Edenville Energy Plc (AIM: EDL), the AIM quoted company developing the Rukwa coal project in southwest Tanzania, is pleased to announce the signing of two new significant contracts to supply washed coal from the Company’s flagship Rukwa Coal Project (“Rukwa” or the “Project”).
Since the opening up the Northern Mining Area earlier this year, the Company has expanded its marketing efforts in the countries to the north of Tanzania, in particular Uganda, Rwanda, and Burundi, where the Company’s Directors believe Edenville has a competitive advantage over other Tanzanian coal producers, many of whom are located up to 700km further south of Rukwa.
As a result of this the Company is pleased to announce it has signed two contracts to supply up to 6,000 tonnes and up to 3,000 tonnes respectively of washed coal per month to industrial customers in Rwanda and Uganda.
The up to 6,000 tonnes per month contract has been signed with a Rwandan company, Tara Group Ltd, which is a wholly owned subsidiary of Tanzanian company, Kitanyoe Group Company Ltd, which currently supplies coal, gypsum, limestone and calcite to industrial users. The end user for the Company’s coal is expected to be a major cement manufacturer in Rwanda.
The up to 3,000 tonnes per month contract has been signed with a Ugandan company, Springwood Capital Ltd, (“Springwood”) with the expected end user being a Kampala based steel works. As with the Tanzanian agent, Springwood supplies limestone, gypsum, calcite and iron ore to consumers in Uganda and Kenya.
The Rwanda contract is of particular note to the Project as it has the potential to open up a major new transport route for the Company’s coal on Lake Tanganyika to both Rwanda and Barundi. This is a route that is both shorter than conventional truck transport and is more cost-effective, using low cost barge transport.
In aggregate these two new contracts represent a supply of up to 9,000 tonnes per month, which accounts for approximately 75% of the current capacity of the recently refurbished wash plant. The new contracts will also complement the existing long-term contracts.
Progression of these supply arrangements is, however, dependent on the Company securing sufficient operating capital to fund production, as detailed in the Company’s announcement on 29 November 2019.
In this regard discussions with the potential strategic investor in the Project are progressing and a second investor has expressed interest in becoming involved with the Company as a strategic shareholder at the Company level. Whilst there is currently no certainty that these negotiations will lead to a successful outcome for Edenville, the Board believes that the two coal new contracts increase the attractiveness of both the Project and the Company for potential investors. Further announcements will be made on these matters as appropriate.
Assuming sufficient working capital is available, the Company expects to be in a position to supply coal on an ongoing basis under these contracts before the end of Q1 2020. As previously reported, Edenville expect cashflow breakeven at Rukwa at around 4,500 tonnes of washed coal sold per month and has a target of achieving this by May 2020.
Alistair Muir, Chief Executive Officer of Edenville, commented: “I would like to acknowledge the Project team’s efforts, and particularly those of former CEO Rufus Short, for their groundwork and efforts in making these contracts possible. The Project has a significant advantage being the most northerly coal mine in the region by some 700km. I believe these contracts represent an important first step; now Rukwa has to deliver and assuming the required operational funds are secured we should see the mine and plant delivering as initially planned and our goal of becoming cash flow positive being realised. I look forward to providing our shareholders with further updates in due course.”
For further information please contact:
Edenville Energy Plc
Jeff Malaihollo – Chairman
Alistair Muir – CEO
+44 (0) 20 3934 6630
SP Angel Corporate Finance LLP
(Nominated Adviser and Joint Broker)
+44 (0) 20 3470 0470
Brandon Hill Capital Ltd
Oliver Stansfield, Jonathan Evans
+44 20 7936 5200
IFC Advisory Limited
(Financial PR and IR)
+44 (0) 20 3934 6630