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Road Town, Tortola, British Virgin Islands (January 24, 2008) – CIC Energy Corp. (“CIC Energy” or the “Company”) (TSX:ELC, BSE: CIC Energy) is pleased to provide an update on the Mmamabula Energy Complex in Botswana, Africa. The Mmamabula Energy Complex is comprised of the Mmamabula Energy Project, the coal-to-hydrocarbons project (the “CTH Project”) and the initiative to evaluate the best options available for exporting coal from the Company’s Mmamabula Coal Field.
The current Mmamabula coal resource estimate exceeds projected coal consumption for both Phase One and Phase Two power plants for the Mmamabula Energy Project. In addition, ongoing exploration is expected to lead to a further increase in the coal resource.
Updates on the Company and the Mmamabula Energy Complex in this news release are:
- Exploration
- Mmamabula Energy Project
- Coal-To-Hydrocarbons Project
- Export Coal Opportunities
- Addition to S&P/TSX Global Mining Index
Exploration
In excess of 160,800 metres in over 1,800 diamond drill holes have been completed at the Company’s Mmamabula Coal Field as of the end of December 2007, and a total of eight diamond drill rigs are currently active.
Exploration drilling is now focused on the Border Block which has been targeted for export markets as this high quality coal is believed to meet the requirements of the seaborne traded energy coal. The drilling program at the Border Block is expected to be completed by the end of March 2008. Drilling at the Serorome Block was completed in December 2007 for the purpose of upgrading the resource classification from the inferred to the measured category. A further twenty confirmatory boreholes were planned for the Serorome Block; fifteen of these holes have been drilled and sampled, while the remaining five will be drilled in January 2008. At the Mookane Block, drilling of seventeen closely-spaced boreholes (50m apart) to identify possible micro-structures along the main underground development was completed in October 2007 and the data is currently being evaluated. A programme of ten large diameter boreholes has been started to obtain samples of sufficient mass for advanced physical and chemical analyses; these results will be used in the design of the power station boilers.
The Company is targeting the release of a NI 43-101 mineral resource estimate update in mid-2008.
Mmamabula Energy Project
The Company anticipates announcing the selection of the Engineering, Procurement and Construction (“EPC”) contractor for the Mmamabula Energy Project (the “Project”) shortly.
Discussions with Eskom Holdings Limited and Botswana Power Corporation on Power Purchase Agreements (“PPA”) are ongoing. The Bankable Feasibility Study for Phase One of the Project is expected to be finalized on the conclusion of the definitive EPC contract and the signing of the PPAs. All the technical components of the study are now substantially complete.
Since the Company’s Project schedule update last fall, strong demand for power plant builds and prevailing engineering resource constraints, even with the world’s largest contractors, have continued to increase lead times for power plant equipment and construction services. The Company today announces further revisions to the Project schedule of approximately four to six months. Revised schedule estimates are as follows:
- Financial Close for Phase One of the Project is targeted for the fourth quarter of calendar 2008, immediately followed by the commencement of construction, also in the fourth quarter. (Financial Close is the date of the execution of definitive project loan agreements and the satisfaction and/or waiver of all conditions precedent to the advancement of funds.) The PPAs and definitive EPC contract will be signed prior to Financial Close.
- Commercial operations of the first unit of the power plant is expected in late 2012 / early 2013. The second and third units of Phase One are scheduled to come on-line at six month intervals following the first unit.
New legislation in Botswana to facilitate the Project has received approval from the Government of Botswana cabinet and passed the third and final Parliamentary reading. These bills to amend the country’s Mines and Minerals Act and Electricity Supply Act will become law following Presidential approval and gazetting.
The Mmamabula Energy Project is one of the few major projects that can meet the urgent demand for new baseload capacity in Southern Africa.
Coal-To-Hydrocarbons (CTH) Project
The Company is rapidly advancing the coal-to-hydrocarbons project which is intended to produce synthesis gas (“syngas”) from coal which can be converted to a variety of downstream products including petrochemicals, gas and fuels. At Mmamabula the Serorome and Dovedale Blocks are being considered for the CTH Project. Drilling results have indicated that the coal qualities of both Blocks are suitable for gasification.
A “blue chip” technology partner is anticipated for this large scale project and preliminary discussions with a number of potential joint venture partners have commenced. Separate technology licenses are envisaged for the coal gasification and downstream conversion facilities that could produce fuels (such as gasoline, diesel or jet fuel) or petrochemicals (such as methanol, ethanol, hydrogen or ethylene). Methanol can be used as a cheaper and cleaner fuel substitute for small diesel-fired power plants in Africa. Cogeneration, converting waste heat to steam and power, is also being investigated as well as the sale of syngas for use as fuel and with some conversion for use as industrial gas.
