18 May - 8 min read

Agreement to Co-develop Renewable Energy Projects in South Africa

Agreement to Co-develop Renewable Energy Projects in South Africa

Kibo Energy PLC (Incorporated in Ireland)
(Registration Number: 451931)
(External registration number: 2011/007371/10)
Share code on the JSE Limited: KBO
Share code on the AIM: KIBO
ISIN: IE00B97C0C31
(“Kibo” or “the Company”)

Dated: 18 May 2021

                                    Kibo Energy PLC (‘Kibo’ or the ‘Company’)

                       Agreement to Co-develop Renewable Energy Projects in South Africa

Kibo Energy PLC, the multi-asset, African focused energy company, is pleased to announce that it has entered
into     an   agreement     with    South    Africa-based    Industrial    Green   Solutions    (Pty)   Ltd   (‘IGES’)
(https://www.industrialgreenenergy.com/) to jointly develop a portfolio of Waste to Energy projects in South
Africa (‘the Agreement’) with an initial target of generating more than 50 megawatts of electricity for sale to
industrial users. The Agreement, which is subject to the satisfaction of certain conditions, is in line with Kibo’s
strategy to integrate renewable energy into its project pipeline, which includes three utility-scale power
generation and mining projects.


Highlights
Targeting South Africa’s chronic shortfall in electricity and high plastic waste disposal costs
       * Under the terms of the Agreement, Kibo will own 65% of Newco Energy (Pty) Ltd (‘Newco’), which will
         hold the Waste to Energy Project Portfolio, with IGES holding 35%
       * Newco will initially develop a phased c. 8MW project for an industrial client, to be followed by six other
         projects at different sites, to a total generation of up to 50MW.
       * Initial Project Pipeline comprise of seven projects in place, and will utilise Pyrolysis technologies to convert
         waste non-recyclable plastics to syngas for the generation of energy:
               > Pyrolysis technology to be supplied by a local international technology firm in the form of a waste
                 to energy conversion plant;
               > Syngas to be stored on site and fed into gas engines to generate electrical power; and
               > Off takers for all seven projects have been identified with Power Purchase Agreement (‘PPA’)
                 negotiations underway


Project 1 – Most Advanced in Project Portfolio and Involves the Development, Construction and Operation
of a c. 8MW Base Load Waste to Energy Generation facility
       * MOU for the supply of energy signed with industrial client in Centurion (Pretoria, South Africa) - 10-year
         “Take or Pay” PPA negotiated subject to independent review;
       * Fuel feedstock supply agreement signed with waste management operator for 100% of project’s fuel
         requirement - intention to operate from a 9 – 12-month stockpile;
       * Land acquisition and waste licensing completed, air emissions license submitted and grid connection
         approval process underway;
       * Capacity to be scaled up from c. 2 MW to 8 MW, in 4 x 2 MW phases over three years;
       * Project development duration for first phase of 2 MW expected to be no longer than 16 months including
         construction;
       * Kibo will fund NEWCO, commencing with an amount of R11,145,000 (GBP560,000) as an Equity Loan
         to Newco for the development of this first project (Project 1- referred to above); and
       * Kibo will be developing the project portfolio with Lesedi Nuclear Services (Pty) Ltd
         (https://lesedins.co.za/) as strategic partner for EPC and Operations and Management services


Louis Coetzee, CEO of KIBO said: “This opportunity to enter the South African waste to energy market in
strategic partnership with Lesedi and IGES, is a win - win for all parties. For Kibo, today’s Agreement is in
line with our strategy to integrate sustainable environmentally friendly energy generation into our portfolio,
which could shortly include waste to energy projects in the UK currently the subject of a due diligence
investigation. The 50MW project pipeline also positions Kibo squarely in the new and exciting renewable
energy industry in South Africa and places us firmly on a programme to production and revenue in the short to
medium term.


For IGES, the company gains a partner in Kibo with a track record not only in project development but also in
project finance. For South Africa, the Pyrolysis technology provides a perfect solution to the disposal of plastics
in the country, which up until now is high cost and subject to cumbersome procedures and under most recent
legislation prohibits the disposal of plastics with a CV (Calorific Value) of more than 20 in landfill facilities.
In addition, Newco will enable South African industry to operate independently from the National Utility, Eskom
and secure stable power supplies. With the above in mind, we are keen to get started at the earliest opportunity
and I look forward to providing further updates on our progress.”


Transaction Background
Kibo has entered into an agreement with IGES to jointly develop a series of Waste to Energy projects in South
Africa to address the insecure energy supply environment in the country by enabling industries to operate
independently. The Agreement resulted in the establishment of Newco, in which Kibo will hold 65% for an
Equity Loan contribution of R11,145,000 which will serve as project development funding for the initial project
and IGES will hold 35% for an equity contribution to the value of a seven - project portfolio and development
expenditure to date. Newco will initially develop a phased c. 8MW project for an industrial client, to be followed
by six other projects at different sites, to a total generation of up to 50MW.


The Waste to Energy concept entails the conversion of plastic waste (provided by leading waste disposal
operators) by a Pyrolysis plant, into syngas. The syngas will be stored on site and fed into gas engines to generate
electrical power.


