ASX-listed African Energy has signed a term sheet with a South African project developer to divest of its Mmamantswe coal and power project, in Botswana.
Subject to certain conditions precedent, African Energy would sell the Mmamantswe project for an initial sum of $10m to the developer, which would form a bid consortium to sole fund the preparation and submission of a bid into South Africa’s upcoming Coal Baseload Independent Power Producer (IPP) Procurement Programme, using the Mmamantswe project. African Energy would be paid this initial fee if the project is shortlisted by the South African Department of Energy.
On receipt of the initial funds, African Energy would transfer ownership of its shares in the Mmamantswe project to the developer. The ASX-listed company would receive a second payment of $10m if the project reaches financial close. African Energy told shareholders on Monday that the conditions precedent included the completion of a due diligence, the delivery of a bank guarantee or the creation of an escrow account for the initial $10m payment, and the completion of a share sale agreement within 60 days.
The Mmamantswe coal project is estimated to host some 1.25 billion tonnes of coal, and is located 20 km from the South African border. The project has an approved environmental-impact assessment for a coal mining operation of up to ten-million tonnes a year and a 2,000 MW power station. African Energy would retain full ownership of the Mmamabula West coal and power project, also in Botswana, as well as a 49% interest in the Sese joint venture with First Quantum Minerals.