Ncondezi shares slide on Tete solar project update


Ncondezi Energy updated the market on its solar photovoltaic and battery energy storage system project in Tete, Mozambique on Monday.

The AIM-traded firm updated the solar project valuation forecasts update for 100MW phases up to 300MW, following inputs from the feasibility study.

It said the forecast solar project pre-money net present values at 10% discount rates were $23m at 100MW, $51m at 200 MW, and $75m at 300MW.

Forecast solar project net cash flows over the 25-year operational period for each phase came in at $186m for 100MW, $400m for 200MW, and $584m for 300MW.

It said fully-diluted net cash flows to Ncondezi over the 25-year operational period for each phase were $33m to $44m for 100MW, $96m to $116m for 200MW, and $171m to $196m for 300MW.

Ncondezi said 100MW phases were selected to capture economies of scale, in a bid to lower the upfront capital expenditure per MW installed.

The tariff price was based on comparable tariffs in Mozambique, and on achieving a “competitive” project equity internal rate of return, “acceptable” in the regional market.

Ncondezi updated its forecasts to include transmission, permitting and concession costs, with capital expenditure, operational expenditure and financing forecasts adjusted for recent escalations in global inflation and interest rates.

The company said its focus was now on agreeing a transmission connection solution with the Mozambique authorities, and confirming power demand from potential off-takers.

“Ncondezi’s updated valuation forecasts further confirm the value potential of our solar project to shareholders and new investors,” said chief executive officer Hanno Pengilly.

“These results are derived from the recently announced positive feasibility study results which confirm the project’s technical viability and strong solar resources.

“Inputs from the feasibility study have been utilised to update the solar project financial model with a greater degree of detail and accuracy, generating what we believe to be a competitive power tariff for potential off takers.”

Pengilly said the firm’s focus was now shifting to engaging with potential off-takers – a process that was expected to start at the end of November.

“In parallel to this, the company has submitted its preferred transmission connection solution to the relevant Mozambican authorities for approval.

“The solar project is strategically positioned from a transmission perspective, having access to existing grid networks with available capacity and multiple evacuation paths in Mozambique and the wider southern Africa region.”

There was also potential to further enhance the solar project value, Hanno Pengilly said, through optimisations including competitive bid processes launched with engineering, procurement and construction (EPC) companies and financiers to refine forecasts and enhance confidence levels.

“This is expected to commence following further progress with potential off-takers.

“The board believes that the company is at an exciting phase of development with the solar project taking advantage of Mozambique’s leading sustainable energy resources and being fully aligned with the government’s objective to become a champion for energy transition impacting all of southern Africa.

“We look forward to providing additional updates in the near future.”

At 1123 GMT, shares in Ncondezi Energy were down 10.38% at 0.83p.

Reporting by Josh White for Sharecast.com.