Bushveld Minerals Limited (LON:BMN), the AIM-listed integrated vanadium producer with additional investments in coal, power and tin, has today provided an operational update in respect of Lemur Holdings Limited (“Lemur”), Bushveld’s coal and energy subsidiary that is developing an integrated thermal coal mining and independent power project in Madagascar.
Highlights:
· Load, demand and transmission routing studies completed
· Discussions with Madagascan government regarding Concession initiated
· Social and Environmental Impact Assessment (“SEIA”) commenced
· Consultants appointed to support engagement with financial institutions for project financing
Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented:
“Notwithstanding Bushveld Minerals’ focus on its flagship vanadium platform, the Company is committed to progressing the Lemur project as an integrated coal mining and power project, a configuration that it believes is key to unlocking the significant value inherent in the project. We believe the Imaloto Power Project is key for the southwestern region of Madagascar. The design and location of the Project would immediately increase the country’s baseload power supply by approximately 15 per cent, with the option to scale up to supply more power to new electricity users in the region in the longer term.”
“I am therefore pleased to see significant progress made on the project – particularly now that it is in process of completing a bankable feasibility study. Moreover, I am delighted to note the positive cooperation with the Madagascan government as we advance discussions on the concession for the power project alongside the various studies that are an important part of the bankable feasibility study.”
Prince Nyati, CEO of Lemur Resources Limited, commented:
“Lemur is focused on building on the achievements made in 2017, key among these was the signing of a 30 year PPA with JIRAMA which is a statutory precondition to receiving a concession for the Power Project from the government. The process to obtain the concession is underway and is a top priority for 2018. Likewise, Lemur will focus on completing the Social and Environmental Impact Assessment. These approvals will be pursued together with the Bankable Feasibility Study and discussions with potential partners for project financing.
“A key strategy for Lemur is for the asset to supply sustainable and affordable baseload power by using locally produced fuel to provide power to the southwestern region of Madagascar. This is critical for local industry, manufacturing and economic development in the region.”
Lemur, through its Madagascan subsidiary Imaloto Power Project SARL. executed in November 2017 a binding Power Purchase Agreement (“PPA”) with state-owned utility, Jiro sy Rano Malagasy (“JIRAMA”) as part of the Imaloto Power Project. The power plant will be located at the mine-mouth of Lemur’s coal deposit, which has a JORC compliant resource of approximately 136 million tonnes of coal. The addition of a power component will support Lemur’s plans to unlock the value of the coal asset, while at the same time secure a reliable electricity off-take backed by a government entity for the people of Madagascar.
The load, demand and transmission routing study primarily focussed on understanding the load demand in the catchment area as well as to align the design and phasing of the power plant capacity and transmission with actual demand in the catchment area. These studies are critical to concluding the bankable feasibility study (“BFS”) of the Project.
Discussions with the Government of Madagascar on obtaining a Concession for the Project are at an advanced stage, with the Concession Agreement currently under legal review by the parties’ respective legal teams.
We have commenced the SEIA which is supported by Worley Parsons/Advisian. The advisers are currently preparing the formal submission to the Environmental Ministry. We have conducted procurement of financial advisory consultants to support engagement with financial institutions for project financing. The financial advisers will among other things, prepare the financial modelling and structuring. They will also assist with the credit enhancement and risk management.
Figure 1: Imaloto Power Project Timeline
http://www.rns-pdf.londonstockexchange.com/rns/9478J_-2018-4-5.pdf
Objectives for 2018:
· Obtain the concession for the Project
· Conclude the SEIA Study
· Pursue funding and credit enhancement options for the Project, which have already been initiated
· Secure additional offtakes above the current demand from JIRAMA
· Seek to conclude coal offtakes with third parties – the coal mine is viable with only supplying coal to the Power Project. Notwithstanding, supplying coal to third parties provides early cashflows prior to commissioning of the power plant
· Further explore strategic partnerships for the Project (technical, commercial and financial)
· The projected power project commissioning date is 2021
