Edenville Energy Plc (LON:EDL), the AIM quoted company operating the Rukwa Coal Project in southwest Tanzania, has provided an operational and corporate update.
Current Operational Situation
The Rukwa mine has been operating since operations recommenced on 3 August 2020 and continues to fulfil its pre-purchase orders. The Company successfully restructured its staffing requirements during the summer and can confirm that employee numbers on site have been reduced by circa 50%. No major production issues have been experienced.
Transition to Coal Mining Agreement
As previously announced, the commencement date for the Company’s strategic partner Infrastructure and Logistics Tanzania Ltd (“ILTL”) to take over Rukwa operations pursuant to the Coal Mining Agreement (“CMA”) was 1 September 2020 (the “Commencement Date”).
The CMA contains a provision for a mobilisation period of up to 60 days from the Commencement Date to ensure both ILTL’s equipment and personnel are at site. Both Edenville and ILTL have been working towards an earlier hand over date and had expected the transition to have taken place during September 2020. However, given administrative issues relating to work permits between the Tanzanian Government and ILTL, principally as a result of a backlog caused by Covid-19, the transition is now expected to take place during October, ahead of the 1 November 2020 deadline.
ILTL and EDL have continued to work closely since the last update, finalising the procedural aspects of the transition and identifying how to optimise operational efficiencies to increase production at Rukwa. ILTL has also been undertaking marketing and sales activities for Rukwa coal, as foreshadowed in the Sales and Marketing Agreement, with a number of positive developments with respect to additional contracts. These are expected to be formalised and announced following the transition.
Funding Agreement with Lind Partners LLC
The Company also provides an update regarding its outstanding funding agreement with Lind Partners LLC (“Lind”), that was first announced on 6 November 2018 and further detailed in the Company’s announcements of 29 April 2019, 23 January 2020 and 7 April 2020 (the “Funding Agreement”).
Following the recent conclusion of the deferral period and given the brief period of COVID-related mine suspension and subsequent ongoing production ramp up, Edenville notified Lind that it wished to make the July, August and September 2020 repayments in shares, as is its right under the Funding Agreement. However, to date, Lind has not taken delivery of the shares, so no additional monthly payments have been made.
These three-monthly payments represent approximately US$150,000 of the total outstanding balance of the Funding Agreement, which is currently US$580,000. Lind has subsequently requested that Edenville repay the total outstanding balance of the Funding Agreement by 30 November 2020. The Company does not accept the proposed date of repayment as under the terms of the Funding Agreement the loan expires in June 2021.
The Company is holding further discussions with Lind in order to agree a way forward. A further announcement regarding the status of the Funding Agreement will be made as soon as practicable.
Annual General Meeting
The Company will shortly announce details of its AGM, which will be structured in accordance with the UK Covid-19 guidelines.
Commenting, CEO of Edenville Alistair Muir, said:
“The Company has made good progress at Rukwa since the last update, with production and sales continuing. Both Edenville and ILTL are preparing for the transition to take place at the earliest possible opportunity. To date administrative delays have hampered the relocation of ILTL staff into Tanzania, although we have been advised these issues will be resolved by mid-October, enabling the transition under the terms of the CMA to take place before 1 November 2020”.
“The transition will see us entering an exciting new phase for Rukwa and we look forward to a fruitful relationship with ILTL.”
