ROAD TOWN, TORTOLA, British Virgin Islands, Jan. 24 /CNW/ - CIC Energy
Corp. ("CIC Energy" or the "Company") (TSX:ELC, BSE: CIC Energy) is pleased to
provide an update on the Mmamabula Energy Complex in Botswana, Africa. The
Mmamabula Energy Complex is comprised of the Mmamabula Energy Project, the
coal-to-hydrocarbons project (the "CTH Project") and the initiative to
evaluate the best options available for exporting coal from the Company's
Mmamabula Coal Field.
The current Mmamabula coal resource estimate exceeds projected coal
consumption for both Phase One and Phase Two power plants for the Mmamabula
Energy Project. In addition, ongoing exploration is expected to lead to a
further increase in the coal resource.
Updates on the Company and the Mmamabula Energy Complex in this news
- Mmamabula Energy Project
- Coal-To-Hydrocarbons Project
- Export Coal Opportunities
- Addition to S&P/TSX Global Mining Index
In excess of 160,800 metres in over 1,800 diamond drill holes have been
completed at the Company's Mmamabula Coal Field as of the end of December
2007, and a total of eight diamond drill rigs are currently active.
Exploration drilling is now focused on the Border Block which has been
targeted for export markets as this high quality coal is believed to meet the
requirements of the seaborne traded energy coal. The drilling program at the
Border Block is expected to be completed by the end of March 2008. Drilling at
the Serorome Block was completed in December 2007 for the purpose of upgrading
the resource classification from the inferred to the measured category. A
further twenty confirmatory boreholes were planned for the Serorome Block;
fifteen of these holes have been drilled and sampled, while the remaining five
will be drilled in January 2008. At the Mookane Block, drilling of seventeen
closely-spaced boreholes (50m apart) to identify possible micro-structures
along the main underground development was completed in October 2007 and the
data is currently being evaluated. A programme of ten large diameter boreholes
has been started to obtain samples of sufficient mass for advanced physical
and chemical analyses; these results will be used in the design of the power
The Company is targeting the release of a NI 43-101 mineral resource
estimate update in mid-2008.
Mmamabula Energy Project
The Company anticipates announcing the selection of the Engineering,
Procurement and Construction ("EPC") contractor for the Mmamabula Energy
Project (the "Project") shortly.
Discussions with Eskom Holdings Limited and Botswana Power Corporation on
Power Purchase Agreements ("PPA") are ongoing. The Bankable Feasibility Study
for Phase One of the Project is expected to be finalized on the conclusion of
the definitive EPC contract and the signing of the PPAs. All the technical
components of the study are now substantially complete.
Since the Company's Project schedule update last fall, strong demand for
power plant builds and prevailing engineering resource constraints, even with
the world's largest contractors, have continued to increase lead times for
power plant equipment and construction services. The Company today announces
further revisions to the Project schedule of approximately four to six months.
Revised schedule estimates are as follows:
- Financial Close for Phase One of the Project is targeted for the
fourth quarter of calendar 2008, immediately followed by the
commencement of construction, also in the fourth quarter. (Financial
Close is the date of the execution of definitive project loan
agreements and the satisfaction and/or waiver of all conditions
precedent to the advancement of funds.) The PPAs and definitive EPC
contract will be signed prior to Financial Close.
- Commercial operations of the first unit of the power plant is
expected in late 2012 / early 2013. The second and third units of
Phase One are scheduled to come on-line at six month intervals
following the first unit.
New legislation in Botswana to facilitate the Project has received
approval from the Government of Botswana cabinet and passed the third and
final Parliamentary reading. These bills to amend the country's Mines and
Minerals Act and Electricity Supply Act will become law following Presidential
approval and gazetting.
The Mmamabula Energy Project is one of the few major projects that can
meet the urgent demand for new baseload capacity in Southern Africa.
Coal-To-Hydrocarbons (CTH) Project
The Company is rapidly advancing the coal-to-hydrocarbons project which
is intended to produce synthesis gas ("syngas") from coal which can be
converted to a variety of downstream products including petrochemicals, gas
and fuels. At Mmamabula the Serorome and Dovedale Blocks are being considered
for the CTH Project. Drilling results have indicated that the coal qualities
of both Blocks are suitable for gasification.
A "blue chip" technology partner is anticipated for this large scale
project and preliminary discussions with a number of potential joint venture
partners have commenced. Separate technology licenses are envisaged for the
coal gasification and downstream conversion facilities that could produce
fuels (such as gasoline, diesel or jet fuel) or petrochemicals (such as
methanol, ethanol, hydrogen or ethylene). Methanol can be used as a cheaper
and cleaner fuel substitute for small diesel-fired power plants in Africa.
Cogeneration, converting waste heat to steam and power, is also being
investigated as well as the sale of syngas for use as fuel and with some
conversion for use as industrial gas.
The initial market study currently being conducted by Wood Mackenzie,
along with other factors, will assist the Company in determining the most
attractive products which could be manufactured from the syngas. This study,
which is expected to be completed in the first quarter of 2008, will
complement the feasibility study being conducted by Jacobs Engineering, which
will be completed in the second quarter of 2008.
Export Coal Opportunities
The Company is actively investigating ways to fast-track export coal
opportunities for the Border Block at Mmamabula. The profit margin on this
opportunity is potentially attractive for CIC Energy with current spot coal
prices of up to US$100/tonne FOB Richards Bay for 27MJ A grade steam coal,
provided a viable transport solution is found.
