The build contract, valued at $33.8m, includes $25.8m construction principal and $8m in interest, covers the design, construction and installation of two Semi-Dry Flue Gas Desulphurization (FGD) Units, each of which is approximately 500sqmt in size, which collectively produce approximately 11 million tons of sinter mine annually.
The project commenced at the Hebei Province Tangshan City Caofeidian Industry zone facility with initial engineering design work on January 1, 2010 and the installation will be completed by September 30, 2010. Rino anticipates these systems will filter at least 91.7% of the sulphur dioxide produced, from sinter mines.
The customer will make an initial payment of $4m one year after the FGD Units have received product approval by the customer and environmental acceptance by the State Environmental Protection Department. The balance of the build contract amount will be paid in annual installments of approximately $3m, which includes interest at a blended rate of 5.75%. Gross margins associated with the build contract are estimated at approximately 38%.
The operating contract, valued at approximately $84.3m, has a 10-year term, will commence upon receipt of final State Environmental Protection Department approval. Rino will be responsible for daily operation of the two FGD Units installed under the build contract. This includes obtaining desulfurization supplies such as lime, and utilities, such as process water, power and compressed air, in addition to staff salaries, maintenance repair and FGD ash handling fees.
Under the operating contract, the customer shall make annual payments to Rino of approximately $8.24m through monthly installments. Rino will bear the utility expenses estimated at $6.21m annually, which are the component of the operating costs. RINO will also receive $1.9m for maintenance upgrades of the FGD Units in the fifth year.
After the final payments under the BOT contracts, the ownership of the FGD Units will be transferred to Shougang Jingtang Iron & Steel.
