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Road Town, Tortola, British Virgin Islands (October 18, 2006) – CIC Energy Corp. (“CIC” or the “Company”)(TSX:ELC, BSE: CIC Energy) is pleased to announce the signing of a binding Heads of Agreement (the “Agreement”) between the Company and International Power plc (“IPR”), regarding the proposed development of a power station at the Mmamabula Energy Project (“Mmamabula” or the “Project”) in Southern Africa.
Under the terms of the Agreement, IPR has agreed in principle to acquire 50% of the equity in the vehicle which will develop the Mmamabula coal-fired power station. It is envisaged that the power output from the plant will be sold under a long-term Power Purchase Agreement (“PPA”), predominantly to Eskom Holdings Limited (“Eskom”), South Africa’s national electrical utility, with the balance to Botswana Power Corporation, Botswana’s national electricity utility. The total development cost of the first phase 2,400 to 3,600 megawatt (“MW”) power station, with final size still to be determined, will be in excess of US$5 billion (approximately CDN$5.64 billion). The Agreement is subject to various conditions being met and the concluding of definitive agreements. These definitive agreements are expected to be finalized by the end of Q4/06 and construction is scheduled to commence in Q4/07, subject to a PPA being concluded, financing secured and all regulatory conditions being met.
IPR is one of the world’s leading independent power generators, with 18,234 MW of annual capacity (net) in operation and a further 915 MW (net) under construction in 39 projects in 18 countries worldwide. IPR has a market capitalization of £5.0 billion (approximately CDN$10.6 billion) and trades on the London and New York Stock Exchanges.
Mr. Gregory Kinross, CEO of CIC, states “Today’s announcement regarding the selection of a development partner for the power station at Mmamabula is a significant milestone for CIC. Along with an excellent reputation globally, IPR has the knowledge and depth of operational experience we were looking for in an independent power producer for the Project. Furthermore, IPR’s commitment to maintaining the highest standards of corporate social responsibility is consistent with that of CIC.”
Philip Cox, Chief Executive of IPR, states, “We are very pleased to have signed this Agreement for the proposed development of the Mmamabula power station, the first major independent power project in the region. Southern Africa is a market we have been researching for a number of years. The Project has an excellent commercial structure with a proposed long-term PPA. We look forward to working closely with CIC, whose management team has significant experience in minerals and natural resource development.” About CIC Energy Corp.
CIC is a TSX/BSE-listed company engaged in the advancement of Mmamabula, which includes the Mmamabula East and Mmamabula South prospecting licenses, located in the Mmamabula Coal Fields of southeastern Botswana, 120 kilometres north of the capital city of Gaborone and adjacent to South Africa’s Waterberg Coal Fields. The Southern Africa region is projected to require significant new baseload power generation capacity beginning in 2011. To address this shortfall, the Company is currently conducting a Bankable Feasibility Study on an integrated coal mine and mine-mouth power station at Mmamabula, with the objective of commencing commercial power production in 2011.
CIC has a treasury of approximately CDN$ 33.3M, and has 43,324,021 shares outstanding and 49,384,111 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
For additional information on IPR, please visit www.ipplc.com or contact:
Anna Hirst
Investor Relations Manager
International Power plc
Tel: +44 (0)20 7320 8788
Email: anna.hirst@ipplc.com
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 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 with respect to 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; the grade, quality and recovery of coal which is mined varying from estimates; fluctuations in coal and electricity prices; inflation; changes in exchange rates; delays in the development of the Mmamabula Energy Project caused by unavailability of equipment, labour or supplies, climatic conditions or otherwise; delays or failures in obtaining regulatory permits and/or licences respecting mining, power generation and/or power transmission lines; availability of water at cost effective prices; inability to enter into a power purchase agreement and/or transmission agreement with Eskom Holdings Limited; inability to enter into a joint venture agreement with a major mining company to develop and operate the proposed coal mine; the termination of the Heads of Agreement with IPR, the inability to enter into a definitive project development agreement with IPR respecting the power station; and/or failure to raise additional funds to finance the development of the coal mine or power station; political risks arising from operating in Africa; or other factors (including exploration, 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.
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