Oracle Coalfields PLC has signed a deal with a consortium of new and existing Chinese partners to advance development of the Thar coal and power project in the Thar Desert of Sindh province in Pakistan.

Although details are sketchy, the consortium plans to take 70% equity in Oracle’s subsidiaries in Pakistan in order to advance the development of the project.

Earlier this year, the AIM-listed company said that it would concentrate on formalising agreements and contracts in 2016 to bring the project to ‘full implementation’ along with securing all the financing arrangements, including equity for funding.

The concept is a 4 million tonnes per annum mine providing lignite to a first stage 600MW power plant at its mouth. The coal project contains a JORC-compliant resource of 1.4 billion tonnes.

In September 2015, the mine was valued at US$624 million and the power station was valued at US$770 million.

Oracle aims to open up the mine from 2016 to 2018 in conjunction with construction of the power plant. It expects to produce coal and deliver electricity from late 2018.

The company is finalising agreements and contracts, including an EPC (engineering, procurement and construction) term sheet and contracts with its Chinese partner for mine and plant.

A key milestone came in November last year when the group received a ‘no objection’ letter from the Central Power Purchasing Agency Guarantee Limited (CPPA), which buys electricity on behalf of Pakistan’s state-owned electricity grid operator NTDC. This means that power from the Thar project can be transmitted into the grid.

This came a month after Oracle signed a consortium agreement with its partner, Shangdong Electric Power Corporation of China (SEPCO), which said Oracle will hold 90% of owner/ operator Thar Electricity (Private) Limited, while SEPCO has the remaining 10%.

The agreement formed part of a key submission to Pakistan’s Private Power and Infrastructure Board (PPIB), which is expected to lead to a power purchase agreement with NTDC that would include a government guarantee for payment.

The Thar Coalfield is 380km from Karachi, and covers 9100sqkm, with a total lignite coal resource in excess of 175 billion tonnes. The coalfield is in close proximity to good infrastructure, with ongoing development of a road and power network in the region.

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