coal jv with tanzanian govt

ATQ released the following announcement to ASX this morning.
ATOMIC RESOURCES SIGNS COAL JOINT VENTURE WITH TANZANIAN GOVERNMENT

Atomic Resources Limited is pleased to announce that the formal Joint Venture Agreement between the National Development Corporation (NDC) (a Tanzanian Government Corporation) and Pacific Corporation East Africa Limited (PCEA) of Tanzania (a local subsidiary of Atomic Resources Limited) has been duly signed by both parties on the 3rd of April 2008.

Under the terms of the Joint Venture PCEA will acquire up to 70% of the Mhukuru and South Ngaka (Mbalawala) Coal projects.

The NDC was originally mandated by the Government of the Republic of Tanzania to promote, plan, approve, structure initiate and undertake development projects within the Mtwara Development Corridor of southern Tanzania by structuring Public Private Partnerships (PPP). As a consequence of the mandate, in November 2007 the NDC entered into a Memorandum of Understanding (MOU) with PCEA to develop selected coal Projects in Southern Tanzania. Subsequently, PCEA has now successfully concluded negotiations with NDC and has signed a formal JV Agreement for coal mining and exploration within the Mhukuru and South Ngaka coal fields and subsequent investigations into power generation and distribution in the region.

Under the terms of the Joint Venture, a new local company is to be formed with PCEA and NDC as the share holders (“PCEA-NDC JV”). PCEA has also agreed to advance a USD 50,000 commitment fee to the National Development Corporation and will fund the completion of an updated Feasibility Study defined within the JV agreement as the “Due Diligence Period”) with a financial commitment of not less than $500,000.00 for a 50% shareholding in the new company. The NDC will use its best endeavours to ensure that the mining rights are granted in terms and conditions optimal to the PCEA-NDC JV as well as assist in obtaining any subsequent mining rights, water rights, coal export and terminal construction licences, land rights, local community negotiations, and government facilitation and representation.


On completion of the Updated Feasibility Study, PCEA will acquire a further 20% equity by funding a Bankable Feasibility Study (BFS) through a Bankable Feasibility Study Loan on the coal project. With NDC as a free carried partner, allowing PCEA to increase to 70% shareholding of the SPV formed for the project
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On finalization of a subsequent favourable BFS, the parties will seek to raise third party project finance deemed prudent by the board of the PCEA NDC- JV with the balance of the funding if required to be provided by the parties pro rata to their shareholding at that time.

Stipulated in the Project Strategy of the Agreement is the intention to ensure that export coal is a priority however provision for the supply of fuel to future power generation plants is included. In such instances, the PCEA-NDC JV is granted the first right of refusal to supply all coal required to power generation project as determined in the BFS and that the price of coal in any such supply contracts shall be benchmarked against international coal prices.

The company is now seeking to appoint a suitable drilling contractor to begin verification and validation drilling of the previous data with the express intention of updating and validating the information in the existing feasibility study, determining the potential viability of the proposed project and to determine the work necessary for the proposed project to be taken to the BFS stage within the six month timeframe nominated in the agreement.