Modern Mining October 2015

COAL MINING

showing the outcome of the latest, more detailed work undertaken by our advisers for the MCPP,” comments Louis Coetzee, CEO of Kibo Mining. “In particular, we are delighted with the confirmation of the NPV range of US$214 million to US$219 million which is solely in respect of the coal mining component and does not include the significantly larger power generation portion of the project. “This is a large-scale project which is now demonstrably lower risk. With the relatively low capital investment required, the Mbeya coal mine delivers a high project IRR and short payback period. “The IRR being substantially above the cost of debt makes it an attractive option to con- sider project level loan financing. The project’s robust financials will play in Kibo’s favour in respect of the competitiveness and conditions attached to any such loans. “As each stage of our work on the MCPP is completed, Kibo emerges with a stronger, more valuable project. We will update shareholders with further progress in the near-term in what is a busy operational period for the Kibo team and the MCPP.” 

of optimal gearing was tested on the surface miner contractor option, one of four alterna- tive options for project development examined in the PFS. One of the key conclusions result- ing is that the all-in cost margin ranges from 47,9 % to 48,1 %. Applying this margin, Kibo interprets that annual earnings before interest and tax (EBIT) of between US$23,5 million and US$23,6 million will be generated. The high all-in cost margin reflects low oper- ating costs as a result of the proposed mining method and shallow orebody, small sustain- ing capital expenditure and a fixed coal price as received from the power plant and is – says Kibo – a key indicator of the robustness of the project. Applying a real discount rate of 5,51 %, the best estimated NPV of free cash flow to equity ranges between US$214 million and US$219 million while the equity IRR (leveraged) ranges between 131 % and 146 %, with a project IRR of 54 %. The cash return on capital invested ranges between 726 % and 732 % while the project payback period before loan repayment is estimated at 2,6 years. “We are delighted to provide this update

“This is a large- scale project which is now demonstrably lower risk.”

Louis Coetzee, Kibo Mining

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October 2015  MODERN MINING  39