Edenville Enegy plc, the Company developing an integrated coal to power project in western Tanzania, has given DirectorsTalk an update on the status of the financial modelling work for the project.
A newly constructed financial model for the Company’s Rukwa Coal to Power Project has been completed by Diamond Energy Ltd, an independent power modelling consultant, commissioned by the Company. Diamond Energy Ltd, specialise in building and reviewing valuation models for energy assets, and assisting clients with negotiation of commercial contracts supporting independent electricity projects.
Key Points
· Newly developed independent 2016 Financial Model constructed by Diamond Energy Ltd
· 2015 Power Plant Feasibility Study financial model independently validated with new model results
· Improved NPV (using a nominal pre tax discount rate of 10%) of US$252 million for a 120MW power plant with a 30 year life
· Pre Tax Project nominal IRR 23.4%
Rufus Short CEO of Edenville Energy plc said: “I am extremely pleased with the completion of the new independent financial model for our Rukwa Coal to Power Project. We now have both an additional level of assurance to what has been done previously, and going forward, will be able to use a fully independently constructed model, structured for international project finance and so preferable for funding negotiations. In addition, we are currently in the process of completing significant work flow including an updated mining assessment; bulk sampling of the deposit and detailed coal wash plant requirements. These will feed into the overall financial analysis of the project over the coming weeks and months.”
This new Financial Model further builds upon and validates the results and integrity of the financial model constructed from the results of the 2015 Power Plant Feasibility Study carried out by Lahmeyer India.
Positive and comparable results were obtained in the new Financial Model compared to the 2015 model with an increase of approximately 14% in pre-tax NPV, reflective of improved time granularity of cashflow modelling, pass through indexation and revised capital cost phasing.
For clarity, the 2015 model returned a pre-tax NPV(10%) of US$220 million with an IRR of 23.1% over a 30 year project life for an integrated 120MW coal to power project at the Company’s Rukwa site. The newly constructed Financial Model using essentially the same cost inputs returns an improved pre-tax NPV(10%) of US$252 million demonstrating an IRR of 23.4% over the same time period of 30 years. The size of power plant in both models was set at 120MW with a plant utilisation of 80%.
