Oracle Power (AIM:ORCP) has signed a consortium agreement with one of the largest coal mining companies in the world as well as a prominent member of the UAE Royal Family, this morning’s statement detailed.
The news follows the previously announced joint development agreement with partners, China National Coal Development Company Ltd and His Highness Sheikh Ahmed Bin Dalmook Juma Al Maktoum.
The consortium agreement, which is subject to the laws of Pakistan, will supersede the JDA to establish a joint combined lignite coal mine in Block VI of the Thar desert and will establish the shareholding structure as required under the Government of Pakistan's 2010 Independent Power Production (IPP) policy guidelines.
The AIM-listed coal developer has now conducted the appropriate measures to formally obtain a letter of intent from the Pakistani government the statement added.
The parties intend to develop the proposed coal mine for a 1,320MW (2x 660MW) mine mouth power plant and coal to gas and liquid which they believe will produce sustainable and cheap energy for Pakistan.
The use of coal to produce gas aims to meet the growing demand for gas as Pakistan's gas reserves decline whilst coal to liquid production aims to counter expensive fuel imports into the country.
Shares in Oracle Power were trading 13.51% higher at 1.05p during Monday trading.
“Today's development marks a major step for Oracle and enables us to progress on our journey, with the LOI being the next major step, in developing the Project,” said Ms. Naheed Memon, Chief Executive of Oracle.
Oracle believes the agreement demonstrates the unity between the parties as well as their shared focus to develop a “first-class” project.
Pursuant to the agreement, Oracle intends to hold a 12% equity interest in the project via local project companies whilst CNCDC, being the main sponsor, is intended to hold 73% and HH Private Office to hold the remaining 15%.
As a result of the project’s inclusion on the priority list in the China Pakistan Economic Corridor, CNCDC has stated its intentions to source all debt for the project from Chinese banks.
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