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IPS
IPSA
IPS - IPSA Group Plc - Update: Further expansion in Eastern Cape
IPSA GROUP PLC
(Incorporated and registered in England and Wales)
(Registration number 5496202)
AIM Share Code: IPSA ISIN: GB00B0CJ3F01
JSE Share Code: IPS ISIN: GB00B0CJ3F01
(`IPSA` or `the Company`)
Update: Further expansion in Eastern Cape
IPSA is making good progress in expanding its portfolio of power generation
projects in the Eastern Cape province of South Africa. Two important
additions to capacity are now planned at the Elitheni Clean Coal Project
("Elitheni Clean Coal") and at the combined heat and power ("CHP") project
for da Gama Textiles ("da Gama").
Elitheni Clean Coal is an existing project under development where IPSA
intends to build and operate a mine-mouth coal-fired plant at Indwe to the
north of Port Elizabeth and East London. IPSA had originally intended to
develop 400 MW of capacity on a site adjacent to Elitheni`s Guba coal
reserves at Indwe. Following further investment in recent months by the
owners of the Elitheni coal mine in proving up the coal deposits at the
site, IPSA believes that there is sufficient commercial reserves of coal in
place to increase the Elitheni Clean Coal power plant from 400 MW to 500 MW
based on two generating blocks of 250 MW each. This change will provide
extra generation capacity in a part of South Africa which needs new local
capacity.
IPSA is now in discussions regarding a joint venture at Elitheni Clean Coal
with local Black Economic Empowerment groups which will allow for the rapid
development of the power plant in parallel with development of the coal
reserve.
In a further development, IPSA now intends to increase the size of its CHP
project at da Gama Textiles in East London from 7 MW to 80 MW. This
increase follows on from discussions with da Gama to permit an enlarged
plant footprint on its site. The da Gama plant is one of the largest
textile plants in the southern hemisphere. The enlarged da Gama CHP
facility will provide steam for the textile plant as well as additional
electrical capacity for industrial users in East London, Eastern Cape.
IPSA is in final negotiations with its potential Black Economic Empowerment
partners regarding the refinancing of its 18 MW Newcastle power plant and
the financing of the 1,600 MW Coega Fast Track CCGT project. The Board of
IPSA intends to announce the final agreement in the near future. In the
meantime, Newcastle has achieved its first revenues and has successfully
completed its commissioning.
In South Africa the aggregate electricity demand situation in the country
continues to work in the Company`s favour. In the week ended 25 May 2007 a
number of South African power-system demand records were broken. These
included the morning peak, evening peak, the maximum night minimum demand
and the daily energy usage levels. The individual record for peak demand
was broken three times during the course of that week. On 24 May 2007 Eskom
issued a warning that further load-shedding (i.e., power cuts) would be
"inevitable" if users of electricity did not reduce their consumption
during peak periods.
The Directors of IPSA believe that the growth of the South African economy
will result in ever-increasing extra demand for electricity, which the
Company is well-placed to help fulfill. According to the South African
Reserve Bank, the annualised rate of real economic growth accelerated from
4.5 per cent in the third quarter of 2006 to 5.5 per cent in the final
quarter on account of an improvement in growth in all the main sectors of
the economy. Growth is forecast to continue at a rapid rate in 2007 and
beyond.
Peter Earl, CEO of the Company, said:
`We are very pleased to be expanding our portfolio of power projects in the
Cape. Last week saw South Africa break all records for the peak demand for
electricity with national power cuts yet again from shortages of generation
capacity. IPSA intends to bring its new capacity on stream as fast as
possible to meet the desperate need for power in South Africa.`
For further information contact:
Peter Earl, CEO, IPSA Group Plc 020 7793 7676
Liz Shaw, COO, IPSA Group Plc 020 7793 7676
John Llewellyn-Lloyd, Noble & Company Limited
020 7763 2200
Sean Lunn, Hichens, Harrison (South Africa) Ltd +2721 950 2711
Allan Piper, First City Financial 020 7242 2666
01 June 2007
Sponsor
Standard Bank
AIM nominated advisor
Noble and Company Limited
Date: 01/06/2007 11:15:01 Produced by the JSE SENS Department.
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