| Tue 28 Oct 2008, 10:30 | | IPS - IPSA Group PLC - IPSA clean coal project expansion advances with agreement |
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IPS
IPSA
IPS - IPSA Group PLC - IPSA clean coal project expansion advances with agreement
to use SNR`s elitheni coal
IPSA GROUP PLC
(Incorporated and registered in England and Wales)
(Registration Number 5496202)
AIM Share Code IPSA ISIN GB00BOCJ3F01
JSE Share Code IPS ISIN GB00BOCJ3F01
("IPSA" or "the company")
IPSA CLEAN COAL PROJECT EXPANSION ADVANCES WITH AGREEMENT TO USE SNR`s ELITHENI
COAL
IPSA Group PLC ("IPSA") today announces that it has reached formal agreement
with Elitheni Coal (Pty) Ltd ("Elitheni"), a subsidiary of Strategic Natural
Resources PLC ("SNR"), for the coal supply to approximately 250 MW of its
initial power projects in South Africa`s Eastern Cape. At the same time, the
basis of a framework agreement has also been put in place giving IPSA the right
of first refusal for further coal supplies from Elitheni to serve the 1,000 MW
of clean coal power plant capacity which IPSA intends to develop throughout the
Eastern Cape between East London and Port Elizabeth. IPSA has also been pre-
qualified to participate in Eskom`s Multi-site Baseload IPP Programme.
Under the terms of the contract which has been signed between Elitheni and Indwe
Power (Pty) Ltd ("IPPL"), an indirect subsidiary of IPSA, IPPL will purchase
approximately 1,000,000 tonnes of coal per annum for a period of 20 years (20
million tonnes) for use at its power projects under development in the Eastern
Cape. As further coal is proved up by Elitheni, IPPL intends to increase coal-
fired capacity under development in subsequent later phases. However, given the
greater than anticipated mineable coal resource figures announced by Elitheni,
which gives it the ability to sell more coal for power generation into the
Eastern Cape, IPSA has agreed to broaden its development programme and is
currently looking to enter into binding power purchase agreements with large
South African users of power who are keen to replace electricity demand reduced
under Eskom`s current load-shedding and demand side management programmes.
These programmes have seen large mining houses forced to reduce metals
processing output during 2008 with resultant, costly production losses.
Furthermore, the recently publicised fines for failure to comply with energy
conservation measures are expected to take effect from the first quarter of 2009
is now placing a verifiable price on unsatisfied demand. Announcements late
last week indicate that users who fail to honour the cutbacks in demand will pay
an aggregate cost of ZAR 3 and ZAR 9 per kWh in respect of each unit of
electricity that exceeds their allocation. Current average electricity prices
to industry are reported to be ZAR 0.25 per kWh. As a result of the power
supply crisis in South Africa, IPSA has received approaches from private sector
purchasers of power from its proposed new clean coal capacity.
IPSA is the owner/operator of South Africa`s first independent gas-fired power
plant (IPP), in Newcastle, KwaZulu Natal. IPSA is also one of the pre-qualified
bidders participating in Eskom`s Multi-site Baseload IPP Programme. On 24th
October IPSA announced it has entered into discussions to sell its 501D gas
turbines. The announcement of further coal-fired expansion using state of the
art circulating fluidised bed (CFB) technology has been taken against a
background of worsening power shortages in South Africa in 2008.
For further information contact:
Peter Earl, CEO, IPSA Group PLC: +44 (0)20 7793 5615
Elizabeth Shaw, COO, IPSA Group PLC: +44 (0)20 7793 5615
Nick Naylor / Jamie Boyd,
Noble & Company Ltd: +44 (0)20 7763 2200
(Nominated Adviser and Joint Broker)
Sean Lunn, Hichens, Harrison
(South Africa) Ltd: +27 21 950 2711
(Joint Broker) Allan Piper, Tavistock
Communications (UK PR Advisers): +44 (0)20 7920 3150
PSG Capital (Pty.) Limited +27 11 797 8400
Dino Theodorou / Melissa Harris
(South African Sponsors)
Jacques de Bie/Sugitha Naidoo,
College Hill (South African PR Advisers) +27 11 447 3030
Or visit IPSA`s website: www.ipsagroup.co.uk
28 October 2008
Date: 28/10/2008 10:30:01 Produced by the JSE SENS Department.
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