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Kibo eyes revenue streams as it lines up investment in UK power project company

Published: 02:28 15 Aug 2018 EDT

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If it pushes the button, Kibo will issue shares to acquire a 60% stake in MED

Kibo Energy PLC's (LON:KIBO) has moved outside of its normal sphere of operations to buy a stake in a UK power project company.

The Africa-focused energy company has signed a memorandum of understanding (MOU) to take a 60% stake in Mast Energy Developments (MED), a company targeting the development and operation of flexible power plants to service the reserve power generation market.

READ: Kibo places shares at a "significant premium"

Under the terms of the MOU, Kibo can acquire a 60% shareholding in MED for a consideration of £300,000 payable in new Kibo shares and a share of future project revenue royalties, which will be used by the recipients to buy more Kibo shares up to the value of £2.2mln.

MED has identified various "shovel ready" sites in the UK that are capable of sustaining gas-fired power generators and ancillary structures from 20 megawatts upwards. The sites have full planning permission and permitting in place, long-term lease agreements, grid & gas connection offers and positive feasibility studies, pertaining to technical and commercial viability, Kibo said.

Kibo believes that the first asset acquired by MED can be up and running within 12 months, thus potentially providing revenue streams for Kibo.

"This proposed acquisition provides Kibo with exposure to near-term revenue generating assets and enables us to combine our knowledge of the power generation market both in mature and emerging markets,” said Louis Coetzee, the chief executive officer of Kibo.

“There is a distinct short-term revenue generating potential in the UK, which is positive for Kibo and importantly all early-stage royalties payable to the sellers will be reinvested in Kibo. This prospect of receipt of gradually increasing revenue streams in the short term as MED builds generating capacity and the re-investment of royalties in the early stages of production will greatly assist the company's working capital requirements as it develops its rapidly expanding larger scale energy asset portfolio in Africa. Additionally, it creates a situation where we can expand our product offering and increase our exposure to different sectors of the African energy market," he added.


 

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