Bushveld Minerals Limited (LON:BMN), a diversified mineral development company with projects in Southern Africa and Madagascar, have today announced the signing of a Memorandum of Understanding (“MoU”) between its wholly-owned subsidiary, Lemur Holdings Limited (“Lemur”) and Sinohydro Corporation Limited (“Sinohydro”). The MoU gives both companies exclusive rights to work with each other on the development of an initial 60 MW independent power producer (“IPP”) coal power plant and associated 200 kilometre transmission line in southern Madagascar (the “Project”). It is anticipated that the coal fuel for the power station will be provided from Lemur’s coal mining permit area in Madagascar.
The MoU’s objectives include:
· Development of a Bankable Feasibility Study (“BFS”) and a Project Implementation Proposal (“PIP”) for the project by Sinohydro, at its own cost, within 12 months of signing the MoU;
· Preparation by both parties of an Environmental Impact Assessment for the Project;
· Preparation by both parties of EPC and O&M contracts for the IPP plant and the EPC contract for the transmission line within 18 months;
· Cooperation between the two parties to secure both debt and equity funding for the project;
· Potential establishment of a future company for the Project upon completion of the BFS, in which Sinohydro’s parent company, PowerChina, may take an equity interest;
· Lemur will continue the development of its mine in order to supply coal to the Imaloto IPP.
Lemur has to date completed a conceptual study, followed by more detailed pre-feasibility studies (“PFS”) for the mine, power plant and transmission line. These studies demonstrated favourable project economics, including the existing and future demand for electricity in the area. Sinohydro will use its vast expertise in power plant and transmission line engineering and construction to build on the work already done by Lemur in the PFS.
The Project stands to have a transformational impact on Madagascar. At present, no electricity grid exists in the southern part of the island. The Project would be able to not only supply electricity cheaper to existing mining and industrial operations in the region, but to also deliver electricity to tens of thousands of people currently without access to power. Realising this, the Madagascar power utility, Jirama, is currently negotiating an offtake agreement with Lemur for electricity for the IPP.
Commenting on the executed Agreement, Fortune Mojapelo, CEO of Bushveld Minerals Limited, said: “This is another example of the progress Bushveld has made across its platforms in 2017, in what we forecasted as a pivotal year for our Company.”
“The MoU signing is a major step forward in the development of our coal mine and power plant project in Madagascar. Sinohydro and its parent company PowerChina, bring a wealth of technical expertise in building such projects and bringing them into operation. The MoU reinforces the commercial merits of the Project and the bankable feasibility study will add significant value to the development of the power Project. We look forward to working with Sinohydro and the Madagascar authorities in implementing the Project and realising its immense positive social impact it will create.
Commenting on the MoU, Liu Kai, Vice President of Sinohydro, said: “As a major breakthrough for the energy sector of Madagascar, this project will help solve the problem of power shortage and contribute to local economic growth in the south of the country. Sinohydro, with rich experience in thermal power field, is ready to help Lemur complete preliminary work. We both hope the Project can move forward into the next stage as soon as possible with the strong support of Madagascar government.”