Ncondezi Energy Limited (LON:NCCL) has reached agreement with partner China Machinery Engineering Corporation (CMEC) for a US$1.8mln programme of accelerated development works at their power project in Mozambique.

CMEC will fund the programme, which will focus on the additional survey drilling required to complete Chinese Government approvals and to ensure the key agreements are compliant with Mozambican laws.

Ncondezi added this funding deal is a supplement to the Joint Development Agreement announced in July 2019, which still remains in force.

Funds drawn down through the agreement will be treated as pre-financial close project development costs, to be reimbursed at financial close.

Ncondezi has agreed to a share pledge as security for the funding, which will be released upon achievement of financial close with CMEC as the strategic partner

Hanno Pengilly, Ncondezi’s chief executive, said he was delighted with the supplementary agreement.

“This provides the strongest signal to date of CMEC’s commitment to the project, targeting its 60% equity stake, and we look forward to them leading the debt financing negotiations with Chinese financiers. Consultants have been instructed and work has commenced.”

Ncondezi shares jumped 21% to 4.6p.

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