Invictus Energy Ltd (ASX: IVZ) shares soar high on ASX after the company announced that it has signed a Memorandum of Understanding (MoU) with Sable Chemical Industries Limited to investigate the economic and commercial viability of supplying natural gas from the Cabora Bassa Project to the Sable fertiliser plant located in Kwekwe, Zimbabwe. The stock has gone up by 5.405% in a mid-day trade to trade at $0.039 as at 7 May 2019.
Cabora Bassa Project partners include Invictus holding 80% ownership and One-Gas Resources (Pvt) Limited with the remaining shareholding of 20%. This MoU with Sable is said to progress gas supply from the Cabora Bassa Project subject to a commercial gas discovery being made from SG 4571.
Invictus Managing Director Scott Macmillan commented “Signing this MOU with Sable marks a significant milestone in the company’s commercial negotiations as it looks to progress the Cabora Bassa Project. Sable is the sole producer of nitrogenous fertiliser in Zimbabwe and a well-recognised brand in the country. Invictus is proud to work with them to fulfil their ambition of becoming the preferred manufacturer and supplier of fertilisers and other chemical products in Africa.”
The agreement will see the potential gas supply of up to 70 million cubic feet per day for 20 years which marks an indigenous natural gas supply by Invictus to Sable for it to produce ammonia gas for its fertiliser plant. This significant volume is likely to help underpin the development of any commercial gas discovery Invictus make in the Cabora Bassa Project.
Let’s have a quick look at the Key highlights of the MoU:
- Minimum Daily Contract Quantity (DCQ) of 35 mmscf/d (~13 bcf per year)
- Sable can elect to increase DCQ to 70 mmscf/d (~26 bcf per year)
- Minimum Total Contract Quantity of 255 Bcf
- Maximum Total Contract Quantity of 510 Bcf
- Supply term of twenty (20) years from the date of First Commercial Gas Production
- Gas sales price commercial in confidence
Macmillan added that this MOU demonstrates the huge local gas demand in an energy-starved market in Zimbabwe and the company expect to enter into additional gas supply MOUs in the future.
Commenting on the MoU, Bothwell Nyajeka, CEO of Sable Chemicals stated that “Sable Chemicals currently has a capacity to produce 240,000 tonnes of ammonium nitrate per year and has historically played an important anchoring role in the agricultural sector of Zimbabwe, thus ensuring that well-priced fertilisers, with formulations that are optimised to suit local conditions, are made available to farmers in a timeous manner each year. The potential future supply of gas by Invictus is also critical for Sable’s medium-term expansion program aimed at increasing production to 600,000 tonnes of nitrogenous fertilisers.”
Established in 1969, Sable Chemicals is a sole producer of Ammonium Nitrate (AN) fertilizer in Zimbabwe and have the capacity to meet the demand of entire country. For every one tone of ammonia gas imported from South Africa, Sable Chemicals produces two tonnes of AN.
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