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Road Town, Tortola, British Virgin Islands (March 26, 2007) – CIC Energy Corp. (“CIC”) (TSX:ELC, BSE: CIC Energy) is pleased to announce the Company has entered into a project development agreement (the “PDA”), subscription agreements and other related agreements with International Power plc (“IPR”) as part of the ongoing development of the Mmamabula Energy Project (“Mmamabula” or the “Project”).
Pursuant to the PDA, CIC and a wholly-owned subsidiary of IPR have agreed to undertake the development of the planned Phase One 2,100 to 2,460 megawatt power station and related 7.5 to 9.0 million tonne per annum coal mine, in which each of CIC and IPR will indirectly hold a 50% interest. The PDA sets out the respective obligations of the parties in respect of Phase One of the Project and provides for the establishment of an executive committee composed of representatives of both CIC and IPR.
Mr. Greg Kinross, President and CEO of CIC, states “Although we have been working extensively and closely as co-sponsors with IPR since the signing of our heads of agreement in October 2006, we are nonetheless very pleased to have entered into these agreements, reaffirming the commitment of the parties to each other and to the Project. With these agreements in place we can focus on finalization of the additional agreements required to reach our planned financial close for Phase One of Mmamabula before the end of 2007”.
Ranald Spiers, IPR’s Regional Director of Middle East & Africa states; "We are delighted to have formalized our partnership with CIC, and remain committed to working with CIC to develop and successfully deliver this major project to help meet South Africa and Botswana's growing demand for power."
Additional Information
Pursuant to the PDA, during the term of the agreement and for a period of at least two years following termination of the PDA, IPR will be restricted from engaging in any power project located within Botswana or any coal fired project, the feasibility of which is based on coal from the Mmamabula coal fields, subject to certain exclusions. The PDA is subject to termination in the event that certain share subscription and shareholder agreements concerning Phase One of the Project terminate, or there is a material breach by a party’s obligations.
As part of these arrangements, an affiliate of IPR has entered into a subscription agreement (the “ME Subscription Agreement”) to purchase an indirect 50% shareholding interest in Botswana-registered Meepong Energy (Proprietary) Limited (“Meepong Energy”), which will hold the interests in the Phase One power station This share subscription is scheduled for closing on or before May 31, 2007, subject to certain conditions precedent, including receipt of legal and tax opinions respecting the transaction and related agreements and the execution of certain agreements. Pursuant to the ME Subscription Agreement, CIC and IPR have agreed to negotiate and enter into an additional share subscription agreement prior to the financial close of the Project's debt funding. Such agreement will provide for the additional share subscription amounts to be paid by each of the parties in order to fund the Phase One power station.
An affiliate of IPR has entered into a subscription agreement (the “MR Subscription Agreement”) to purchase an indirect 50% shareholding interest in Botswana-registered Meepong Resources (Proprietary) Limited (“Meepong Resources”), which holds the Mmamabula East and Mmamabula South prospecting licences in the Mmamabula coal field. This share subscription is scheduled for closing on or before May 31, 2007, subject to certain conditions precedent, including receipt of legal and tax opinions respecting the transaction and related agreements, confirmation that the Government of Botswana has approved or not objected to this share subscription by IPR’s affiliate and the execution of certain agreements. The MR Subscription Agreement is terminable in certain circumstances and in such event, IPR may continue to be the co-developer of the power station project and not participate in the development of the Mmamabula coal fields. It is anticipated that an inter-company loan agreement will be entered into between Meepong Resources and Meepong Energy, pursuant to which Meepong Energy will provide a loan to Meepong Resources for the purpose of financing the development and construction of the mine.
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 over the next several years. 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.
Additional information with respect to Mmamabula is contained in a technical report dated October 19, 2006 and entitled “CIC Energy Corp.: Mmamabula Energy Project, Southeastern Botswana, Project No. J912: Fourth Technical Report”, a copy of which has been filed on SEDAR and may be accessed at www.sedar.com.
CIC has a treasury of approximately CDN$61.1M, and has 47,655,111 shares outstanding and 54,082,361 shares fully diluted. For additional information on CIC and Mmamabula, please visit CIC’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
About International Power plc
IPR is a leading independent electricity generating company with 18,935 MW (net) in operation and 657 MW (net) under construction. IPR has power plants in operation or under construction in Australia, the United States of America, the United Kingdom, the Czech Republic, Italy, Portugal, Spain, Germany, France, Turkey, Bahrain, Oman, Qatar, Saudi Arabia, the UAE, Indonesia, Malaysia, Pakistan, Puerto Rico and Thailand. IPR was listed on the London Stock Exchange and the New York Stock Exchange (as ADR’s) on October 2, 2000. The ticker symbol on both exchanges is “IPR”. For additional information please visit www.ipplc.com. IPR is a FTSE100 company with a market capitalization of approximately US$11.2 billion.
Forward-Looking Statements
This press release contains certain "forward-looking statements". All statements, other than statements of historical fact, that address activities, events or developments that CIC believes, expects or anticipates will or may occur in the future are forward-looking statements. These forward-looking statements reflect the current expectations or beliefs of CIC based on information currently available to CIC. Such forward-looking statements include, among other things, statements relating to the Project with respect to assumptions in respect of future production, goals, objectives, plans and future economic, market and other conditions. Forward-looking statements are subject to significant risks and uncertainties and other factors that could cause the actual results to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on CIC. Factors that could cause actual results or events to differ materially from current expectations include, but are not limited to failure to enter into the required additional agreements with IPR as contemplated by the PDA, the ME Subscription Agreement and/or the MR Subscription Agreement and/or the termination of any of the foregoing agreements; failure to complete a positive bankable feasibility study on Phase One of the Project; delays or failures in obtaining permits and/or licences respecting mining, power generation and/or power transmission lines; inability to enter into power purchase agreements and/or transmission agreements or other requisite agreements, including fixed price contracts with reputable engineering, procurement and construction firms and other agreements required to facilitate the development, operation and financing of Phase One of the Project; failure to raise additional funds on favourable terms to finance such development; inability to obtain tax concessions from the Government of Botswana and requisite credit support from the Government of South Africa and/or the Government of Botswana; political risks arising from operating in Africa; or other factors (including development and operating risks). Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, CIC disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although CIC believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.
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