CIC Energy vulnerable to a takeover bid

Staff Writer
Global bankers have warned CIC Energy that it could be subject to some sort of corporate takeover by another large player in the region due to its rich Mmamabula resource.

The size of the Mmamabula resource is 2.3 billion tonnes.
CIC Energy CEO Warren Newfield admitted to Miningmx online that they feel the company is vulnerable at this point particularly with the value and progress of the project.

"There are very few projects in the world that are multi-billion tonnes in a jurisidiction like Botswana (Mmamabula) that are fully permitted and ready to go into production."

Asked how the company could protect itself, he said: "The trick is to keep our investors totally abreast of what is happening and to try get the development news into the market as quickly as we can about the other projects, which we believe will lock substantial value for shareholders and they can appreciate the magnitude of the asset."

CIC hopes to inform investors shortly about its plans for a coal-to-hydrocarbons project as well as coal exports through a yet-to-be-constructed rail link from southeastern Botswana across Namibia to a port.

On Monday CIC Energy said it is considering building a smaller power plant at its Mmamabula energy project because potential clients like South African power utility Eskom and the Botswana Power Corporation could not come to an agreement on assuming risk in the project.

Moody's rating agency said last week the Mmamabula energy project is in danger

of being scrapped or down-sized after costs soared to almost triple the initial estimate of $6bn.
The MEP includes a coal mine and a 2,100 to 2,400 megawatt power plant. Kristin Lindow, Moody's senior vice president and Botswana sovereign analyst, told Reuters costs were now seen at about $16bn.

"CIC Energy intends to assess and consider alternative configurations for the Phase One Mmamabula Energy Project to supply power for the region's growing needs," CIC president Greg Kinross said in a statement.

"One alternative is downsizing the project to a smaller power station," he said, adding there were a number of engineering companies excluded when looking at building the large plant that could construct the smaller plant.

The lenders CIC had spoken to wanted one of the offtake parties to assume some of the risk in the project, but talks failed to reach any conclusion at the expiry of the deadline set by the prefered engineering, procurement and construction company that was to build the large power project.

Mmamabula had featured in Eskom's plans to increase power supply to its consumers in South Africa, which are experiencing electricity shortages. Most mining and large industrial companies are operating at 90 percent of normal consumption. Eskom has battled with unplanned maintenance and depleted coal stockpiles.



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