African Energy signs EPC Contract for Sese project

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African Energy Resources Limited, the company developing Sese Power Project says it has signed a Memorandum of Understanding with a significant international engineering, procurement and construction contractor in relation to the proposed 300MW coal‐fired power project and associated mine.

The company update says the agreement is for the EPC Contractor to provide engineering and consultancy services to assist AFR in the completion of its Bankable Feasibility Study for the Sese Power Project.

“Also for the engineering, procurement and construction of the Sese Power Project, of which would be subject to a number of conditions, including the raising of adequate project financing,” says the company.

“It is envisaged that benefits that will flow from using this EPC contractor will include improvements on the conceptual power station design and savings in time and cost due to early mobilisation from their current project in Botswana.”

African Energy also reveals the geotechnical assessments have commenced to test the ground conditions for the power plant location and associated infrastructure, including the mine and coal delivery systems.

It states the preliminary discussions have been held with banks and other institutions in relation to the project finance package with strong interest being received. Engagement with the respective finance groups will continue over the next 6 months in parallel with the off‐take and construction negotiations.

“Discussions are continuing with two potential power station operators for the Operations and Maintenance contract,” says African Energy.

The Sese project comes at a time when there is need for independent power producers to help state owned utilities in the region including Botswana Power Station (BPC) and Eskom struggling to meet power needs.

Sese project has the potential to meet the needs of the region and the country. BPC is building its own P11 billion 600 MW power project that was expected to be fully operational by the December.

African Energy also announced that it has approved a resource drilling programme for the Sese West coal target, and that drilling will commence in a few days.

The tenement covers an area of 229km2 and is approximately 1.0 to 1.5km south of the 2.5 billion tonne Sese coal deposit hosted in the Company’s prospecting licence PL96/2005

In June 2011 the Company announced that it had discovered coal on PL197/2007 during the course of exploration drilling to test weak uranium anomalism.

Access track clearing and drill pad preparation for this programme has already commenced, and drilling is expected to commence within three days. The Company expects that the drilling programme will be completed in 6‐8 weeks and that analytical results will be available in the first quarter of 2013. The programme should be sufficient to allow the classification of an inferred resource.

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