Under the terms of the MoU, AIM-listed Sable and CITIC Construction, a subsidiary of China’s CITIC Group, will explore the opportunities to use their respective expertise to develop the power station.

The intention was to supply the plant with coal from Lubu, Sable said.

The MoU is supported by the Zimbabwean government and the Ministry of Energy and Power Development.

“Considering the energy and power dynamic in southern Africa, there is a major demand for a secure and reliable power supply, which will continue to grow unless new power sources are established,” Sable Mining CEO Andrew Groves said.

“This [plant] will represent a significant step forward in solving the ongoing energy deficit which is currently presenting significant obstacles to development within southern Africa.

“The combination of our quality coal together with CITIC’s access to power plant infrastructure, financing and construction expertise has the potential to create a long-term power supply which, due to Lubu’s strategic location in northwest Zimbabwe, could supply both domestic and regional demand once connected to the established power grid.”

Sable has a significant interest in the Mount Nimba iron ore project in Guinea, and, until now, has been “assessing ways” in which to best generate value from Lubu and its other Zimbabwean coal assets in the Mid Karoo Zambezi coal basin.

It recently commissioned international consultant Aurecon to conduct a scoping study to assess the potential of establishing a coal-fired power plant.

It believes the electricity generated by the plant would be available for domestic industrial use and for export to neighbouring countries South Africa, Namibia, Botswana and Zambia, via connection to the established grid.

Sable secured an 80% interest in Monaf Investments, the holder of the Lubu coal concession, in 2010 for a total of US$6 million in cash and shares.

It immediately started a 36-hole drilling campaign, with the results emphasising the continuity of Lubu’s shallow deposit, and of high coking coal deposits across multiple seams it believes can add more tonnes to the project.