In the last update about Kibo Mining (LSE: KIBO) entitled Why Kibo Mining Earnings Are A Pipe Dream I’d noted how future cash flows from it’s Rukwa Coal to Power Project with SEPCO III were some years away:
…construction work is expected to commence in Q2 of 2016, with completion and first power delivered into the grid, expected by Q1 2019
Today’s RNS from Kibo explained the positive five day site visit to the Rukwa Coal to Power Project in Tanzania with SEPCO III, one of the world’s largest engineering organisations.
But where or rather when are the cash flows?
Louis Coetzee, CEO of the Company was upbeat
The fact that we are able to provide the market with an update on the fulfilment of the most important condition precedent in the JDA so soon after it was signed, is strong confirmation that in SEPCO III Kibo has engaged a highly professional, competent and committed joint venture partner that is as serious as Kibo in pursuing the successful and timely delivery of the RCPP.
The site visit comprised five very productive days that totally exceeded our expectations in terms of progress made on all relationship levels associated with the JDA. This bodes well for the further development of the RCPP and we look forward to updating the market on further progress
This optimism is justified and for the reasons that Coetzee cites.
But it does not change the fact that future cash flows from the Rukwa Coal to Power Project are four years away at best, assuming that cash flows from this project are actually positive.
Kibo is still a loss making business and has an extremely weak balance sheet which is on life support from placings.
Are Kibo shareholders expected to be diluted over this four year time period whilst they wait for the Rukwa Coal to Power Project to produce positive cash flows?
Clearly the choice for shareholders is a simple one: wait it out or get out.