| Wed 28 Nov 2007, 16:55 | | IPS - IPSA Group Plc - IPSA Joint Venture for Elit |
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IPS
IPSA
IPS - IPSA Group Plc - IPSA Joint Venture for Elitheni Clean Coal Plant
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`)
IPSA Joint Venture for Elitheni Clean Coal Plant
The directors of independent power plant developers IPSA Group PLC
("IPSA" or the "Company") announces that it has today sold a 50%
interest in its wholly-owned subsidiary, Elitheni Clean Coal Holdings
Limited ("ECC") to Exodus
Africa LLC ("Exodus") for a premium of US $5 million to IPSA`s holding
cost in ECC.
ECC is the project holding company established by IPSA to oversee the
development of the 500 MW Elitheni Clean Coal project at Indwe in
Eastern Cape Province in South Africa. ECC has been assigned the
benefit
of the coal supply framework agreement between Elitheni Coal (Pty)
Limited (a subsidiary of Strategic Natural Resources PLC) and IPSA.
Earlier this year the owners of the Elitheni coal mine, Strategic
Natural Resources PLC ("SNR") granted IPSA exclusive rights to develop
a mine mouth coal-fired power plant at Indwe using coal to be produced
from one of South Africa`s oldest coal mines.
Subsequently SNR has completed an initial drilling programme that has
satisfied both IPSA and Exodus that the commercially exploitable coal
reserves justify an on-site power plant of no less than 500 MW. The
eventual size of the plant could be increased above this level if the
overall SNR drilling programme confirms the coal reserves to be greater
than the 120 million tones originally estimated at Indwe. In recent
weeks SNR has announced a resource of 40 million tones based on
drilling samples covering only 7% of the current mining licence area.
Previous drilling reports prepared for former owners of the mine in the
1960s and 1980s had originally led IPSA to believe that a 400 MW was
the most appropriate size for an Indwe power plant. However both IPSA
and Exodus now agree that a flexible approach to the mine mouth power
project could lead to an eventual increase in the total power produced
on site.
Accordingly IPSA and Exodus are now resolved to develop the first 250
MW of power plant capacity at Indwe on a "fast track" basis with
flexibility to add additional blocks of 250 MW each as the coal
resource confirmation so justifies. This fast track approach also
reflects the national need for South Africa to bring new power capacity
on line as swiftly as possible as power shortages and load shedding
continued this week across the country.
Under the fast track plan for the first 250 MW, IPSA and Exodus are
looking to acquire existing equipment for conversion to meet the
precise coal specifications at Elitheni Coal Mine - low sulphur, low
volatile coal - while at the same time qualifying as Clean Coal with
the high efficiency, lower emissions associated with clean coal
technology. This will involve combining high pressure steam turbines
with fluidised bed combustion boilers. IPSA is currently in
negotiations to take options over equipment suitable for the first
Clean Coal block at Indwe.
The consideration to be paid by Exodus as a result of the transaction
announced today will in effect be payable in two parts: 52% of the
principal plus interest upon introduction of a black economic
empowerment investor; and the balance on the earlier of ECCH securing
funding for the project or 365 days. Interest on the consideration is
payable at LIBOR plus 2%.
Exodus Africa LLC is a U.S.-based, privately held integrated energy
company. Headquartered in greater Houston, Texas, the company is
focused on developing, acquiring and operating energy assets in Africa.
A number of senior members of its management team were previously with
Enron. Exodus has committed to place half of its 50% stake in ECC with
qualifying broadly based Black Economic Empowerment (BEE) investment
funds in South Africa in order to allow the project to conform with
South Africa`s norms.
IPSA completed its own BEE initiative earlier this year following the
placing of 15% of its shares in August 2007 with Metropolitan Life on
behalf of IMARA, a specialist BEE energy consortium.
"We are very pleased to work together with the IPSA team to make the
Elitheni Clean Coal Power Project a reality in the very near future,"
said Sean Long, President, Exodus Africa LLC. "The Elitheni Clean Coal
Power Project will provide the eastern and western cape region with
much needed additional electricity using modern environmentally
friendly equipment. In addition, the project will offer a practical,
long-term local market for Elitheni coal which in turn will create new
jobs in the region. Exodus is also looking forward to bringing in a
highly respected BEE group under its 50% ownership. We believe strongly
in the importance of strengthening local businesses. It`s just simple
good business to help to strengthen the economies where we do business
by helping local companies grow."
Peter Earl, CEO of IPSA added, "This is a very important step for IPSA
in bringing partners to South Africa for what will be a world scale
clean coal development. We need to build all the power capacity we can
to alleviate South Africa`s power shortages. Exodus will help us to
accelerate our development drive in the Eastern Cape."
IPSA`s business is developing independent power generation projects in
southern Africa. IPSA is well positioned to ease South Africa`s
deepening energy crisis, and is currently developing a 1,600 MW
combined cycle gas turbine plant at Port Elizabeth. In 2007 it
completed an 18MW combined heat and power plant at Newcastle, KwaZulu
Natal, South Africa`s first gas-fired independent power project.
For further information contact:
Peter Earl, CEO, IPSA +44 20 7793 7676
Liz Shaw, COO, IPSA +44 20 7793 7676
John Llewellyn-Lloyd, Noble & Company Limited +44 20 7763 2200
Allan Piper,
First City Financial Public Relations +44 20 7436 7486
28 November 2007
Standard Bank
AltX Sponsor to IPSA Group PLC
Noble & Company Limited
AIM Nominated Advisor and Joint Broker to IPSA Group PLC
Date: 28/11/2007 16:55:01 Produced by the JSE SENS Department.
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