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Road Town, Tortola, British Virgin Islands (December 20, 2006) – CIC Energy Corp. (“CIC” or the “Company”) (TSX:ELC, BSE: CIC Energy) is pleased to announce that the Company has agreed to acquire Johannesburg-based Southern African Development through Electricity (Pty) Ltd. (“SAD-ELEC”) via a binding Sale of Business Agreement (the “Agreement”).
SAD-ELEC is a leading consultancy group in the Southern African energy sector, with extensive experience in providing energy-related advisory services to utilities, governments, major energy consumers, fuel suppliers and financiers. SAD-ELEC has served as a strategic advisor to CIC since August, 2005, focusing on legal, regulatory and utility issues, power market analysis, commercial arrangements, and transmission integration for the Mmamabula Energy Project (“Mmamabula”) into the Botswana and South African power grids.
Pursuant to the Agreement, a wholly-owned subsidiary of CIC has agreed to purchase SAD-ELEC’s “Core Business”, effective January 1, 2007. This includes SAD-ELEC’s consulting, advisory and management business, along with the services of certain senior executives, including Tore Horvei, Mike Page, Stefan Regardh, Les Kügel and Cosmas Gutu. The senior executives will be managing key aspects of Mmamabula, in particular related to the planned implementation and operations phases. Certain of these executives, plus other SAD-ELEC personnel, will be temporarily seconded to the completion of existing contractual obligations of SAD-ELEC. Commercial terms of the Agreement include a cash payment of R6.5 million (approximately CDN$1.07 million) and the issuance of 130,000 common shares and 100,000 common share purchase warrants of CIC. Each warrant will entitle the holder to purchase one common share of CIC at CDN$11.00 until January 1, 2009. The issuance of the shares and warrants is subject to approval by both the South African Reserve Bank and the Toronto Stock Exchange.
Mr. Gregory Kinross, President and CEO of CIC, states “We are delighted to have SAD-ELEC senior personnel making the transition from their former, limited advisory role to their new role as senior members of the CIC team. The SAD-ELEC executives are leaders in their field, and bring to the Company in-depth knowledge and experience of the Global and Southern African electricity and energy industries and regulatory environment, as well as established relationships with key industry stakeholders in Southern Africa. We believe that they will make a valuable contribution to the growth of CIC, by enhancing the depth of management and professional expertise within the Company.”
Mr. Tore Horvei, the current Chief Executive of SAD-ELEC, will assume the role of Chief Operating Officer (“COO”) of CIC. Mr. Horvei will take over the role of COO from Francois Badenhorst. Mr. Badenhorst will continue to be involved with CIC in an advisory capacity and will move to a new position with another company associated with the Tau Group. The other SAD-ELEC executives will assume senior positions in the wholly-owned CIC subsidiary, as follows: Mr. Mike Page: Vice President – Projects, Mr. Stefan Regard: Vice President – Project Analysis, Mr. Les Kugel: Vice President – Legal and Regulatory, and Mr. Cosmas Gutu: Vice President – Operations.
Mr. Tore Horvei is an economist by training with an M.Sc. (Business) from the Norwegian School of Economics and Business Administration, and more than twenty years of experience covering energy market analysis and demand forecasting, economic and financial analysis of energy projects, tariffs and energy pricing issues, energy industry restructuring, development of legal and regulatory frameworks, and project development and management. He has considerable knowledge of the Southern African electricity supply industry and its development plans. Of particular interest to CIC is his strong background and knowledge of the electricity industries in South Africa and Botswana and of the key industry players in these markets. He has been Project Manager for a number of assignments for regional governments, energy utilities, the Southern African Power Pool (“SAPP”), large electricity and energy users, private investors and financiers. Since August, 2005 he has consulted extensively to CIC. Other recent major projects include Project Manager for the design of a competitive wholesale market for the South African electricity industry, Manager for SAD-ELEC’s support to the Angolan Ministry of Energy and Water on reform on the electricity sector, Project Adviser on team advising the Government of Botswana on potential reform of the Botswana electricity supply industry, Lead Adviser to City Power Johannesburg on restructuring and reform of the electricity distribution industry in South Africa, and Project Manager for a number of private sector clients on generation capacity expansion in the Southern Africa region and electricity price developments.
