Edenville Energy PLC Corporate Update (0695V)
November 29 2019 - 2:00AM
UK Regulatory
TIDMEDL
RNS Number : 0695V
Edenville Energy PLC
29 November 2019
29 November 2019
EDENVILLE ENERGY PLC
("Edenville" or the "Company")
Corporate Update
Edenville Energy Plc (AIM: EDL), the AIM quoted company
developing the Rukwa coal project in southwest Tanzania, provides
an update on recent corporate developments, the current mining
operations at its flagship Rukwa Coal Project (the "Project") and
the Company's current financial position.
Current Operations
Following the refinancing of the Company, in particular through
the fund raisings undertaken in April and September 2019,
significant investments have been made in plant and equipment at
the Project site, including wash plant upgrades and the purchase of
the Company's own trucks in August 2019. The Company has also been
able to begin mining at the new Northern Area, which has yielded
near surface and thicker coal zones (up to 40m thick versus
previous thicknesses of 3.5m) and also higher energy value coal
than that previously mined. However, since the announcement of the
interim results for the six months to 30 June 2019 on 27 September
2019, further operational progress has been limited, primarily due
to working capital constraints and the onset of the rainy season at
the beginning of November.
Consequently, whilst the Directors believe the Project currently
has an estimated production capacity of approximately 12,000 tonnes
of washed product per month, recent production levels have been
significantly lower than this with 820 tonnes of washed coal
produced from 21 September 2019 to the present time. During this
period the Company sold 1,021 tonnes of washed coal, which included
some coal from the stockpile at the Project. This was sufficient to
satisfy a long-term customer. In addition to this, nearly 30,000
tonnes of overburden were stripped during September and October,
providing ready access to the coal zone for production.
During this period the Company has continued to identify new
potential customers who, combined with existing customers,
cumulatively have demand in excess of the current capacity, but in
order to meet this demand and expand operations the Company will
require additional working capital.
Funding Agreement with Lind
As previously announced, it is the current intention of the
Company to repay its outstanding funding agreement (the "Funding
Agreement") with Lind Partners LLC ("Lind"), that was first
announced on 6 November 2018 and further detailed in the Company's
announcement of 29 April 2019, in cash. The repayment holiday ended
in August 2019 and all cash payments under the repayment schedule
have been made to Lind to date. Consequently a balance of
US$835,760 now remains outstanding under the Funding Agreement,
repayable on a monthly basis at an amount of US$50,637.38 per
month.
Loan Agreement and Current Financial Position
In order to satisfy the Company's immediate working capital
requirements, the Company has entered into an agreement with a
private lender to secure a non-convertible GBP100,000 loan (the
"Loan"). The Loan carries a fixed coupon rate of 20% per annum and
must be repaid on or before 25 February 2020. Including the Loan
funds, the Company currently has cash resources of approximately
US$190,000. Whilst this will provide the Company with sufficient
funds for its immediate needs and enable Edenville to satisfy
orders from an existing customer, it does not provide sufficient
working capital to enable the Project to operate at its planned
capacity, nor to continue the 2020 monthly payments to Lind in
cash.
To address this, the Company is currently in discussions
relating to an investment at the Project level with a potential
strategic investor with experience in Tanzania and the neighbouring
region. A further update on this will be made as soon as
practicable. Whilst these discussions are at an advanced stage and
the Directors believe they will reach a Heads of Terms with the
investor in December, the Board cannot guarantee discussions will
result in a positive outcome for the Company.
Moreover, to help ensure the Company has sufficient time to
close this transaction or source additional funds, either at
Project or Company level, the Directors have implemented certain
cost cutting measures in order to be able to deploy available
capital to the Project. As part of this, the Directors either have
not taken their salaries or have drawn reduced salaries since
September 2019. In the event the Company is unable to secure
project level funding by early Q1 2020, Edenville will require a
further capital injection. Following conversations with its broker
and major shareholders, who recently participated in the September
2019 equity issue at 0.05p per share, the Directors believe
sourcing this capital would be achievable.
Alistair Muir, Chief Executive Officer of Edenville, commented:
"Since my appointment as the Company's new Chief Executive Officer
on 1 November 2019 I have undertaken a thorough review of the
Company and the Rukwa Coal Project, including spending the majority
of my time at site where I met both existing and potential
customers. I am encouraged by what I have seen at the Project site
and believe in Edenville's potential.
"We believe Edenville can meet the demands for coal in the
regional market. In the long term I believe the Project has the
potential to supply in excess of 25,000 tonnes per month to a range
of industries, although the current plant capacity restricts us to
being able to produce a maximum of approximately 12,000 tonnes per
month of washed product. Whilst the current working capital
situation is hampering our ability to reach these levels, I am
optimistic that all is in place to achieve these production levels
in the medium to long term once the working capital situation has
been addressed. Our desire is to address the shortfall with a
capital injection at the Project level if possible.
"Assuming we are able to source the requisite funds, our aim
still remains to become cash flow positive from operations during
2020. I look forward to providing further updates as soon as
practicable."
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
(Nominated Adviser and Joint Broker)
David Hignell
Charlie Bouverat
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
Florence Chandler +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
UPDZMMZMRRRGLZM
(END) Dow Jones Newswires
November 29, 2019 02:00 ET (07:00 GMT)
Edenville Energy (LSE:EDL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Edenville Energy (LSE:EDL)
Historical Stock Chart
From Sep 2023 to Sep 2024