(Alliance News) - Edenville Energy PLC on Monday announced a GBP500,000 placing at 0.04 pence per share and the signing of a coal mining agreement for the Rukwa coal project in Tanzania.
Shares in Edenville were up 29% at 0.055 pence in London on Monday afternoon.
As the ramp up at Rukwa has been delayed first by a protracted rainy season and then the Covid-19 pandemic, Edenville has needed to stake steps "to address its working capital position".
To this end, Edenville has raised GBP500,000 through the issue of 1.25 billion shares at 0.04p each - the same as its January capital raise. Of this, 71% was subscribed for by the company's four major shareholders, who will collectively represent around 62% of share in issue once placing shares are admitted to AIM.
Brandon Hill Capital Ltd was broker for the placing. Brandon Hill and its executives, Neal Griffith and Oliver Stansfield, who currently hold a 20% stake in Edenville, will subscribe for 277.6 million share. This represents a GBP111,050 cash subscription and will give them a 21% stake in the company's enlarged share capital.
Furthermore, Edenville has been talking with its creditors and been able to cut its current liabilities from around GBP270,000 to around GBP145,000. Around 25% of placing proceeds will be used to settle these creditors while the rest will go towards general working capital and operations.
As part of the settlement agreement with creditors, 257.7 million warrants were granted with an exercise price of 0.06p per share.
Once the placing and payment to creditors complete, Edenville's cash balance will total around GBP375,000. Along with a proposed loan from Infrastructure & Logistics Tanzania Ltd, this amount leaves Edenville "comfortable it will have sufficient funds to bring Rukwa into a position where it is cashflow positive from operations."
ILTL - a private company focused on infrastructure development, marketing, logistics, and mining - has signed a coal mining agreement with Edenville subsidiary Edenville International (Tanzania) Ltd. ILTL will become an Edenville customer before mining operations resume in Tanzania once pandemic restrictions ease.
The plan is for ILTL to enter a long-term coal supply agreement with ILTL providing an anchor tenancy at Rukwa by purchasing 3,000 tonnes of washed coal per month at standard market rates, increasing to 5,000 tonnes per month over a 12 month period.
"ILTL are also expected to use their logistics network and expertise with respect to existing and potential customers. The directors believe this should improve the likelihood of future customers entering into long-term contracts with the company, given they would benefit from these anticipated transport and logistics savings," said Edenville.
At present, operations at Rukwa are suspended during the pandemic but Edenville is prepared "to recommence activity as soon as practicable" when it is safe.
Chief Executive Alistair Muir said: "I'm delighted to be able to make this announcement as I believe it heralds a new chapter for Edenville. It has taken some time to finalise the coal mining agreement, largely due to global developments in 2020. However, I am confident we have now struck a beneficial arrangement for our shareholders, which we hope will set the pattern for our future strategic partnership with ILTL.
"I would like to thank all Edenville shareholders for their patience over the last few months. I would also like to thank our major shareholders, who once again have all subscribed for at least their pro rata in this capital raise, representing over 70% of the total raise. Their long-term support is greatly appreciated and I believe continues to highlight the value proposition Edenville offers. I hope to deliver on various milestones over the coming weeks and months and look forward to providing our shareholders with further updates on these matters as appropriate."
By Anna Farley; annafarley@alliancenews.com
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