African Energy (AFR) said conditions precedent to the conclusion of the Sese JV Shareholders Agreement has been met and First Quantum Minerals (FQM) will acquire a stake in the Botswana based project.
According to the company, the deal gives FQM the go ahead to purchase an initial 51% stake in African Energy Holdings SRL (AFRH) for $8m and will become project manager for the Sese Project.
“FQM will invest a further $12m within 18 months to earn an additional 24% stake in AFRH,” African Energy said. “The $12m funding for AFRH will be used to immediately investigate the development of power generation projects at Sese.”
Once FQM has earned its 75% stake, AFR’s 25% interest will be funded by FQM and loan carried through to the start of commercial operations. AFR’s 25% carried interest will be financed under the same terms as FQM’s majority stake, with FQM to arrange the full financing for each project.
“On receipt of the $8m initial investment, AFR will have approximately $10m working capital and no debt, and a 25% carried interest in new power projects being developed at Sese.” AFR retains 100% ownership of the Mmamabula West and Mmamantswe coal and power projects in Botswana.