Edenville Energy plc (AIM: EDL), the company developing a coal project in southwest Tanzania, is pleased to provide a further update in relation to the Company’s recently established commercial coal production.
· One year contract for a minimum of 2,000 tonnes of coal per month has been signed;
· Further trial orders of several thousand tonnes for other potential customers are being filled;
· All current orders are being sold at commercial market rates, similar to those expected for longer-term contracts;
· Logistical challenges have now been resolved at no cost to the Company; and
· Payments for coal shipped at the end of 2017 are now being received as anticipated.
Since the Company Update announcement of 31 January 2018, Edenville has continued to supply coal on a commercial basis and has received further orders. The Company has now signed a one year contract with an East African industrial user for a minimum 2,000 tonnes per month with favourable payment terms.
In addition, the Company is pleased to have commenced production on a new order for 4,000 tonnes of coal for use by a Tanzanian customer. If the coal is deemed suitable for the customer’s needs having utilised this initial order, the customer has requested another 60,000 tonnes over a period of 6 months (an average of 10,000 tonnes per month). In parallel, trials are underway with a third customer, which if successful is expected to result in future orders on an ongoing basis.
Importantly, the Company believes it has now found solutions to the recent logistical challenges with transporting mined coal, as detailed in the announcement on 31 January 2018, and now has several transport options available at competitive market prices and with no current requirement for capital expenditure by Edenville.
The Company is also pleased to report that it has now started receiving payments for the coal shipments made in late 2017, which is in line with the agreed payment terms.
With significant demand for the Company’s coal and long-term order indications in excess of the amount of coal that the Company can supply in the short to medium-term, the focus is on entering into long-term contracts with those groups that can provide attractive payment terms, maximising the price per tonne and minimising credit terms. Whilst these longer-term contractual negotiations continue, with the goal of ensuring the best long-term economic outcome for the Company, Edenville will continue to supply and be paid commercial rates for significant bulk and trial orders. For the avoidance of doubt the coal subject to these current individual bulk and trial orders is being supplied at a similar price per tonne as is envisaged for longer-term contracts.
Commenting, Rufus Short, CEO of Edenville said, “As we progress our coal to power project we believe we are in a strong position as a coal producer in Tanzania. Whilst our current production is mainly under one off contracts with potential longer-term customers, we are confident that a sufficient number of these orders will lead to longer-term contracts. This coal is being sold at commercial market rates, similar to those rates we expect for longer-term deals.”
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.
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