Mr. Mike Page is a Chartered Engineer, with postgraduate management qualifications and over twenty-five years of professional and management experience in energy utility environments, as well as extensive business development experience from private power projects. He has been Project Manager for a number of key recent SAD-ELEC contracts including the development of an information reporting system for the National Electricity Regulator (NER) of South Africa, Transaction Advisory services to the South African Department of Minerals and Energy for the next off-grid concession in South Africa, and the management of SAD-ELEC’s World Bank financed Management Contract to prepare Lesotho Electricity Corporation (“LEC”) for privatization. Before joining SAD-ELEC he held senior management positions within East Midlands Electricity International (UK) and Powergen International (UK), working extensively in Southern and Eastern Africa, Asia and Australia on business development and various electricity and gas distribution projects.
Mr. Stefan Regardh is an economist and financial analyst with an MBA from the University of Lund in Sweden, combining his financial background with a technical interest. He has 15 years utility management experience from the Sydkraft group (Sweden) in the electricity and natural gas areas and close to fifteen years experience as a specialised energy sector consultant. After leaving Sydkraft he spent a few years as an independent financial consultant in Sweden, before taking up a position as Special Advisor to the Financial Director of the Mozambique power utility Electricidade de Moçambique (EDM), a position he held for four years. Since joining SAD-ELEC in 1996, he has played a key role in assignments for regional governments, power utilities, and power sector investors on electricity industry restructuring issues and electricity pricing and tariff modeling for clients including International Power plc, Globeleq, Xstrata Coal, Kumba Coal, CVRD and PetroSA. He has also undertaken a number of assignments related to electricity and transmission pricing, in South Africa, Namibia and other southern African countries. For a period of two years he also held the position as Deputy Managing Director: Finance of the LEC, as a key member of a SAD-ELEC management team running LEC of a performance based contract.
Mr. Les Kugel is an admitted Advocate with an LLM (Company Law) and BLC LLB. He has extensive experience in the regulatory environment, particularly in regard to energy and agriculture. For four years he was the Chief Legal Advisor to the South African Department of Minerals and Energy (DME) and was responsible for the drafting and implementation of numerous laws, regulations and policy documents. Since joining SAD-ELEC as an Associate in 2000, he has been involved in a number of projects as a Legal and Regulatory Specialist. He has played a key role in the drafting of legislation establishing electricity and gas regulatory authorities in South Africa, the development of the legal and regulatory framework in relation to the establishment of an electricity market in Namibia, South Africa, Swaziland, and Zimbabwe. He has also been responsible for the development of concessions contracts and a light-handed regulatory framework for private electricity concessions in Uganda and Mozambique.
Mr. Cosmas Gutu is a Senior Consultant with a B.SC (Mathematics and Physics joint majors) from the University of Zimbabwe. He has in excess of fifteen years experience in the electrical energy sector within the Southern African Region. Prior to joining SAD-ELEC in 2000, Cosmas worked for the Zimbabwean Electricity Supply Authority (“ZESA”) in the Corporate Planning Department. Responsibilities included conducting cost of supply studies, long-run marginal cost pricing of electricity and tariff design and analysis. He was also responsible for negotiating cross-border supply agreements with neighbouring utilities and for design of special tariffs, such as commodity-linked tariffs for ZESA’s major customers. Over the past five years Cosmas has held various positions on the SAD-ELEC team, providing management services to the LEC, including the role of Managing Director of LEC over the past 18 months. He is currently the Chairperson of the SAPP, with vast exposure to the regional electricity utility environment throughout the Southern Africa region.
About CIC Energy Corp.
CIC is a TSX/BSE-listed company engaged in the advancement of Mmamabula, which includes the Mmamabula East and Mmamabula South prospecting licenses, located in the Mmamabula Coal Fields of southeastern Botswana, 120 kilometres north of the capital city of Gaborone and adjacent to South Africa’s Waterberg Coal Fields. The Southern Africa region is projected to require significant new baseload power generation capacity beginning in 2011. To address this shortfall, the Company is currently conducting a Bankable Feasibility Study on an integrated coal mine and mine-mouth power station at Mmamabula, with the objective of commencing commercial power production in 2011.
CIC has a treasury of approximately CDN$25.1M, and has 43,424,021 shares outstanding and 49,404,111 shares fully diluted. For additional information on CIC and Mmamabula, please visit the Company’s website at www.cicenergycorp.com or contact:
Fiona Childe, Ph.D., P.Geo.
VP Corporate Communications
Tau Capital Corp.
Tel: (416) 361-9636 x 227
Email: fchilde@taucapital.com
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