Edenville Energy Plc (AIM: EDL), the AIM quoted company operating the Rukwa Coal Project in southwest Tanzania (the “Project” or “Rukwa”), is pleased to announce that the Company’s subsidiary Edenville International (Tanzania) Limited (“EITL”) has entered into a Sales and Marketing Agreement with MarTek Global FZ-LLC (“MarTek”). MarTek is a Dubai-based sister company to Infrastructure and Logistics Tanzania Limited (“ILTL”), with both having the same principal shareholder.
The Sales and Marketing Agreement follows on from the recently announced Coal Mining Agreement (“CMA”) with ILTL, which provided for a fixed rate mining and processing contract at Rukwa and which is scheduled to take effect from 1 September 2020. The CMA has a contract term of four years and will be automatically renewed for further period of four years unless terminated by either party (for further details please see RNS of 8 June 2020). The CMA was complimented by a recent US$1m Loan Agreement with ILTL, which further aligned the respective interests of both parties. The Sales and Marketing Agreement is the final piece in the previously announced strategic partnership.
Sales and Marketing Agreement
- Sales and Marketing Agreement comes into immediate effect and remains in place for a minimum of four years.
- MarTek to provide an anchor tenancy at Rukwa, of 3,000 tonnes per month of washed coal, increasing to 5,000 tonnes per month over the first 12 months.
- MarTek’s purchase price for Rukwa coal, is the highest EITL has achieved to date and should provide the Company with a healthy margin on tonnes sold.
- EITL and MarTek will share marketing and sales responsibilities in Tanzania for any sales above the anchor tenancy.
- MarTek will have exclusive rights to market Rukwa coal internationally at the pre-agreed sales price, with any transport costs to be added to the sales price.
- MarTek expects to leverage its logistics capabilities to supply these new markets.
- EITL, MarTek and ILTL have agreed to focus on maximising production from Rukwa with a target of increasing capacity in the near term to circa 12,500 tonnes per month.
- Initial marketing efforts from both MarTek and EITL suggests sufficient demand for Rukwa coal exists to utilise any additional supply.
Status of Operations at Rukwa
The anticipated despatches of coal have now commenced following the recent arrival of the first trucks at Rukwa.
Commenting, CEO of Edenville Alistair Muir, said:
“I am delighted to confirm this third and final contract is now in place and brings to conclusion the restructuring of our Tanzanian operations. We believe these agreements will collectively address the previous challenges, particularly in mining, processing and sales, that Edenville has experienced in recent years.
Feedback from ILTL and MarTek has been encouraging with respect to the appetite for Rukwa coal and all parties are now focused on adding to the order book, which has been underpinned by the anchor tenancy and MarTek’s purchase price.
Whilst concluding all three agreements has taken longer than envisaged as a result of the COVID-19 pandemic, we are excited to have now reached this point. Mining and processing is underway again at Rukwa and I look forward to providing our shareholders with further updates in due course.
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
Alistair Muir – CEO
+44 (0) 20 3934 6630
SP Angel Corporate Finance LLP
+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