23rd Jan 2020 12:02
(Alliance News) - Edenville Energy PLC said Thursday it has raised GBP700,000 through a placing with existing stakeholders securing necessary working capital for its flagship Rukwa Coal Project in southwest Tanzania.
Shares in the coal producer were trading 26% higher in London at 0.060 pence each on Thursday.
The company said it has raised GBP700,000 by placing 1.75 million shares at a price of 0.04 pence with existing shareholders. The proceeds will secure the necessary working capital to meet the current contracted production demands of up to 12,000 tonnes of washed coal per month at Rukwa Coal Project.
In November the company had warned it might need to conduct another fundraiser as operation progress had been limited, following the start of the rainy season in November and "working capital constraints".
As a result, only 820 tonnes of washed coal was produced at Rukwa from 21 September to November 29, despite estimated production capacity being 12,000 tonnes per month.
Back in November the company had also announced it entered into an agreement with a private lender Brian McMaster to obtain a GBP100,000 non-convertible loan with a 20% per annum fixed coupon rate which must be repaid by February 25, 2020.
To ensure sufficient access to working capital if required, McMaster advised the company he would be willing to provide a loan of GBP300,000, in addition to his direct equity of subscription for GBP300,000.
The company also announced that Non-Executive Director Rufus Short will be stepping down from his role before March 31. The company said it intends to appoint a new director to coincide with Short's departure.
Alistair Muir, chief executive officer, said: "Now that the working capital issues have been addressed, I believe Edenville is well placed to be cash flow positive this year, as we start to deliver on our contracted orders."
"Moreover, we are also looking at development scenarios that will enable us to further increase production beyond the current capacity of the wash plant, which we estimate is in the order of 12,500 tonnes per month (assuming a plant availability of 66%), in the event some of the targeted additional contracts come to fruition," Muir added.
Edenville Energy also said its Tanzanian subsidiary Edenville International Ltd recently lodged a tender for the supply of 12,000 tonnes of washed coal to a Rwandan power station.
The company believes "it is geographically well placed to provide coal at a competitive price compared to other potential suppliers and is awaiting the outcome of this tender".
By Loreta Juodagalvyte; [email protected]
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