Ncondezi agrees targets for EPC contract

Ncondezi Energy announced on Monday that a target signature date for the engineering, procurement and construction (EPC) power plant contract for the integrated 300MW coal fired power project and coal mine in Tete, Mozambique has been agreed with China Machinery Engineering Corporation (CMEC), with signature reverted for during the third quarter.

The AIM-traded firm also said that a number of funding proposals were being considered, to ensure that it was adequately capitalised to complete the next phase of the project's de-risking milestones.

“The company remains confident in the Ncondezi project's strong merits which include a focus on providing competitively priced power, both in Mozambique and the wider region, in combination with the use of the latest emission control technologies to minimise the plant's impact on the environment and ensure compliance with the most stringent emission standards,” said chief executive officer Hanno Pengilly.

“This confidence is reinforced by agreement of a target signature date with CMEC for the power plant EPC contract of during the third quarter of 2021, which is the main construction contract for the Project and will represent a material de-risking event.

“Whilst project deliverables in 2021 have been slower than expected, the Company, with ongoing support from CMEC, has worked diligently to ensure the Project is properly positioned for success.”

Pengilly said Covid-19 lockdowns and increasing scrutiny on the rationale for new fossil fuel power generation had presented added challenges, but he said the company believed that the project was “sufficiently advanced” and had the necessary support to effectively navigate them, and unlock value through the delivery of key milestones before the end of the year.

“To ensure we are adequately capitalised for the next phase of the project, we are currently considering a number of funding solutions and are confident a solution will be finalised shortly.”

At 1452 BST, shares in Ncondezi Energy were flat at 2.3p.