NKONDEZI CONFIDENT OF DEAL WITH SHANGHAI ELECTRIC POWER

The London-based company Ncondezi Energy announced on Friday that it has made “excellent progress” along with Shanghai Electric Power Company for the development of the Ncondezi power project in the western Mozambican province of Tete.In January, the two companies announced that they had signed a binding Joint Development Agreement under which Shanghai Electric Power will become the controlling shareholder in the planned 300 megawatt coal-fired power station. It will invest up to 25.5 million US dollars and receive a sixty per cent share in the power project.Despite the “excellent progress”, Ncondezi revealed that funding for the project will not begin until the third quarter of 2016.Ncondezi also noted that it now holds less than 50,000 US dollars in cash, which is only enough to keep it going until the middle of this month. However, the company stated that it is in the final stage of executing a million dollar shareholder loan that would fund it until the investment from Shanghai Electric Power materialises.Ncondezi Energy will retain full ownership of the coal mine, which will be financed and developed separately to the power project.Unlike neighbouring coal projects, Ncondezi is focussed on meeting Mozambican demand for electricity, using its own thermal coal. It is thus, unlike other mining companies in Tete, not dependent on rail and port infrastructure to move coal to ports for exports.Ncondezi’s coal mine will be an open cast operation with a target output of 1.3 million tonnes per annum. In the first stage of the power project, 300 megawatts of electricity will be produced. However, Ncondezi plans to expand this in stages to 1,800 megawatts.Despite the upbeat statement, shares in Ncondezi on the London Stock Exchange fell by 27 per cent on Friday morning.