While current rail infrastructure is not adequate for large scale export
via Richards Bay, South Africa, major expansion of rail infrastructure in the
region is anticipated in approximately four years. New rail capacity is
expected to be built to serve the Waterberg Coal Field in South Africa, which
adjoins the Mmamabula Coal Field. As coal resources in South Africa's Witbank
Coal Field are depleted, the Waterberg is expected to replace it as the
primary source for coal for export markets. Significant new rail capacity is
required to accomplish this and South Africa's Chamber of Mines is expected to
form an industry working committee shortly to address this matter. The Company
is also exploring alternative export routes to the west coast of Africa.
ELC added to S&P/TSX Global Mining Index
The Company is also pleased to report that it has been added to the
S&P/TSX Global Mining Index, effective December 24, 2007. To be eligible for
this index, companies must have a market capitalization of at least
US$300 million and meet three liquidity criteria.
About CIC Energy Corp.
CIC Energy is a TSX/BSE-listed company engaged in the advancement of the
Mmamabula Energy Project, a planned power station and integrated coal mine in
Botswana. The Mmamabula Energy Project is in partnership with International
Power plc (LSE listed), a leading independent electricity generating company.
The Southern Africa region is projected to require significant new baseload
power generation capacity over the next several years. The Mmamabula Energy
Project is located in the Mmamabula Coal Field of southeastern Botswana, 120
kilometres north of the capital city of Gaborone and adjacent to South
Africa's Waterberg Coal Field. The majority of the electricity generated is
intended for export under a long-term power purchase agreement to South
Africa's national utility, Eskom Holdings Limited. Phase One of the Mmamabula
Energy Project is planned as a 2,100 to 2,460 megawatt (MW) power plant with
an integrated 7.5 to 9.0 million tonne per annum coal mine scheduled to be in
commercial operation in late 2012 or early 2013.
Ms. Lesley Jeffrey is the "Qualified Person" for the exploration and
development programmes on the Mmamabula Coal Field within the meaning of NI
43-101. Ms. Jeffrey is employed by Bon-Terra, a subsidiary of CIC Energy. Ms.
Jeffrey has reviewed and approved the technical information in this news
CIC Energy has a treasury of approximately CDN$118 million.
This news release contains certain "forward-looking statements". All
statements, other than statements of historical fact, that address activities,
events or developments that the Company believes, expects or anticipates will
or may occur in the future are forward-looking statements. These
forward-looking statements reflect the current expectations or beliefs of the
Company based on information currently available to the Company. Such
forward-looking statements include, among other things, statements relating to
the Mmamabula Energy Project, the CTH Project and the export coal
opportunities with respect to estimates and/or assumptions in respect of
mineral resources, targets, future production, goals, objectives, plans and
future economic, market and other conditions. Forward-looking statements are
subject to significant risks and uncertainties and other factors that could
cause the actual results to differ materially from those discussed in the
forward-looking statements, and even if such actual results are realized or
substantially realized, there can be no assurance that they will have the
expected consequences to, or effects on, the Company. Factors that could cause
actual results or events to differ materially from current expectations
include, but are not limited to: failure to complete a positive bankable
feasibility study on the Mmamabula Energy Project; failure to complete, or
delays in the completion of, positive feasibility and market studies on the
CTH Project; failure to obtain a viable transportation solution to export coal
and/or failure to enter into export coal purchase agreements; the grade,
quality and recovery of coal which is mined varying from estimates; inflation;
changes in exchange rates; the ability to raise the required debt financing
for the Mmamabula Energy Project; further delays in the development of the
Mmamabula Energy Project caused by unavailability of equipment, labour or
supplies, limited capacity among engineering, procurement and construction
firms, climatic conditions or otherwise; insufficient transportation and
transmission capacity; geological and mechanical conditions; delays or
failures in obtaining regulatory permits and/or licences respecting mining,
power generation and/or power transmission lines; the existence of undetected
or unregistered interests or claims, whether in contract or tort, over the
properties of the Company; availability of water and sorbent (at cost
effective prices); inability to enter into power purchase agreements and/or
transmission agreements with Eskom Holdings Limited and (to a lesser extent)
Botswana Power Corporation or other requisite agreements, including
preliminary and/or definitive fixed price contracts with reputable
engineering, procurement and construction firm(s) and other agreements
required to facilitate the development, operation and financing of the
Mmamabula Energy Project, including with International Power plc; failure to
raise additional funds on favourable terms to finance such development;
inability to obtain tax concessions from the Government of Botswana and
requisite credit support from the Government of South Africa and/or the
Government of Botswana; failure to enter into technology and other agreements
required to develop the CTH Project; the failure to receive final approvals
for the above described amendments to Botswanan statutes; political risks
arising from operating in Africa; or other factors (including development and
operating risks). Any forward-looking statement speaks only as of the date on
which it is made and, except as may be required by applicable securities laws,
the Company disclaims any intent or obligation to update any forward-looking
statement, whether as a result of new information, future events or results or
otherwise. Although the Company believes that the assumptions inherent in the
forward-looking statements are reasonable, forward-looking statements are not
guarantees of future performance and accordingly undue reliance should not be
put on such statements due to the inherent uncertainty therein.
Mineral resources that are mineral reserves do not have demonstrated
For further information:
For further information: For additional information on the Company and
the Mmamabula Energy Project, please visit CIC Energy's website at
www.cicenergy.com or contact: Erica Belling, CFA, P.Eng., VP Investor
Relations, Tau Capital Corp., Tel: (416) 361-9636 x 243, Email: