Bangladesh Procurement News Notice - 63303

Procurement News Notice

PNN 63303
Work Detail GCM Resources plc (LON: GCM), an AIM quoted mining and energy company, is pleased to report its interim results for the six months ended 31 December 2023. The Chairmans Statement and the full unaudited interim report are presented below and will shortly be available at the Companys website Chairmans Statement The operating environment in the six months ending 31 December 2023 was dominated by the run up to the National Election in Bangladesh held on 7th January 2024. Notwithstanding the intensity of the election process, our team in Dhaka managed to maintain contact with the necessary government agencies and it became noticeable that momentum to develop domestic energy resources is building. The driver for this apparent swing away from the Countrys growing dependence on imported energy products is the inability of the Bangladesh economy to keep pace with the costs, given since 2022 its currency has devalued by over 30% and its foreign exchange reserves have dropped by over 50%.With the Awami League returned to government, the move to reduce this dependency on imported energy has continued; the Ministry of Power, Energy and Mineral Resources ("the Ministry") is reported to be carrying out rapid actions to define a development strategy for the domestic coal sector. Thus far this has been in the form of internal presentations looking into likely coal production and environmental management issues for the known coal deposits, being Barapukuria, Phulbari, Dighipara, Khalaspir and Jamalganj. It is ubiquitously being reported that the proposed Phulbari open pit development offers the best opportunity for significant long-term coal production. An open pit development at the northern end of the Barapukuria deposit is also mooted. However, with the annual coal requirement forecast to soon reach 36 million tonnes, there is certainly scope to develop more than one open pit operation, given Phulbaris name plate annual production of 15 million tonnes could deliver over 40% of that requirement. At the same time the Ministry has recently invited international bidding for oil and gas exploration in 24 blocks in the Bay of Bengal as it endeavours to discover new gas resources to combat a growing gas shortage and fast depleting gas reserves. The Bangladesh Government is committed to coal-fired power being a significant part of its balanced energy and power strategic mix. The current focused discussions within the Ministry are an important step towards finally delivering Government Policy to kick-start its domestic coal sector and deliver a large volume of much needed energy for power generation. GCM is closely monitoring the situation and is looking forward to holding discussions with the Government and working through its Phulbari Coal and Power Project ("the Project") Proposal, including the modality for state participation as a partner in the Project GCM also continues to work with its Development Partner, Power Construction Corporation of China, Ltd. ("PowerChina") to further enhance the Project Proposal. On 28th November 2023 the Company announced a further 12 months extension to the MOU - Phulbari Coal Mine Development was announced. The intention being for GCM and PowerChina to work towards a mutually agreed business relationship for developing the proposed Phulbari coal mine. Working under this MOU, it was announced on 11th March 2024 that GCM and PowerChina had signed an EPC Contract for "Phulbari Coal Mining Infrastructure Construction and Overburden Stripping" which covers mine development works with a value of approximately US$1 billion, necessary to position the mine to commence coal extraction. The scope of works includes design, procurement, installation, construction and commissioning of mine infrastructure and overburden removal, dewatering and drainage. It also includes selective mining and stockpiling of valuable industrial mineral co-products that occur in the overburden such as China clay, silica sands, and aggregates for the construction industry. These co-products are expected to deliver cashflow for the Project ahead of any coal extraction. The "Notice to Proceed" with the extensive works under this Contract is dependent on receiving the necessary approvals from the Bangladesh Government and financial closure. PowerChina has previously expressed its commitment to assist with project financing. The Contract duration is four years and overburden removal to expose first coal is expected to take approximately two years. GCM and PowerChina will continue to work together under the MOU to formulate additional contracts covering coal extraction and associated activities to achieve our aim of delivering high quality coal supporting at least 6,600MW power generation for over 30 years. On 22nd March 2024, the Company announced the appointment to the Board of Paul Shackleton as acting Non-Executive Chairman and Charlie Green as an Independent Non-Executive Director, whilst Christian Taylor Wilkinson resigned as Independent Non-Executive Chairman on 28 February 2024. Financials GCM incurred a loss after tax of £702,000 for the six months ended 31 December 2023 (31 December 2022: loss after tax of £693,000). The most significant expenditure during the period was pre-development expenditure, while administrative expenses for the six months ended 31 December 2023 were £355,000 (31 December 2022: £368,000) and capitalised project expenditure for the period was £173,000 (31 December 2022: £277,000). On 1 February 2024, the Company issued 30,303,040 Ordinary Shares by way of subscription at a price of 1.65p per share, raising £0.5m before expenses. As previously announced, the Company will need to raise further funds in the coming weeks in order to strengthen its financial position and to meet its immediate working capital requirements; although there can be no guarantee of such, the directors remain confident that sufficient funding will be obtained as required. Accordingly, the financial statements have been prepared on a going concern basis, however there is material uncertainty due to the need for additional near-term funding. Please refer to the accounting policy note on going concern (Note 1 to the Financial Statements) for further information. Outlook At the United Nations Climate Change Conference COP 28 late last year, the Bangladesh delegation stated that, although they are pursuing renewable energy, there is a large divide between developed countries and developing countries in the ability to phase out fossil fuels. Solar and wind power generation, however, have limited application in Bangladesh so thermal and nuclear remain the main options for providing base-load power to support its economic development. The Bangladesh Government has already taken steps to move away from its current "net-energy-importing" situation aimed at both bringing its domestic coal resources into the energy mix and exploring for gas. With this in mind, and Bangladeshs deteriorating foreign exchange position, it is envisaged that Government Policy will be forthcoming to finally enable extraction of the Countrys extensive long-term strategic coal energy assets, such as the Phulbari deposit, and move Bangladesh away from its exposure the long-term vagaries of the international energy market. The Company remains grateful for the ongoing support of its shareholders, stakeholders and staff. We are more confident than we have been in recent years that we are getting closer to a political breakthrough for the Phulbari Coal and Power Project. When this happens, we are ready to deliver the benefits and investment returns that our patient shareholders deserve.
Country Bangladesh , Southern Asia
Industry Energy & Power
Entry Date 01 Apr 2024

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