ASX-listed and Africa-based iron ore miner Genmin (ASX:GEN) executed an agreement with Gabon’s state-owned power utility to supply its Baniaka Iron Ore Project (BIOP) with hydroelectric power for up to 20 years on Wednesday.
The 160 megawatt (MW) dam, Grand Poubara, is located to the northeast of the BIOP.
The Société de Patrimoine du Service Public de l’Eau Potable, de l’Énergie Électrique et de l’Assainissement (SDP) will supply Genmin’s Baniaka acreage with 30 megawatts (MW) of power for the first six years under the agreement with room for scale-up thereafter.
For context, one megawatt (per hour) is enough to power hundreds of homes depending on appliances used.
Genmin highlighted on Wednesday it expects to pay about US¢10 per kilowatt.
The company will be responsible for the construction and maintenance of a 35km overhead transmission line leading from the hydroelectric dam interchange to the project.
The company must also build a transformer at the Grand Poubara hydroelectric dam transmission yard.
The binding deal follows a Memorandum of Understanding (MoU) signed back in April last year.
“The signing…of a long-term renewable power supply for Baniaka is another important milestone as we target first iron ore production in mid-2024,” Genmin CEO Joe Ariti said.
“It also satisfies one of our key ESG objectives of delivering high value, greener iron ore products to global markets.”
Genmin will not see the power supply agreement trigger until it receives financing and permits and approvals needed to develop its BIOP, as well as the 35km transmission line.
The company has secured a fixed power tariff with SDP that locks in low-costs under US¢10 per kilowatt hour.
From the sixth year of the agreement onwards, capacity to BIOP may be increased from 30MW to 50MW, subject to an expansion of Baniaka and “provided water flow rates at [the dam] support supply.”
Genmin may forfeit the agreement in the event of a force majeure.
Market Index’s free company data provides a number of datapoints to consider regarding Genmin’s performance, including but not limited to:
Share price is 20c*
Market cap of $64.5m*
322.79m shares on issue
Average 4 week volume of 163,070
Ranked 306 of 946 companies in the materials sector
One year returns down -4.76%
Year to date performance up 2.56%
Company finished December quarter with $7.3m in cash
It spent $1.2m in opex over the same period
*As at 1200 AEST Wednesday 1 February 2023
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