IPSA Group intends to progress coal-fired developments in the Eastern Cape of South Africa

In its full-year results report, the IPSA Group (AIM: IPSA) said that whilst it has been a difficult year, the recent loan-note issue provides working capital to enable it to progress the coal-fired developments in the Eastern Cape, in addition to securing the sale of its surplus turbines and the power purchase agreement (PPA) for the plant in Newcastle, South Africa.

IPSA said that financing remains its top priority for the coming year and significant risks still remain. During the period, the company signed a standstill agreement with major creditors Standard Bank and TurboCare to January 2011, concurrently a tri-partite marketing agreement was also signed.

“In the coming twelve months the company is focussing its efforts on completing the sale of the four gas turbines and on developing the coal-fired capacity in the Eastern Cape, in addition to securing the long-awaited PPA for our plant at Newcastle”, IPSA Chief Executive Peter Earl commented.

According to IPSA, the marketing agreement is an important development that puts it in a good position to sell the turbines from a position of strength. The company is trying to sell four Siemens Westinghouse 501 DU gas turbines it originally acquired for the proposed Coega fast track project at Port Elizabeth. Delays to the procurement process for that project have persuaded the board to seek to sell the turbines.

The company’s chairman Stephen Hargrave announced today that he will be stepping down at the company’s AGM, to focus on other matters both in business and outside.

During the six-months ended 30 September 2009, IPSA reported a net loss of £5.5m compared to a £4.5m loss in the comparative period in the previous financial year.

Earlier this month, IPSA raised £650,000 through the issue of unsecured loan notes to the RAB Energy Fund and certain other investors. The unsecured loan notes carry 6% interest per annum, and are due for repayment on the earlier of: the 31 January 2011.

IPSA intends to use the proceeds of the loan notes to develop the Elitheni coal project at Indwe, South Africa, and for general working capital purposes. Additionally the subscribers were also issued warrants over 6.5m ordinary shares of 2p each, exercisable between the repayment date and 30 months thereafter. The warrants can be exercised at up to 19p per share.

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