Edenville Energy Plc (AIM: EDL) is pleased to provide an update on operations at its Rukwa Coal Project (“Rukwa”) in Tanzania.
- Production recommenced at Rukwa at an initial 4,000 tonnes per month of washed coal
- Completed overhaul of wash plant expected to significantly improve output
- Potential customer base has now been identified in excess of the previously targeted 6,000 tonnes per month of washed coal
- Pricing discussions now exceeding the previously outlined range of US$35-50 per tonne
Recommencement of production and improvements to the wash plant
Following the planned servicing and repairs on the main machinery and wash plant at the Rukwa site, as well as the purchase of two additional trucks, the Company is pleased to report production and sales have now recommenced at Rukwa. In particular, the wash plant has benefited from significant repair and upgrades, which is expected to address historically poor performance.
Since production of coal recommenced last week, under the day-to-day operational management of Brahma Energies Limited (“Brahma”), as detailed in the Company’s announcement of 16 August 2022, output from the wash plant has averaged 14.87 tonnes of washed coal per hour, consistent with the initially targeted cumulative monthly output of approximately 4,000 tonnes per month. Further refinements to operations will continue over the coming weeks, as Brahma seek to optimise output and further improve production rates of washed coal. The Company is also ensuring an inventory of spare parts is amassed at site, thereby minimizing any future down time.
Further announcements will be made on levels of production in due course. Photos and videos of the operations at the Rukwa site will also be uploaded to the Company’s website shortly.
Update on sales and offtake
With the wash plant now working consistently, the Company in conjunction with Brahma, expect to shortly enter into supply agreements with identified existing and new clients.
The recommencement of production at Rukwa has coincided with a dramatic uplift in global thermal coal prices, which have risen from c.US$125 per tonne a year ago to c.US$450 per tonne in 2022, with Tanzanian coal now also being exported to Europe. This has positively impacted the sales price for Rukwa coal. Both the macro and micro outlook, coupled with the efforts of the new in-country marketing team to reach new customers, has led to significant progress with potential customers.
The Company believes a potential customer base has now been identified in excess of the previously targeted 6,000 tonnes per month of washed coal at a net price greater than the previously estimated range of US$35-50 per tonne at the mine gate. Accordingly, the board is assessing further opportunities to enhance the production required to meet this increase in demand, and economics of the Rukwa project, especially given that at the current production rate, the Company expects to soon become cash generative.
Further announcements will be made in due course, as appropriate.
Noel Lyons, CEO of Edenville, commented:
“I am delighted to confirm operations at Rukwa have recommenced. Since joining the board three months ago with my new fellow directors, we have overseen dramatic change at site. Operations have been overhauled, and new mining and processing equipment has been procured and delivered to site, whilst other parts of the existing infrastructure have been repaired and upgraded. Together with our new day-to-day operational management team at the mine, we are seeing our co-operation with Brahma bearing fruit already, with production now underway.
“This has coincided with a dramatic uplift across the globe in the thermal coal price, which has seen prices rise more than threefold over the last year, with Tanzanian coal now also being exported to Europe. This has naturally positively impacted the likely sales price for Rukwa coal, which now exceeds the previously reported guidance. Both the macro and micro outlook has led to potential customers coming forward and we expect to provide an update in the near term.
“Accordingly, with the Company expected to be shortly turning cashflow positive on the basis of current production levels and anticipated supply agreements, I believe the outlook for Edenville and Rukwa is now more promising than ever before. We will continue to optimise Rukwa where possible and I look forward to providing updates on additional progress in due course.”
For further information please contact:
Edenville Energy Plc
Nick Von Schirnding – Chairman | Noel Lyons – CEO
+44 (0) 20 3934 6630
Strand Hanson Limited (Financial and Nominated Adviser)
James Harris | Rory Murphy
+44 (0) 02 7409 3494
Tavira Securities Limited (Broker)
Oliver Stansfield | Jonathan Evans
+44 (0) 20 7100 5100
IFC Advisory Limited (Financial PR and IR)
Tim Metcalfe | Florence Chandler
+44 (0) 20 3934 6630