REG - Kibo Energy PLC - Acquisition of Advanced UK Waste to Energy Project

Kibo EnergyAnnouncement

21/09/2022 07:45

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RNS Number : 1174A  Kibo Energy PLC  21 September 2022

Kibo Energy PLC (Incorporated in Ireland)

(Registration Number: 451931)

(External registration number: 2011/007371/10)

Share code on the JSE Limited: KBO

Share code on the AIM: KIBO

ISIN: IE00B97C0C31

("Kibo" or "the Company")

 

Dated: 21 September 2022

 

Kibo Energy PLC ('Kibo' or the 'Company')

 

Kibo Bolsters its Renewable Energy Strategy with Acquisition of Advanced UK
Waste to Energy Project

 

Kibo Energy PLC (AIM: KIBO; AltX: KBO) ('Kibo' or the 'Company'), the
renewable energy focused development company, is pleased to announce that it
has signed a definitive Share Purchase Agreement (the 'SPA') to acquire a 100%
interest in a waste reception, Anaerobic Digestor ("AD") and CHP power plant
('Southport' or 'the Project') at Merseyside, United Kingdom.

 

The acquisition of Southport, a 12MW waste-to-energy project in the UK, is in
line with the Company's refocused strategy to acquire and develop an energy
portfolio centered around sustainable renewable / clean energy solutions and
opportunities, as detailed in a Company RNS dated 19 April 2021.

 

Highlights of the Southport SPA:

 

• Kibo Energy will acquire 100% of the total issued share capital of
Shankley Biogas Ltd ("Shankley"), which is developing the Project and who will
also be responsible for the construction and operation of the Project.

• Southport, an AD and power plant at Mersey Side in the UK, comprises an
80,000 tonne waste-reception center, with AD technology that is set to produce
5.5 million m(3) of bio-methane per annum with a 10 MW installed Combined Heat
and Power ("CHP") plant plus planned 2MW battery storage.

• Project rights include all technology license agreements, equipment supply
and maintenance agreements, and related project documentation.

• The transaction consideration is £600,000, payable as £350,000 in
ordinary shares of Kibo at an issue price equal to the 20-day volume-weighted
average price ('VWAP') of the 20 days preceding the closing date of the
acquisition, and £250,000 in cash to be paid as £50,000 within 14 days of
the closing date, an amount of £75,000 on the earlier of the date on which
the new board of directors of Shankley shall have approved a final financial
model and project investor memorandum for debt and project funding following
the closing date, or  on financial close, and £125,000 on reaching financial
close.

• Shankley Biogas Ltd has negotiated a Power Purchase Agreement ('PPA') and
a Gas Purchase Agreement ('GPA') term sheet on favourable terms with a
blue-chip buyer.

• The Project has full planning permission as well as grid and gas
connection points already in place.

• Based on independent financial estimates, prepared by reputable and
appropriately accredited consulting firm, the projected valuation metrics for
the Project are summarised as follows:

- Internal rate of return ('IRR') of c. 22.78%

- Net Present Value (6%) ('NPV') of c. £47 million

- Net Asset Value ('NAV') of c. £22 million

- Projected average annual revenue of c. £24 million over a 25-year term.

- Estimated Operating margin c. 38%

- Capital estimated of c. £.35m

 

The above financial projections have been provided by Shankley and its
consultants. Whilst these figures have been reviewed by Kibo, following
completion of the transaction further review is ongoing and these estimates
remain subject to change.

 

Louis Coetzee, CEO of Kibo Energy, says: "We believe this opportunity supports
our strategic intent to significantly advance and accelerate the development
of the Company's renewable energy portfolio in the United Kingdom. The project
further deliberately and actively drives Kibo's transition from fossil
fuel-based energy solutions to sustainable renewable energy solutions and will
now bring our waste-to-energy ('WTE') portfolio to an aggregate of c.140,000
MWh per annum, with this entire capacity expected to go into production over
the next 12 to 18 months. The Company furthermore expects to further advance
its renewable / clean energy portfolio with the ongoing work related to
converting its existing energy projects in Tanzania, as announced in a Company
RNS dated 27 May 2022.

 

This is indeed an exciting new chapter in the business, one that aligns with
the UK's move to an electricity system that is secure, affordable and employs
increasing amounts of variable renewable energy generation options, as stated
in the 2016 report by the Carbon Trust, in collaboration with the Imperial
College, 'An Analysis of Electricity System Flexibility for Great Britain'".

