Edenville Energy PLC Rukwa Coal Project - Update (8910Y)
May 14 2019 - 2:01AM
UK Regulatory
TIDMEDL
RNS Number : 8910Y
Edenville Energy PLC
14 May 2019
14 May 2019
EDENVILLE ENERGY PLC
("Edenville" or the "Company")
Rukwa Coal Project - Update
Edenville Energy Plc (AIM: EDL), the AIM quoted company
developing the Rukwa coal project in southwest Tanzania (the
"Project"), is pleased to provide an update with respect to its
current and targeted operations for the remainder of 2019.
As announced on 1 April 2019, following the limited take up of
the Open Offer, the Company was forced to constrain operations in
order to maintain capital whilst an alternate funding scenario was
secured. This funding solution was provided through the Firm
Placing to raise GBP100,000 and Conditional Placing to raise a
further GBP410,000 as announced on 29 April 2019. With the Firm
Placing proceeds now received and the net proceeds from the
Conditional Placing expected shortly, subject to shareholder
approval at the General Meeting to be held on 17 May 2019, the
Company has recommenced activities as follows.
Plant
The Company has utilised the period of limited production to
further optimise the plant and facilities. The recalibration of
parts of the plant, orders of additional low capex items and
reorganisation of the workforce is under way and all upgrades are
expected to be completed by the end of June 2019. These are in
addition to the plant upgrades such as the installation of the
Lamella water treatment plant and the introduction of a
pre-screening plant, that have taken place over the last six months
and were summarised in the announcement of 29 April 2019.
Upon completion of this optimisation process, the Company
expects to eliminate the previous issues that had hindered the
throughput and operational capacity of the plant, thereby enabling
the plant to reach its targeted initial production capacity of
10,000 tonnes of washed coal per month. Total capital investment in
these recent upgrades is expected to be less than US$50,000 and the
Company's Directors believe this investment should enhance the
future performance of the Project.
Mining Operations
The Company has commenced site preparations for road
construction to the new mining area, to the north of current
operations. Upon completion of road construction, the Company
intends to open up this new pit and commence extracting coal from
it before the end of Q3 2019. Prior to opening the northern mining
area, the Company plans to continue to mine the existing pit to
build up stockpiles and supply to existing customers.
Sales (Washed Coal)
In recent times Edenville has only achieved modest levels of
production and as such the inventory of washed coal has been
exhausted. The Company has been able to sell all the washed coal it
has produced to date and believes the current contracts which are
in place for circa 8,000 tonnes per month in aggregate, will be
able to be satisfied from opening up the northern mining area.
From recent enquiries received the Company believes there is a
potential broader market for in excess of 10,000 tonnes of washed
coal per month. As the stockpiles build following the restart of
operations, the Company will recommence sales to its existing
client base and will continue to target additional orders from new
and existing customers.
Sales (Fine Coal)
The Company's Directors believe the Project will become cashflow
positive at a steady rate of 6,000 tonnes per month of washed coal
sales. The fine coal is effectively produced as a by-product and to
that end Edenville is continuing discussions with its previously
outlined buyers of fine coal.
Other opportunities available to Edenville with regards to sales
of fine coal are also being assessed. These include briquetting or
the introduction of secondary processing to beneficiate the coal
and improve the calorific value, thereby enhancing the desirability
of the product. Although this would require additional capital
expenditure, the Company believes this to be modest with a short
payback period. The Company's Directors expect to be able to fund
any upgrades to infrastructure from free cash flow from future
mining operations.
Power
Whilst Edenville's primary focus is to turn the Project cash
flow positive within the next 12 months through the sale of washed
and fine coal, the Company is continuing discussions relating to
power generation. As announced on 21 September 2016 an independent
feasibility study provided for an NPV of US$252 million and an IRR
of 23% on a 120MW coal-to-power project.
As reported on 14 February 2019, Edenville's Request for
Qualification, submitted to Tanzania Electric Supply Company
("Tanesco") in Q4 2018, has been rejected at this stage. However,
discussions with Tanesco continue to ascertain the rationale for
this decision and the Company continues to explore alternatives to
the initial terms proposed. The Directors believe an integrated
approach to development of the coal-to-power project in parallel
with the roll out of electricity transmission infrastructure in the
region is the preferred route forward.
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 Joint
Broker)
David Hignell
Jamie Spotswood
Abigail Wayne +44 (0) 20 3470 0470
Brandon Hill Capital Ltd
(Joint Broker)
Oliver Stansfield, Jonathan Evans +44 20 7936 5200
IFC Advisory Limited
(Financial PR and IR)
Tim Metcalfe
Graham Herring
Heather Armstrong +44 (0) 20 3934 6630
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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