Dallaglio, Himoinsa sign a 50MW gas to power MoU with Invictus Energy
In an endeavour to secure a reliable power supply at Eureka Gold Mine, Victoria Stock Exchange-listed Padenga Holdings’ Dallaglio Investments Pvt Ltd and Himoinsa Southern Africa Proprietary Limited have executed a Memorandum of Understanding (MoU) with Geo Associates (Private) Limited, owned by Australia Stock Exchange-listed oil and gas exploration company, Invictus Energy Limited, for a proposed gas-to-power project.
The proposed power generation plant and equipment will be provided by Himoinsa, with a notional capacity of 12MW and the ability to increase the plant capacity size up to 50MW.
According to Dallaglio CEO James Beare, the MoU will ensure that Eureka Gold Mine production will be on a growth trajectory due to the availability of reliable and affordable energy.
He said the mine’s substitution of coal and diesel-fired power for natural gas supports its goal as a long-term sustainable gold producer and will significantly reduce its emissions profile.
“Power is a critical input for our mining operations in Zimbabwe, and securing reliable and affordable energy is crucial to support our plans to expand production at Eureka.
“Substituting coal and diesel-fired power for natural gas supports our goal as a long-term sustainable gold producer and will significantly reduce our emissions profile.
“We look forward to working with Invictus and Himoinsa to realize this mutually beneficial project for the resources sector in the country,” Beare said.
Invictus CEO Scott McMillan said the MOU provides flexibility to grow the pilot project incrementally through modular expansion as the resource base grows and additional power off-takers are signed up.
“Signing this MOU is a major step forward in our early commercialization strategy and demonstrates the immediate monetization opportunities available to Invictus as we look to progress the Cabora Bassa project following our significant gas discovery at Mukuyu.
“We are pleased to be partnering with one of the largest gold producers in the country in Dallaglio and one of the leading power generation solutions companies in Himoinsa for our planned pilot project.
“Eureka’s close proximity to Mukuyu and available infrastructure make this an ideal pilot project and provide us with line of sight to early first production, revenue generation, and proof of concept for future full-field developments and large-scale gas-to-power projects.
“The high-quality gas composition confirmed from Mukuyu-2 requires minimal surface processing of the gas stream, enabling the implementation of a near-term pilot project utilizing a low-cost production system at the well-site and existing infrastructure to deliver gas and power to end-users.
“We look forward to working closely with Himoinsa and Dallaglio to complete the feasibility study over the coming months in tandem with our high-impact field activity to progress the project into implementation,” MacMillan said.
Himoinsa Southern Africa Director Matthew Bell said his company was pleased to be working with Invictus and expanding its relationship with Dallaglio to potentially provide a cleaner, cost-effective, and reliable source of energy to the Eureka Mine by substituting its diesel power generation with natural gas.
“Himoinsa offers a wide range of generation technologies using diesel, HFO, natural gas, LPG, and lithium-ion batteries. One of the advantages of already being operational onsite at Eureka with a diesel power plant is that we can develop an alternative gas solution to complement or replace the diesel plant without any interruption to the mine’s power security.
“We look forward to working with Invictus and Dallaglio on this pilot, which can be used as a project reference for other mines in Zimbabwe, Africa, and globally,” Bell said.
Power generated would be supplied to Eureka or other private off-takers through the local grid or into the Southern Africa Power Pool (“SAPP”) if excess supply is available.
Following the recent confirmation of the Mukuyu gas-condensate discovery at the Cabora Bassa Project, Invictus is positioning itself to capture early monetization opportunities and accelerate timelines to first production and revenue generation.
High-quality natural gas discovered at Mukuyu-2 contains minimal impurities and allows for a simple early production system at the well-site to produce gas to be used in power generation or compressed natural gas for delivery to onsite power generation at Eureka.
This will minimize the Company’s capital and surface processing infrastructure requirements for the pilot project as well as in the future full-field developments.
The MOU provides flexibility to grow the pilot project incrementally through modular expansion as the resource base grows and additional power off-takers are signed up.
A feasibility study will be undertaken to determine the optimal delivery of power to Eureka – either well-site generation of power and wheeling, utilizing the existing grid infrastructure which is located within 5 kilometres of Mukuyu-2, or onsite generation with natural gas transported via truck between the well-site and the power plant.
Following the completion of the feasibility study, Invictus and Himoinsa intend to execute a binding Gas Sale and Purchase Agreement (GSPA), under which the Company will provide natural gas to Himoinsa, which in turn will provide power generation equipment and supply electricity to Dallaglio at Eureka, under back-to-back GSPA and Power Purchase Agreements (PPAs). Part of the feasibility study involves the Company assessing the use of Mukuyu-2, post-well testing, as a producer in the pilot project.
Expansion of the pilot can be matched to gas deliverability from the Mukuyu Gas Field through Himoinsa’s turnkey power generation systems. Himoinsa currently provides supplementary and backup diesel power generation to Eureka and Dallaglio’s other mining operations in Zimbabwe.
Gas-fired power will provide Eureka with a reliable and cleaner source of energy than the current coal-fired power and backup diesel power generation, which is used during frequent power outages experienced in the country.
The pilot will also gather longer-term production data and dynamic reservoir information to assist in optimizing the full field development planning and determining connected resource volumes and development well locations and sequencing.