 

The Project

Southport is located at Merseyside in Northwest England, United Kingdom, and
comprises a waste-reception centre designed to accept up to 80,000 tonnes of
'trommel fines' (also known as municipal solid waste or 'MSW fines') per
annum. The waste reception centre and power plant utilise anaerobic digestion
technology that will create 5.5 million cubic metres (m(3)) of bio-methane
combined with a 10 MW CHP plant. The primary purpose of the plant will be to
produce an organic fraction from the incoming waste, which will be processed
through anaerobic digestion to generate bio-methane that will, in turn, be
exported to the UK's national gas grid network. The CHP plant will generate
electricity to be utilized for internal usage of the AD facility (c.2 MW) and
to be exported to the local grid (c.8 MW). Southport is also planning a 2MW
battery storage facility.

 

The Transaction

The Company continues to advance its strategy to rapidly grow its renewable
energy portfolio and capitalise on sustainable growth that will deliver
long-term value for shareholders. In line with this, the Company has signed an
SPA to acquire the Southport waste gasification and power plant.

 

Under the terms of the Agreement, Kibo Energy will acquire 100% of Shankley
Biogas Ltd, including all its rights and obligations for the development,
construction and operation of Southport. The purchase consideration is
GBP600,000 with £350,000 payable as ordinary shares of the Company at an
issue price equal to the 20-day volume-weighted average price ('VWAP') of the
20 days preceding the closing date of the acquisition. The balance of
£250,000 payable in cash, is to be paid as £50,000 within 14 days of the
closing date, an amount of £75,000 on the earlier of the date on which the
new board of directors of Shankley shall have approved a final financial model
and project investor memorandum for debt and project funding following the
closing date, or on financial close, and £125,000 on reaching financial
close.

 

Project rights include all technology license agreements, all equipment supply
and maintenance agreements, held by Shankley Biogas Ltd. This includes the
agreed projects configuration ('scope of work') with Anaergia Ltd, a global
technology and process engineering company that provides integrated solutions
and technologies for the processing of waste streams. The scope of work
includes the full engineering, procurement and construction of the Southport
plant based on a fixed-price, lump-sum contract for the capital works scope
and a separate minimum five-year duration contract to technically operate the
Southport plant in its entirety.

 

In addition to negotiating a Power Purchase Agreement ('PPA') and a Gas
Purchase Agreement ('GPA') term sheet on favourable terms with a blue-chip
buyer, Shankley Biogas Ltd has already secured import and export grid
connection points for both gas and electricity. The Project furthermore has
planning permission in place that considers the ecological, safety and
sustainable improvements as well as development of the local environment.

 

Shankley Biogas Ltd as at 31 December 2020 had total assets of £66,339 and
total net liabilities of £650. Losses of £750 were noted in the 12 months to
31 December 2020.

 

Important Information for Shareholders

 

Kibo shareholders should be aware that all financial numbers as stated herein
remain subject to change until such a time as actual production figures are
available, following a suitable period of steady state operation. The
projected returns are also subject to Project funding being secured on terms
in line with the Board's current expectation on equity, debt levels and rates,
in which case the Project's returns, as set out above, could be materially
impacted.

 

**ENDS**

 

This announcement contains inside information as stipulated under the Market
Abuse Regulations (EU) no. 596/2014 and is announced in accordance with the
Company's obligations under Article 17 of the specified Regulation.

 

For further information please visit www.kibo.energy (http://www.kibo.energy)
or contact:

 

 Louis Coetzee                  info@kibo.energy (mailto:info@kibo.energy)                                Kibo Energy PLC             Chief Executive Officer
 Andreas Lianos                 +357 99 53 1107                                                           River Group                 JSE Corporate and Designated Adviser
 Claire Noyce                   +44 (0) 20 3764 2341                                                      Hybridan LLP                Joint Broker
 Damon Heath                    +44 207 186 9952                                                          Shard Capital Partners LLP  Joint Broker
 Bhavesh Patel / Stephen Allen  +44 20 3440 6800                                                          RFC Ambrian Ltd             NOMAD on AIM
 Zainab Slemang van Rijmenant   zainab@lifacommunications.co.za (mailto:zainab@lifacommunications.comza)  Lifa Communications         Investor and Media Relations Consultant

 

Johannesburg

21 September 2022

Corporate and Designated Adviser

River Group

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