Edenville Energy Plc (AIM: EDL), the AIM quoted company developing a coal project in southwest Tanzania, provides an update on corporate developments and current operations at the Company’s Rukwa Coal Project (the “Project”).
On 15 February 2019 the Company announced that it had raised gross proceeds of £62,418 from an open offer to existing shareholders (the “Open Offer”), coupled with a further £15,000 that was raised following a subscription for ordinary shares by Jeffrey Malaihollo, the Company’s Chairman. The Open Offer sought to raise gross proceeds of up to £619,099 to strengthen Edenville’s balance sheet and to progress the Company’s operations at the Project, one task to specifically increase the available Run of Mine (“ROM”) coal for processing through the opening up of the Company’s northern pit area.
Given the low level of take up from the Open Offer, progress at the Project has been limited and the Company’s operations have been constrained due to cost cutting measures implemented by the Company’s Directors to preserve working capital. As a result, and despite having the requisite approvals, the Company has as yet been unable to expand its operations or increase mining capacity by opening up the northern mining area.
Coal Production and Sales
Between 1 January 2019 and 26 March 2019, Edenville processed approximately 17,760 tonnes of ROM coal, producing approximately 3,116 tonnes of washed coal to customer’s specifications and approximately 7,992 tonnes of fine coal. In 2019 to date, approximately 3,510 tonnes of coal have been sold and shipped, the majority being washed coal. These production numbers are currently unaudited and may be subject to variations upon plant and mine reconciliation. In addition, the Company has stockpiles of unprocessed, part processed and fine coal, in addition to the coal that is being mined on a daily basis.
The recent upgrades on the plant are all operational. The Lamella water treatment plant has been operating since January 2019 and is providing clean recycled water for the main wash plant. The pre-screen has been fully operational since the end of January 2019 and separates out fines and large size material prior to the coal reaching the main plant. These units are performing as planned.
Due to constrained working capital, the supply of consumables such as fuel and magnetite have been adversely affected, resulting in falling production rates over Q1 2019. In addition, access to the northern mining area and 24 hour operation has been put on hold until capital is available to open up this additional supply of coal. Until additional capital can be applied to these and other parts of the Project, management do not expect production to increase from current levels.
The Company has been conserving available capital and cash wherever possible whilst keeping the operation producing for our core customers.
Fine coal is being sold from the approximately 40,000 tonne fine coal stock pile the Company has at the Project site and that is being produced on a daily basis from the mining and processing activities. The sale of fine coal is providing an additional income stream for the Company and several customers are taking regular shipments.
In addition, the Company has received an order for 1,000 tonnes of fine coal. The Board anticipate that this order will be followed up with a continuing regular monthly order for between 5,000 and 10,000 tonnes per month. Detailed planning on logistics and transport is currently taking place and although no assurances can be given, the Directors are confident that an appropriate contract can be finalised. The Directors expect the sales of fine coal to provide an increasing source of revenue for the Company over the remaining three quarters of 2019 and beyond.
To date the Company has received no detailed explanation as to why Tanzania Electricity Supply Company (“Tanesco”) did not move forward with the previously anticipated coal to power generation plans following the recent Request for Qualification (RFQ) submissions in October and December 2018. Subsequently the Company is concentrating on its commercial coal operations, whilst maintaining a dialogue with Tanesco, until the economic and political environment for coal to power generation in Tanzania is more clearly defined by the appropriate authorities.
Due to the shortfall in the proceeds of the Open Offer the Company will need to raise additional capital in the near term in order to meet its Project and corporate commitments and is currently exploring several options at both a Company and Project level. A further update regarding financing will be made as soon as practicable.
In addition, the Directors have implemented certain cost cutting measures at the Project, including stopping overburden movement and focusing on more easily accessible coal. Further corporate cost cutting measures have been undertaken and the Directors have not taken their salaries since December 2018, after only taking part of their salary entitlements in 2018.
2018 Annual Results
The audit for the year ended 31 December 2018 is now underway and Edenville expects to release its full year results for the year ended 31 December 2018 in early June 2019.
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.
For further information please contact:
Edenville Energy Plc
Jeff Malaihollo – Chairman
Rufus Short – CEO
+44 (0) 20 3934 6630
SP Angel Corporate Finance LLP
(Nominated Adviser and Broker)
+44 (0) 20 3470 0470
(Financial PR and IR)
+44 (0) 20 3934 6630