TSX: ENM
VANCOUVER, June 22 /CNW/ - Energem Resources Inc. ("the Company") is pleased to announce that the Kisumu ethanol plant in Kenya is now substantially complete and near ready to begin production of ethanol and related by product. The Company has a 55% controlling interest in Kenyan company Spectre International Ltd (Spectre) which company owns the Kisumu plant.
The Kisumu plant comprises a number of modules including electric power generation capacity, raw water treatment, purification and boilers facilities, molasses receiving and storage areas, distillation and fermentation columns and plant, yeast and vinegar production facilities, Anament plant and alcohol loading and distribution bay areas. All these modules except the distillation and fermentation, yeast production and alcohol loading bays have been completed and the remaining modules are near completion and are expected to undergo hot commissioning on July 15, 2004, where after ethanol production is expected to start. On site, the plant has over 6,000 metric tonnes of molasses and all other necessary raw material for production and management are comfortable that all important supply sources for future production are secured for the foreseeable future. All licensing and permitting necessary for the commencement of production and business are to hand.
The necessary environmental impact assessment (EIA) study is concluded and approved under Kenyan legislation. The EIA was done by Strategic Environmental Focus (Pty) limited of Pretoria, South Africa to international standards required by the World Bank and executed by Tyrone C. Singleton, BSc(TRP) Wits, MBA(Environment) VSQ, their projects director, in April 2004.
The Kisumu plant is situated in the north west Kenyan province of Nyaza on the banks of lake Victoria and is ideally situated to supply markets for ethanol in Kenya and neighbouring countries as well as the international market from well established and functional infrastructure in this part of Kenya. The plant was independently valued in March 2004 on a break up basis at approximately US$ 24 million by consulting engineers and valuers PDN Mining and Industrial (Pty) Limited of Johannesburg, South Africa, duly executed by project leader Jeremy May, Pr. Eng. The Company's interest in Spectre was acquired in 2003 for US$ 2million. Other than its indebtedness to the Company, Spectre is debt free. Since that valuation was done, the Company has funded approximately US$ 6 million to date by way of loan to Spectre to enable Spectre to bring the plant into phase 1 commissioning of production of 60,000 litres per day in July 2004. A further US$ 4 million is to be advanced over the next few months to fund working capital requirements during production build up and for strategic plant spares inventory. The Company is currently undertaking the necessary funding but considerable international and local Kenyan interest is being expressed by a number of institutions for the refinancing of Spectre in its own right and the consequent refund of the advances made by the Company to Spectre.
It is managements expectation for the plant to initially produce under phase 1, 60,000 litres per day of ethyl alcohol and certain by products, increasing to not more than 250,000 litres under phase 2. Increasing to phase 2 is in planning stage and final capacity increase will be determined by the outcome of a market analysis currently being undertaken in support of phase 2 planning.
Ethyl alcohol (ethanol) is currently used in a number of industrial applications including blending into refined fuel products in the oil industry and for potable alcohol production in the beverage industry. The blending of ethanol for use in the Kenyan fuel industry is a key element to the Company's positioning for expansion in the Kenyan oil industry which is undergoing considerable change and rationalisation and in which process the Company is closely involved and positively contributing in the long term interest of the Kenyan market.
Industrial ethanol sells in international markets for approximately US$ 0.25/litre and potable alcohol sells for approximately US$ 0.56/litre and it is managements expectation that the anticipated net cost of production from Kisumu will make its product competitive. Kisumu will produce both potable and industrial alcohol and is able to vary relative production quantities.
The Company's interest in the Kisumu ethanol plant through Spectre forms part of the Company's trading and logistics division headed by the Company's director, Bruce Holmes. This division in 2003 provided the logistics and procurement support to the successful re-development of the Koidu Kimberlite Mine in Sierra Leone and has operational capacity in several countries in Africa. The management of the division are experienced in the management of industrial plants and have a track record of successful management of the Company's bitumen emulsion manufacturing plant in Harare, Zimbabwe which has been producing bitumen emulsions for supply to the African sub-continent for the past 20 years. In commenting on the considerable progress at Kisumu, Bruce Holmes said :
"We, together with our Kenyan partners and the management team at Kisumu, most of whom are Kenyans, are very pleased that this Kenyan asset is now about to go into production and that we have been able to achieve this well within our initial budget expectations and timeframe."
Energem Resources Inc. CEO Tony Teixeira commented :
"The Kisumu plant and the products it will produce are an important element of our Group strategy which is to focus on long term high margin niche market opportunities in the energy and mining sectors in selected African countries. Kisumu is expected to become an important contributor to the Kenyan energy sector, will assist Kenya in reducing its dependence on imported fuel additives and will considerably enhance the Company's image and position in an important market for the future."
This news release contains forward-looking statements which address future events and conditions which are subject to various risks and uncertainties. The Company's actual results, programs and financial position could differ materially from those anticipated in such forward-looking statements as a result of numerous factors, some of which may be beyond the Company's control. These factors include: the availability of funds; the timing and content of work programs; results of exploration activities; geological interpretations; receipt and security of mineral property titles; fluctuations in diamond prices; currency fluctuations; changes in production costs; differences in ore grades, recovery rates and tonnes mined from those expected; changes in mining rates from currently planned rates; and general market and industry conditions. Forward-looking statements are based on the expectations and opinions of the Company's management on the date the statements are made. The assumptions used in the preparation of such statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.
/For further information: Rob Rainey in Johannesburg at telephone +27 11 454-3099, Fax +27 11 454-1673 or email: info(at)energem.com; Hill & Knowlton: contact Boyd Neil in Toronto at telephone (416) 892-6624; Fax (416) 413-1550, boyd.neil(at)hillandknowlton.ca.; Refer to our website: www.energem.com/