The initial market study currently being conducted by Wood Mackenzie, along with other factors, will assist the Company in determining the most attractive products which could be manufactured from the syngas. This study, which is expected to be completed in the first quarter of 2008, will complement the feasibility study being conducted by Jacobs Engineering, which will be completed in the second quarter of 2008.
Export Coal Opportunities
The Company is actively investigating ways to fast-track export coal opportunities for the Border Block at Mmamabula. The profit margin on this opportunity is potentially attractive for CIC Energy with current spot coal prices of up to US$100/tonne FOB Richards Bay for 27MJ A grade steam coal, provided a viable transport solution is found.
While current rail infrastructure is not adequate for large scale export via Richards Bay, South Africa, major expansion of rail infrastructure in the region is anticipated in approximately four years. New rail capacity is expected to be built to serve the Waterberg Coal Field in South Africa, which adjoins the Mmamabula Coal Field. As coal resources in South Africa’s Witbank Coal Field are depleted, the Waterberg is expected to replace it as the primary source for coal for export markets. Significant new rail capacity is required to accomplish this and South Africa’s Chamber of Mines is expected to form an industry working committee shortly to address this matter. The Company is also exploring alternative export routes to the west coast of Africa.
ELC added to S&P/TSX Global Mining Index
The Company is also pleased to report that it has been added to the S&P/TSX Global Mining Index, effective December 24, 2007. To be eligible for this index, companies must have a market capitalization of at least US$300 million and meet three liquidity criteria.
About CIC Energy Corp.
CIC Energy is a TSX/BSE-listed company engaged in the advancement of the Mmamabula Energy Project, a planned power station and integrated coal mine in Botswana. The Mmamabula Energy Project is in partnership with International Power plc (LSE listed), a leading independent electricity generating company. The Southern Africa region is projected to require significant new baseload power generation capacity over the next several years. The Mmamabula Energy Project is located in the Mmamabula Coal Field of southeastern Botswana, 120 kilometres north of the capital city of Gaborone and adjacent to South Africa’s Waterberg Coal Field. The majority of the electricity generated is intended for export under a long-term power purchase agreement to South Africa’s national utility, Eskom Holdings Limited. Phase One of the Mmamabula Energy Project is planned as a 2,100 to 2,460 megawatt (MW) power plant with an integrated 7.5 to 9.0 million tonne per annum coal mine scheduled to be in commercial operation in late 2012 or early 2013.
Ms. Lesley Jeffrey is the “Qualified Person” for the exploration and development programmes on the Mmamabula Coal Field within the meaning of NI 43-101. Ms. Jeffrey is employed by Bon-Terra, a subsidiary of CIC Energy. Ms. Jeffrey has reviewed and approved the technical information in this news release.
CIC Energy has a treasury of approximately CDN$118 million. For additional information on the Company and the Mmamabula Energy Project, please visit CIC Energy’s website at www.cicenergy.com or contact:
Erica Belling, CFA, P.Eng.
VP Investor Relations
Tau Capital Corp.
Tel: (416) 361-9636 x 243
Email: ebelling@taucapital.com
Forward-Looking Statements
This news release contains certain "forward-looking statements". All statements, other than statements of historical fact, that address activities, events or developments that the Company 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 the Company based on information currently available to the Company. Such forward-looking statements include, among other things, statements relating to the Mmamabula Energy Project, the CTH Project and the export coal opportunities with respect to estimates and/or assumptions in respect of mineral resources, targets, 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, the Company. Factors that could cause actual results or events to differ materially from current expectations include, but are not limited to: failure to complete a positive bankable feasibility study on the Mmamabula Energy Project; failure to complete, or delays in the completion of, positive feasibility and market studies on the CTH Project; failure to obtain a viable transportation solution to export coal and/or failure to enter into export coal purchase agreements; the grade, quality and recovery of coal which is mined varying from estimates; inflation; changes in exchange rates; the ability to raise the required debt financing for the Mmamabula Energy Project; further delays in the development of the Mmamabula Energy Project caused by unavailability of equipment, labour or supplies, limited capacity among engineering, procurement and construction firms, climatic conditions or otherwise; insufficient transportation and transmission capacity; geological and mechanical conditions; delays or failures in obtaining regulatory permits and/or licences respecting mining, power generation and/or power transmission lines; the existence of undetected or unregistered interests or claims, whether in contract or tort, over the properties of the Company; availability of water and sorbent (at cost effective prices); inability to enter into power purchase agreements and/or transmission agreements with Eskom Holdings Limited and (to a lesser extent) Botswana Power Corporation or other requisite agreements, including preliminary and/or definitive fixed price contracts with reputable engineering, procurement and construction firm(s) and other agreements required to facilitate the development, operation and financing of the Mmamabula Energy Project, including with International Power plc; 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; failure to enter into technology and other agreements required to develop the CTH Project; the failure to receive final approvals for the above described amendments to Botswanan statutes; 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, the Company 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 the Company 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.
Mineral resources that are mineral reserves do not have demonstrated economic viability.
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