Multi-asset Africa-focused energy company, Kibo Energy, has acquired 60% equity interest in Mast Energy Developments (MED), a private UK registered company.
The agreement notes that the Company can acquire a 60% shareholding in MED for a consideration of £300,000 payable to existing MED shareholders in new Kibo shares and a share of future project revenue royalties, which will be reinvested in the Company in the short term to an amount of GBP 2.2 million.
The full summary terms of the MOU are described further under the Key Terms in the full report.
MED’s business strategy is to acquire and develop a portfolio of small-scale power generation assets. Various “shovel ready” sites have already been identified in the UK, capable of sustaining gas-fired power generators and ancillary structures from 20MW upwards.
They have full planning permission and permitting in place, long-term lease agreements, grid & gas connection offers and positive feasibility studies, pertaining to technical and commercial viability.
Kibo’s initial review of MED’s business plan indicates that its first asset under acquisition in the UK described above can be up and running within 12 months, thus potentially providing revenue streams to Kibo in the short term. Similar lead time periods from site acquisition to generator installation and power generation are indicated for other projects of similar size in the UK. Read more: Kibo Mining acquires 85% stake in Botswana power project
Financial modelling indicates projected IRRs of 13-16% and NPVs of GBP 16 -19 million for the initial assets described above. MED is exploiting a growing niche market in the UK for small-scale Reserve Power generation to balance out the national grid at critical times.
Louis Coetzee, CEO of Kibo Energy, said: “This proposed acquisition provides Kibo with exposure to near-term revenue generating assets and enables us to combine our knowledge of the power generation market both in mature and emerging markets. There is a distinct short-term revenue generating potential in the UK, which is positive for Kibo and importantly all early-stage royalties payable to the sellers will be reinvested in Kibo.
"This prospect of receipt of gradually increasing revenue streams in the short term as MED builds generating capacity and the re-investment of royalties in the early stages of production will greatly assist the Company’s working capital requirements as it develops its rapidly expanding larger scale energy asset portfolio in Africa. Additionally, it creates a situation where we can expand our product offering and increase our exposure to different sectors of the African energy market.”
Darrel Krowitz, CEO of MAST Energy said: “This acquisition not only provides an opportunity for MED to augment the Kibo Energy portfolio with small-scale power solutions for industry and national grid stability, in southern Africa, but allows it to diversify into the UK’s flexible power markets which we believe will add short and long-term value to Kibo shareholders. I look forward to working closely with the Kibo team as we execute our project development strategy.”