Kibo Bolsters its Renewable Energy Strategy with Acquisition of Advanced UK Waste to Energy Project
Kibo Energy PLC (AIM: KIBO; AltX: KBO) (‘Kibo’ or the ‘Company’), the renewable energy focused development company, is pleased to announce that it has signed a definitive Share Purchase Agreement (the ‘SPA’) to acquire a 100% interest in a waste reception, Anaerobic Digestor (“AD”) and CHP power plant (‘Southport’ or ‘the Project’) at Merseyside, United Kingdom.
The acquisition of Southport, a 12MW waste-to-energy project in the UK, is in line with the Company’s refocused strategy to acquire and develop an energy portfolio centered around sustainable renewable / clean energy solutions and opportunities, as detailed in a Company RNS dated 19 April 2021.
Highlights of the Southport SPA:
• Kibo Energy will acquire 100% of the total issued share capital of Shankley Biogas Ltd (“Shankley”), which is developing the Project and who will also be responsible for the construction and operation of the Project.
• Southport, an AD and power plant at Mersey Side in the UK, comprises an 80,000 tonne waste-reception center, with AD technology that is set to produce 5.5 million m 3 of bio-methane per annum with a 10 MW installed Combined Heat and Power (“CHP”) plant plus planned 2MW battery storage.
• Project rights include all technology license agreements, equipment supply and maintenance agreements, and related project documentation.
• The transaction consideration is £600,000, payable as £350,000 in ordinary shares of Kibo at an issue price equal to the 20-day volume-weighted average price (‘VWAP’) of the 20 days preceding the closing date of the acquisition, and £250,000 in cash to be paid as £50,000 within 14 days of the closing date, an amount of £75,000 on the earlier of the date on which the new board of directors of Shankley shall have approved a final financial model and project investor memorandum for debt and project funding following the closing date, or on financial close, and £125,000 on reaching financial close.
• Shankley Biogas Ltd has negotiated a Power Purchase Agreement (‘PPA’) and a Gas Purchase Agreement (‘GPA’) term sheet on favourable terms with a blue-chip buyer.
• The Project has full planning permission as well as grid and gas connection points already in place.
• Based on independent financial estimates, prepared by reputable and appropriately accredited consulting firm, the projected valuation metrics for the Project are summarised as follows:
– Internal rate of return (‘IRR’) of c. 22.78%
– Net Present Value (6%) (‘NPV’) of c. £47 million
– Net Asset Value (‘NAV’) of c. £22 million
– Projected average annual revenue of c. £24 million over a 25-year term.
– Estimated Operating margin c. 38%
– Capital estimated of c. £.35m
The above financial projections have been provided by Shankley and its consultants. Whilst these figures have been reviewed by Kibo, following completion of the transaction further review is ongoing and these estimates remain subject to change.
Louis Coetzee, CEO of Kibo Energy, says: “We believe this opportunity supports our strategic intent to significantly advance and accelerate the development of the Company’s renewable energy portfolio in the United Kingdom. The project further deliberately and actively drives Kibo’s transition from fossil fuel-based energy solutions to sustainable renewable energy solutions and will now bring our waste-to-energy (‘WTE’) portfolio to an aggregate of c.140,000 MWh per annum, with this entire capacity expected to go into production over the next 12 to 18 months. The Company furthermore expects to further advance its renewable / clean energy portfolio with the ongoing work related to converting its existing energy projects in Tanzania, as announced in a Company RNS dated 27 May 2022.
This is indeed an exciting new chapter in the business, one that aligns with the UK’s move to an electricity system that is secure, affordable and employs increasing amounts of variable renewable energy generation options, as stated in the 2016 report by the Carbon Trust, in collaboration with the Imperial College, ‘An Analysis of Electricity System Flexibility for Great Britain'”.
Southport is located at Merseyside in Northwest England, United Kingdom, and comprises a waste-reception centre designed to accept up to 80,000 tonnes of ‘trommel fines’ (also known as municipal solid waste or ‘MSW fines’) per annum. The waste reception centre and power plant utilise anaerobic digestion technology that will create 5.5 million cubic metres (m 3 ) of bio-methane combined with a 10 MW CHP plant. The primary purpose of the plant will be to produce an organic fraction from the incoming waste, which will be processed through anaerobic digestion to generate bio-methane that will, in turn, be exported to the UK’s national gas grid network. The CHP plant will generate electricity to be utilized for internal usage of the AD facility (c.2 MW) and to be exported to the local grid (c.8 MW). Southport is also planning a 2MW battery storage facility.
The Company continues to advance its strategy to rapidly grow its renewable energy portfolio and capitalise on sustainable growth that will deliver long-term value for shareholders. In line with this, the Company has signed an SPA to acquire the Southport waste gasification and power plant.
Under the terms of the Agreement, Kibo Energy will acquire 100% of Shankley Biogas Ltd, including all its rights and obligations for the development, construction and operation of Southport. The purchase consideration is GBP600,000 with £350,000 payable as ordinary shares of the Company at an issue price equal to the 20-day volume-weighted average price (‘VWAP’) of the 20 days preceding the closing date of the acquisition. The balance of £250,000 payable in cash, is to be paid as £50,000 within 14 days of the closing date, an amount of £75,000 on the earlier of the date on which the new board of directors of Shankley shall have approved a final financial model and project investor memorandum for debt and project funding following the closing date, or on financial close, and £125,000 on reaching financial close.
Project rights include all technology license agreements, all equipment supply and maintenance agreements, held by Shankley Biogas Ltd. This includes the agreed projects configuration (‘scope of work’) with Anaergia Ltd, a global technology and process engineering company that provides integrated solutions and technologies for the processing of waste streams. The scope of work includes the full engineering, procurement and construction of the Southport plant based on a fixed-price, lump-sum contract for the capital works scope and a separate minimum five-year duration contract to technically operate the Southport plant in its entirety.
In addition to negotiating a Power Purchase Agreement (‘PPA’) and a Gas Purchase Agreement (‘GPA’) term sheet on favourable terms with a blue-chip buyer, Shankley Biogas Ltd has already secured import and export grid connection points for both gas and electricity. The Project furthermore has planning permission in place that considers the ecological, safety and sustainable improvements as well as development of the local environment.
Shankley Biogas Ltd as at 31 December 2020 had total assets of £66,339 and total net liabilities of £650. Losses of £750 were noted in the 12 months to 31 December 2020.
Important Information for Shareholders
Kibo shareholders should be aware that all financial numbers as stated herein remain subject to change until such a time as actual production figures are available, following a suitable period of steady state operation. The projected returns are also subject to Project funding being secured on terms in line with the Board’s current expectation on equity, debt levels and rates, in which case the Project’s returns, as set out above, could be materially impacted.
This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) no. 596/2014 and is announced in accordance with the Company’s obligations under Article 17 of the specified Regulation.
For further information please visit www.kibo.energy or contact:
Kibo Energy PLC
Chief Executive Officer
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