African Energy says it has executed a binding term sheet with an experienced South African project developer for the sale of its 100% owned Mmamantswe coal and power project.

According to the company, the developer will form a bid consortium which will sole fund the preparation and submission of a bid into South Africa’s coal fired base load IPP procurement programme using Mmamantswe project.

Equally, African Energy will be paid an initial sum of $10 million if the project bid is shortlisted by the South Africa’s Department of Energy.

“On receipt of the initial $10m, African Energy will transfer ownership of its shares in the Mmamantswe project to the developer,” a statement said.

African Energy will then receive a second payment of $10m if the project reaches financial close.

“The conditions precedent include completion of due diligence by the buyer within 30 days, delivery of a bank guarantee or the creation of an escrow for the initial $10m payment within 60 days and completion of a Share Sale Agreement within 60 days”.

However, African Energy retains 100% ownership of Mmamabula West coal and power project in Botswana and 49% project interest in the Sese Joint Venture, which is 51% owned and managed by First Quantum Minerals Ltd.