CIC Energy Announces Preliminary Agreement with Sumitomo on the Mmamabula Energy Project
Tuesday, August 28th, 2007
CIC Energy Corp. is pleased to announce that the Company, along with its partner, International Power plc (“IPR”), has entered into a preliminary agreement with Sumitomo Corporation on the possible subscription of a 20% equity interest in Phase One of the Mmamabula Energy Project. Currently CIC Energy and IPR hold equal 50% interests in the Project.
Subject to a favorable outcome of its due diligence, Sumitomo has agreed to enter into a good faith negotiation with CIC Energy and IPR on the possible subscription of a 20% interest in Meepong Energy (Mauritius) Pty Ltd. CIC Energy and IPR would be expected to equally sell down a portion of their respective equity stakes to facilitate this. Meepong Energy (Mauritius) is the joint venture company which will hold the power station assets of Phase One of the Project.
This agreement also provides the option for Sumitomo to take a 20% interest in Meepong Resources (Mauritius) Pty Ltd. Should this occur, the balance of this holding company is expected to be held equally by CIC Energy and IPR. Meepong Resources (Mauritius) is the joint venture company which will hold the assets related to the coal mine for Phase One of the Project.
While this preliminary agreement does not commit Sumitomo to equity participation in the Mmamabula Project, it is an important milestone indicating Sumitomoâ€™s serious interest in the Project.
â€œWe are extremely pleased to announce the potential addition of Sumitomo to the Mmamabula Energy Project,â€ stated Mr. Greg Kinross, President and CEO of CIC Energy. â€œThis development brings a possibility of another major and highly credible partner to the project which, over and above their wealth of experience, should also enhance our access to new sources of project finance.â€
The electricity generated by the Mmamabula Energy Project is expected to be sold under long-term Power Purchase Agreements (â€œPPAâ€) of approximately 40 years, predominantly to Eskom Holdings Limited (â€œEskomâ€), South Africaâ€™s national electrical utility, with the balance to Botswana Power Corporation, Botswanaâ€™s national electricity utility. The first phase is envisaged as a 2,100 to 2,500 megawatt coal-fired power station with commercial operations planned for 2012.