MOU Extension – Phulbari Coal Mine Development
Updated : 07:01
The information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation.
13 December 2024
GCM Resources plc
("GCM" or the "Company")
MOU Extension - Phulbari Coal Mine Development
GCM Resources plc (AIM: GCM), the AIM traded mining and energy company, announces that Power Construction Corporation of China, Ltd. ("PowerChina") has agreed to an extension of the memorandum of understanding ("MoU") for a period of a further 12 months from 6 December 2024 to 6 December 2025 on the same terms as the previous memorandum of understanding which is primarily focused on the Phulbari coal mine development.
On 27 November 2018 the Company originally announced the entry into the MoU. The MoU was previously extended for 12 months from 6 December 2023 to 6 December 2024, details of which were announced by the Company on 28 November 2023.
It is acknowledged that working under the MOU the parties have already taken a significant step towards developing the Phulbari coal mine. This is demonstrated by the signing of an EPC contract for "Phulbari Coal Mining Infrastructure Construction and Overburden Stripping", which was announced by the Company on 11 March 2024. The scope of work under this contract includes design, procurement, installation and commissioning of mine infrastructure and overburden removal, dewatering and drainage. It also includes selective mining and stockpiling of valuable industrial mineral co-products that occur in the overburden and are expected to deliver considerable cashflow for the Project ahead of any coal extraction. Importantly, the proposed mine development is now heading in the direction of contract mining which means that the mining is carried out by an experienced mining contractor utilising their own resources and mining equipment resulting in reduced technical risk and start-up capital expenditure requirement.
Working under this extended MOU, GCM and PowerChina aim to determine the modality for PowerChina to become involved in other packages of work and financing that are necessary to fully develop the Phulbari coal mine. PowerChina's involvement as a Mine Development Partner remains subject to the approval of PowerChina internal compliance and all other relevant regulatory agencies.
Over the past decade, Bangladesh has experienced considerable expansion of its power generating capacity. However, it did so by relying on imported fuel and not promoting extraction of its domestic coal and gas resources. Bangladesh's installed coal-fired power capacity currently stands at over 8,000MW (commissioned and soon to be commissioned). This represents an investment of some US$20 to 30 billion, predominantly in the latest High Efficiency - Low Emission (HELE) ultra-supercritical coal fired power plant technology with an annual coal supply demand of some 19 million tonnes of coal of the quality of the Phulbari reserves. GCM remains confident that by developing the proposed Phulbari coal mine, the Country will take a significant step away from an almost total dependance on expensive imported energy.
Michael Tang, Chief Executive of GCM, commented: "Working under the MOU, GCM and PowerChina will have the opportunity to finalise the remaining work packages necessary to bring the Phulbari coal mine into production. It also further strengthens our working relationship and demonstrates our ability to bring the Project to fruition. Having PowerChina as our Development Partner will greatly assist with obtaining the necessary Government approval and demonstrating that the proposed Phulbari coal mine will provide a large reliable supply of affordable commercial energy that will reduce the Country's dependance on expensive imported energy products."
For further information please contact:
GCM Resources plc Keith Fulton, Finance Director
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Allenby Capital Limited Nominated Adviser and Joint Broker John Depasquale / Vivek Bhardwaj
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Axis Capital Markets Limited Joint Broker Ben Tadd / Lewis Jones
| Tel: +44 (0) 203 026 0320 |
About GCM Resources plc
GCM Resources plc (LON: GCM), the AIM listed mining and energy company, has identified a high-quality coal resource of 572 million tonnes (JORC 2004 compliant) at the Phulbari Coal and Power Project (the "Project") in north-west Bangladesh.
Utilising the latest highly energy efficient power generating technology the Phulbari coal mine can support some 6,600MW. GCM requires approval from the Government of Bangladesh in order to develop the Project. The Company has a strategy of linking the Company's mine proposal to supplying coal to the Government of Bangladesh's existing and in the pipeline coal-fired power plants and / or power plants developed development partners. Together with credible, internationally recognised strategic development partners, GCM aims to deliver a practical power solution to provide the cheapest coal-fired electricity in the country, in a manner amenable to the Government of Bangladesh.
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