Extension of IRR arrangement
21 March 2016
Oracle Coalfields PLC
("Oracle" or the "Company")
Extension of IRR arrangement and increased investment in subsidiary
Oracle Coalfields PLC (AIM:ORCP), the U.K. coal developer of a 1.4 billion tonne lignite resource located in the Thar Desert in the south-eastern areas of the Sindh Province, Pakistan announces that the Energy Department, Government of Sindh, Pakistan has issued a notification for the extension of the applicability of US$ based 20% Internal Rate of Return ("IRR") to all coal mining projects, based on indigenous Thar coal, to the companies which achieve Financial Close before 31st December 2016. The Government of Pakistan has enacted a number of fiscal incentives to encourage and accelerate the development of the substantial coal resources in Thar Desert.
This fiscal incentive is a fixed 20% IRR in US$ terms to be applied on a cost plus basis determination of the coal price. As the government is keen to attract more investors in indigenous Thar coal based power projects to overcome the acute power shortage in the country, the Company is confident that the fiscal incentives, inclusive of 20% IRR, shall be the operational policy of the government and, if the need be, the Company can ask, on the expiry, for the required extensions of the applicability.
The Company also announces that following the recent rights issue by its subsidiary Sindh Carbon Energy Limited ("SCEL"), Oracle has increased its equity interest in SCEL from 80% to 98%. The additional shares have been secured by converting the amount equivalent to £600,000 of the Company's loan to SCEL. In the year ended 31st December 2015, SCEL had gross and net assets of approximately £2,382,000 and £6,400 respectively, and made a loss of approximately £4,800. The project development is proceeding and an increase in Oracle's equity in the increased paid up capital of SCEL will add further to the investment value of Oracle in the project, with a correspondent increase in the asset value of SCEL.
Shahrukh Khan, CEO of Oracle, said:
"The extension of the 20% IRR (in US$ terms) demonstrates the commitment of the Government of Sindh to the development of Thar coal. This is an attractive rate of return, designed to encourage foreign inward investment for the development of Thar. Oracle is committed to this project which will help to alleviate the country's power shortfall."
Ends
For further information:
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Oracle Coalfields PLC Shahrukh Khan
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+44 (0) 203 102 4807 |
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Brandon Hill Capital Limited Oliver Stansfield
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+44 (0)203 463 5000 |
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Peterhouse Corporate Finance Charles Goodfellow
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+44 (0)20 7220 9791 |
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Grant Thornton UK LLP Salmaan Khawaja, Richard Tonthat, Daniel Bush
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+44 (0) 207 373 5100 |
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Blytheweigh Tim Blythe, Camilla Horsfall, Megan Ray
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+44 (0) 207 138 3204 |
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Fortbridge Consulting Matt Beale, Bill Kemmery
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+44 (0)7966 389196 |
This information is provided by RNS
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