Energem secures interest in Stieglers Gorge Hydro-Electric Scheme project in Tanzania

TSX/AIM: ENM

VANCOUVER, May 20 /CNW/ - Energem Resources Inc ("Energem" or "the Company") is pleased to announce that it has executed a Memorandum of Understanding ("MOU") with Infrastructural Development Finance (Pty) Ltd ("IDF") in terms of which it has, subject to further detailed contracts, acquired a 40% interest in a proposed 900 megawatt hydro-electric scheme, the Stieglers Gorge Hydro-Electric Scheme in Tanzania ("the Project") in consideration for advancing a short term loan, approximately US$1.2 million (the "Loan").

The acquisition results from an undertaking to fund and assist in the updating of historic engineering and feasibility studies relating to the Project, to bring these studies to bankable feasibility status and to assist in the raising of funding for the development and construction of the Project. In the early 1980's, through a Norwegian Government initiative, a detailed feasibility study of the Project was undertaken and completed ("the Historic Feasibility"). The Historic Feasibility has now been made available to Energem. Under the MOU, Energem will advance the Loan to IDF in order to update the historic feasibility study to bankable status.

The 1980's Project, whilst qualifying at the time in respect of all engineering and environmental considerations, was shelved due to insufficient regional electricity demand at the time to justify economic viability. This position has now changed with demand for electricity in the region showing considerable growth at a time when current infrastructure is unable to meet existing demand.

Energem's principal partner in the Project is IDF who has been granted the rights to the Project by the Tanzanian Government to update the feasibility study and thereafter potentially develop and construct the scheme, which would be based on the Rufiji river at the Stieglers Gorge site in the Selous Game Reserve. IDF is a private company with expertise in hydro-electric power stations The remaining 60% in the Project is held by IDF (40%), a private engineering consortium (10%) and the Rufiji Basin Development Authority (RUBADA), an arm of the Tanzanian Government (10%).

The rights to the Project are at all times subject to Tanzanian legal regimes and regulatory process.

Energem has appointed consulting engineers Jeffares & Green to examine the historic feasibility studies relating to the Project. Jeffares & Green have to date concluded that the historic studies were comprehensive and of a high standard and would require limited updating to bring them up to current standards for internationally acceptable bankable level.

Based on a recent review of the information available from the Historic Feasibility, the construction of a dam has a very limited environmental impact, is expected to use only a minor fraction of the area of the Selous Game Reserve, requires no resettlement of local communities and can provide substantial down stream irrigation and flood control benefit to agricultural development in the area, which is approximately 200 kilometres south west of the port of Dar Es Salaam and reasonably well served by road and rail infrastructure both inland and to the port.

The current estimated capital cost of construction, subject to updating of the studies, is in the order of some $2 billion with an estimated five year construction period.

Energem would seek to assist in the management, financing and logistics support to the construction of the scheme.

This project represents a natural adjunct to the Company's logistics platform and strategic involvement in other African based clean and renewable energy activities.

This news release contains forward-looking statements which address future events and conditions which are subject to various risks and uncertainties. The actual results 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 costs and availability of product; fluctuations in fuel product sale prices; currency fluctuations; changes in production costs; fluctuation in shipping costs; availability of shipping; general market and industry conditions; political and regulatory instability and risks associated with rights to title and ownership of assets.

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.

Energem Resources Inc (TSX/AIM:ENM). is an Africa focussed company listed on the Toronto Stock Exchange and on the London Stock Exchange's AIM market and the holding company of a group of companies engaged in, mainly, several African countries in the bio-fuels, oil and related sectors including logistics and supply to the mining industry in South and Central Africa and development of an up-stream oil exploration asset. The Company has offices and/or logistics and support infrastructure in Johannesburg, London and a number of African countries.

Contacts

Rob Rainey in Johannesburg at telephone +27 11 372-3300
Fax +27 11 454-1673 or email: info@energem.com

Refer to our website: www.energem.com

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