Ncondezi Energy Limited (LON:NCCL) said it has submitted a historical cost audit report to China Machinery Engineering Corporation (CMEC) for its Ncondezi integrated 300 megawatt (MW) power project in Tete, Mozambique.
The AIM-listed firm said the report covers Ncondezi development expenditure on both the mine and the 300MW coal-fired power project over the last 10 years and has been completed by an international independent audit firm and submitted to CMEC for review.
“The news that the audit report has been completed and submitted to our partner, CMEC ticks off another milestone for the company. This audit work is the most detailed carried out to date, covering 10 years of development costs on both the mine and power plant. Once the report is approved by both parties, the historical costs will be reimbursed as part of the capital investment by Ncondezi at financial close, providing a clear crystallisation of value for Ncondezi shareholders”, Ncondezi chief executive Hanno Pengilly said in a statement.
“Agreement on the historical costs is a key condition precedent for the full form shareholders agreement between Ncondezi and CMEC, and is in addition to the subscription price to be agreed for the 60% share in the project and the project developers fee. The team is very pleased with the progress made to date and continues to work tirelessly to complete the remaining workstreams”, he added.
Losses narrowed in first half
In a separate announcement covering its results for the six months ended June 30, Ncondezi reported a loss for the period of US$1.21mln, narrowed from a US$1.26mln loss in the previous year, while it ended the first half with cash of US$592,000.
Looking ahead, Ncondezi said it is planning to finalise its funding strategy once the impact of the coronavirus pandemic “becomes clearer” and that it will focus on raising funding at the subsidiary level for future construction & industrial (C&I) to ensure its cash reserves are “prioritised for the immediate funding needs of the main project”.
The company also said further funding will be required to meet operating cash flows under current forecasts beyond the fourth quarter of 2020 or in the event of accelerated project advancement.
Shares in Ncondezi were steady at 3.9p in early deals on Tuesday.