# Edenville Energy Plc Rukwa Coal Project – Update

- Link: https://www.directorstalkinterviews.com/edenville-energy-plc-rukwa-coal-project-update-2/412774846
- Published: 2019-05-14T07:15:58+01:00
- Author: Giles Arbor

**Edenville Energy Plc** (LON: EDL), the AIM quoted company developing the Rukwa
coal project in southwest Tanzania, has today provided 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 £100,000 and Conditional Placing to raise a further £410,000
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 Energy 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 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.

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