Edenville Energy inks two new coal supply contracts
London-listed has signed two new contracts to supply up to 9,000 tonnes of washed coal per month from the group’s flagship Rukwa Coal Project.
The first contract, signed for up to 6,000 tonnes per month, has been signed with Rwandan company, Tara Group, a wholly owned subsidiary of Tanzanian company, Kitanyoe Group Company.
Edenville revealed the contract to be of particular note as it holds the potential to open up a more cost-effective transport route for the group's coal on Lake Tanganyika to both Rwanda and Barundi.
The second contract, signed for up to 3,000 tonnes per month has been signed with Ugandan company, Springwood Capital with the expected end user being a Kampala based steel works.
Together, the new deals represent a total supply of up to 9,000 tonnes per month, which is approximately 75% of the current capacity of the recently refurbished wash plant.
Alistair Muir, Chief Executive of Edenville said the project had “significant advantage” of being the most northerly coal mine in the region by some 700km - “I believe these contracts represent an important first step,” he stated.
Shares in Edenville Energy were trading 30.77% higher at 0.0425p on Wednesday morning.
He added: “Now Rukwa has to deliver and assuming the required operational funds are secured we should see the mine and plant delivering as initially planned and our goal of becoming cash flow positive being realised.”
Edenville expects to be in a position to supply coal on an ongoing basis under these contracts before the end of Q1 2020 and foresees reaching cashflow breakeven at Rukwa by May 2020.
The progression of the supply arrangements are dependent on the company securing sufficient operating capital to fund production, as detailed in an earlier November statement.
The company further explained that whilst there is ‘no current certainty’ regarding negotiations leading to a successful outcome, the Board is in agreement that the two new contracts increase the attractiveness ‘of both the project and the company’ for potential investors.
Since the opening up the Northern Mining Area earlier this year, Edenville has expanded its marketing efforts in the countries to the north of Tanzania, in particular Uganda, Rwanda, and Burundi.
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