MBEYA COAL TO POWER (formerly Rukwa)

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Key Facts

Main Target Coal
Location Mbeya & Songea Regions, Tanzania
Area ~2,000 sq. km
Kibo’s Interest 100%
Main Prospect Rukwa thermal coal deposit
Resource 121 Mt (20.9 Mt, 88.6 Mt Indicated, 11.3 Mt Inferred)
Joint Development Agreement SEPCO III, China based international EPC contractor
Next Steps

Complete Integrated Bankable Feasibility Study

Map

The Mbeya coal project comprises c.22 tenements (licences, licence offers and licence applications) located in south-western Tanzania. The Central Block containing the Mbeya coal Mineral Resource and the planned location for the Mbeya Coal to Power Project (“MCPP”) comprises 10 tenements covering approximately 2,000 sq.km and is located 70 km north of the regional town of Mbeya and just south of Lake Rukwa. The remaining tenements are spread over small blocks up to 240 km northwest and 330 km southeast of the Central Block respectively comprising a total area of approximately 2,600 sq. km. Access to the Central Block project is gained by turning off the main (bitumen) road at the village of Mbalazi, southwest of Mbeya, and by continuing north-west to the town of Galula on a gravel road. From Galula the road turns west, skirting the northern boundary of the Central Block, from which side tracks navigable only by 4WD vehicles give access to the central part of the area. Alternative access to the southeast and northwest of the Central Block is also possible by gravel roads and dirt tracks branching from main bitumen roads servicing Mbeya. The northwest tenement blocks are accessible via the road north skirting the western side of Lake Rukwa. The southeast blocks are located close to the western shore of Lake Malawi and can be reached on the roads going west from the town of Songea.

Regional Setting

The Mbeya coal deposit is hosted within the Karoo Supergroup, an extensive sequence of Late Carboniferous to Early Jurassic marine & terrestrial sedimentary deposits (mostly shales and sandstones) that cover large parts of southern Africa and hosts most of its coal deposits. At the Mbeya project, Karoo rocks were deposited within the Songwe Basin which is a sub-basin of the larger regionally more extensive Mbeya Basin. The coal bearing sedimentary sequences were deposited on Precambrian basement rocks (metamorphic rocks) which now form flanking uplifted fault blocks to the rift basin. Within the Songwe Basin, the Karoo rocks are divided into three main units, K1, K2 and K3 of which K2 is the main coal bearing horizon.

The Mbeya Coal Deposit (formerly Rukwa Coal Deposit)

The Mbeya coal deposit extends across two prospecting licences and is divided into six blocks based on geology and location. All of the currently defined resource is located within the Muasa and Kanga Blocks which have been extensively explored to date. The coal which occurs with the K3 unit in these blocks is contained within seven coal plies (seams) which strike northwest (~310 azimuth) and dip at ~30 degrees to the northeast. The seams vary in thickness from 0.5m to 5m (they pinch and swell along strike) and have been drilled over a strike length of 9 km. The most recent resource estimate for the Mbeya deposit was completed in April 2016 the details of which are shown in the Table 1 below together with the various coal quality (“Raw Qualities”) measures for the deposit.

Rukwa-table

Table 1: Mbeya Coal Resource: Figures taken from Gemecs (pty) Limited technical report for Mzuri Energy Limited dated April 2016 ( NI-43-101 Compliant).

The results of petrographic and metallurgical analyses classify the coal as medium rank bituminous D coal and to exceed the quality standards required a for use in a fluidized bed coal fired electricity generating plants.

Kibo is undertaking a twin track development at Mbeya comprising a coal mine based on the existing coal resource and a 250 -300 MW mouth- of- mine thermal power plant (the Mbeya Coal to Power Project (“MCPP”)). The business case for such a development is enhanced by the current and anticipated future power generation requirements of Tanzania. The country currently has less than 1,000 MW operational out of the 2,000 MW it requires and with a projected GDP growth rate of 7% per year in the medium term (IMF projection), it is facing increasing power generation under-capacity to meet its economic development needs.

Kibo has to date made significant progress in winning financial, government and other key stakeholder support for the MCPP. The MCPP is now part of the Tanzanian Government’s National Energy Strategy and it has committed to support development of the infrastructure in southern Tanzania to enable the project to proceed. Kibo has established the Mbeya Executive Management Team (“MEMT”) to take MCPP through the feasibility stages through to construction and commissioning and has appointed Minxcon as lead Mining Feasibility Study consultant, Tractebel Engineering as lead Power Feasibility Study consultant and Shangoni Management Services LTD as lead Environmental and Social Impact Study consultant. ABSA/Barclays has also been retained to develop a financial model and financing strategy for the project where it will have first option on being lead arranger for debt financing.

During 2014 Kibo initiated a Definitive Feasibility Study on the MCPP commencing with a Stage 1 Concept Study, followed by a Pre-Feasibility Study on the mining component and a Pre-Feasibility Study on the thermal power component. The study reports indicated very robust technical and economic fundamentals for the MCPP and have given impetus to the completion of the the full Integrated Bankable Feasibility Study (“IBFS” ) for the project.

The project received a significant boost in April 2015 with the signing of a Joint Development Agreement (JDA) with international China based EPC contractor SEPCO III. Kibo is now continuing with completion of the IBFS and on the MCPP which it expects to complete during the first half of 2016.The publication of the IBFS will allow the project to proceed to Financial Close and the commencement of the construction phase for the mine and power plant.

An important part of the feasibility studies on the Mbeya coal mine will be further drilling and associated technical surveys to increase confidence in the existing resource and to test for additional coal resources over the rest of the project, for which Kibo believes there is excellent potential. Apart from supplying the planned thermal coal plant, additional markets for the coal will also be explored such as export and for coal to gas conversion.

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