Kibo, from the commencement date of the Agreement referred to above, will fund Newco, commencing with
the equity loan of R11,145,000 referred to above, whereafter funding of Newco’s approved budget will be funded
through a combination of various standard commercial funding options, repayable from free cash generated by
Newco from its Projects.


The first project, i.e., the project to supply power to an industrial client, is in an advanced project development
stage, with access to land, key licenses and approvals acquired, and an offtake MOU and PPA negotiations
concluded.
South African Energy Environment
Electricity is in short supply in South Africa and despite the efforts of the management of National Utility,
ESKOM, rolling blackouts have remained an integral part of the industrial landscape in the country. Furthermore,
several current coal-fired power plants will come to the end of their economic lifespan in the next ten years,
further curtailing energy supply. An indicative near-term energy requirement of 11,800MW was recently
envisaged by the President of South Africa.


Sustained power cuts, caused by under-investment and a shortage of generating capacity, have damaged the
South African economy. The response has been a belated thrust towards more power supply, from a combination
of coal-fired power plants, oil and gas, wind and solar, and potentially a fleet of new nuclear power stations.


Planners are now considering the addition of independent power producers (IPPs) to the energy mix and small-
scale residential generation as citizens, increasingly frustrated by load-shedding and rising electricity prices, are
starting to install their own generation systems.


Electricity generation is thus becoming decentralized, and the line between consumer and producer is beginning
to blur and the electricity sector is moving away from a monopolistic model. New players are taking on roles
and responsibilities historically controlled by national utility, Eskom, which is made more complex given the
growing number of IPPs. (Extracted from https://www.weforum.org/agenda/2015/09/how-do-we-solve-south-
africas-energy-crisis)


In response to this context, developers and industrial users are looking to various forms of embedded energy
supply. These private initiatives, generally deployed in smaller-but-more-distributed units, will form an
increasing part of the South African energy landscape over time as private enterprises seek to achieve some level
of independence from the national grid.


Newco intends to operate in this space.


Waste Management
South African authorities have expanded the responsibility of a waste generator to ensure that the waste products
from their activities are managed responsibly on a cradle-to-grave basis.


Secondly, the regulations continuously constrain the types of waste that are allowed to be sent to landfill. Certain
plastics, for instance, can no longer be landfilled due to its high calorific value. Plastic generators therefore have
to find alternatives for the disposal and/or recycling of these waste streams.


Primary Technology
Pyrolysis Technology is an advanced conversion technology that can produce a clean, high calorific value gas
from a wide variety of waste and biomass streams. The hydrocarbon content of the waste is converted into a gas,
which is suitable for utilization in gas engines, with associated electricity generation.


Conditions Precedent
The Agreement is subject to three conditions precedent, to be met by 15 June, 2021 (the “Longstop Date”) being:
      * Kibo completing detailed Due Diligence with respect to the commercial viability and fundability of the
        Project(s);
      * Kibo obtains written approval from its Board of Directors;
      * Kibo Energy shall have advanced the full amount of a c. R11.1 million Equity Loan to Newco.

                                                     **ENDS**

This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) no.
596/2014.

For further information please visit www.kibo.energy or contact:


 Louis Coetzee           info@kibo.energy            Kibo Energy PLC       Chief Executive Officer

 Andreas Lianos          +357 99 53 1107             River Group           JSE Corporate and Designated Adviser

 Claire Noyce            +44 (0) 20 3764 2341        Hybridan LLP          Broker

 Bhavesh Patel /
                         +44 20 3440 6800            RFC Ambrian Ltd       NOMAD on AIM
 Stephen Allen

 Isabel de Salis /
                         info@stbridespartners.co.uk St Brides Partners Ltd Investor and Media Relations Adviser
 Charlotte Hollinshead


Notes
Kibo Energy PLC is a multi-asset, Africa focused, energy company positioned to address the acute power
deficit, which is one of the primary impediments to economic development in Sub-Saharan Africa. To this end,
it is the Company’s objective to become a leading independent power producer in the region.


Kibo is simultaneously developing three similar coal-fuelled power projects: the Mbeya Coal to Power Project
(‘MCPP’) in Tanzania; the Mabesekwa Coal Independent Power Project (‘MCIPP’) in Botswana; and the Benga
Independent Power Project (‘BIPP’) in Mozambique. By developing these projects in parallel, the Company
intends to leverage considerable economies of scale and timing in respect of strategic partnerships, procurement,
equipment, human capital, execution capability / capacity and project finance.


Johannesburg
18 May 2021
Corporate and Designated Adviser
River Group

Date: 18-05-2021 08:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.
Information on this Website is provided for general information purposes only and is not a substitute for professional advice. ASX Information (including company announcements and prices) is delayed by at least 20 minutes. JSE Information (including company announcements and prices) is delayed by at least 15 minutes. Reliance on the information you access on or from this Website is solely at your own risk. We make no representation or warranty in relation to the future performance of the companies that appear on this Website. Investment in securities involves risk and you should obtain independent professional legal, financial, investment or company advice before acting on any of the information you access on this Website. Using, browsing or otherwise accessing this Website is subject to our Terms and Conditions and our Privacy Policy.

© 2021 Listcorp. ABN 60 166 140 307

Never miss news from Kibo Energy PLC (JSE:KBO) when you join Listcorp.