Ncondezi Energy Limited has signed a non-binding Memorandum of Understanding (MoU) with Shanghai Electric Power Company Limited (SEP) to progress and agree a transaction where SEP could potentially become the controlling shareholder in the 300 MW coal fired power plant, the Ncondezi Power Project, located near Tete in northern Mozambique.
This large scale project will be developed in phases, starting with a 300 MW integrated mine and power plant, expanding ultimately to an 1800 MW power plant. The 300 MW project will see the development of an open pit mining producing 1.2 million tonnes per annum of coal for consumption by a 300 MW base load thermal coal fired power plant, which will be adjacent to the mine.
The MoU documents SEP and Ncondezi’s mutual intention to further cooperate with each other and sets out a work plan and timetable, with a view to executing a legally binding Joint Venture Agreement Heads of Terms (JVAHOTs) during Q4 2014.
It is currently the intention within the MoU that the JVAHOTs will outline a transaction whereby SEP acquires a controlling equity position in the power project.
In addition, it is also the intention that SEP will acquire a minority interest in the Ncondezi Mine project.
Following execution of this MOU, the parties will commence the negotiation of the JVAHOTs. Such process shall run concurrently with the final due diligence process to be conducted by SEP in order to meet the Q4 2014 timetable. Ncondezi has agreed to give SEP a short period of exclusivity to agree the JVAHOTs.
Paul Venter, Chief Executive Officer and Executive Directo of Ncondezi Energy, stated:
“The formalising of the relationship between Ncondezi and SEP through the signing of this MoU is a significant step toward agreeing a transaction which will bring the Ncondezi Power Project to commercial realisation. SEP brings a wealth of power plant financing, construction and operating expertise that will be a major benefit to both the Power Project and Mozambique.”