LONDON (Alliance News) - Shares in Edenville Energy PLC soared on Tuesday after it said it has completed an optimisation process at its coal plant and now expects the plant to reach targeted production despite "previous issues".
The coal project developer's shares were trading at 0.12 pence on Tuesday morning, more than twice its 0.052p closing price on Monday but still less than its 0.16p share price at the start of 2019.
Edenville has experienced a number of difficulties with its Rukwa coal project, which is located in Tanzania. These problems have mainly stemmed from a lack of capital, which has prevented the company from opening the northern pit at Rukwa and has caused production rates to fall.
In February, Edenville raised only GBP61,418 from an open offer of shares and GBP15,000 from a share subscription by its chair, just a fraction of the GBP619,099 it had been trying to raise. This forced it to implement cost-saving measures.
However, the company has now completed and received funds from a firm placing, announced at the start of April, which raised GBP100,000. The company also said it expects to receive the proceeds of its GBP410,000 conditional placing "shortly" once shareholder approval is granted.
The company said it has used the limited production period it has experienced to optimise its plant and facility, including recalibration, orders for low-cost items, and reorganising its workforce. This is all expected to be completed by the end of June.
Once the optimisation process is complete, Edenville "expects to eliminate the previous issues that had hindered the throughput and operational capacity of the plant". This should, therefore, allow the plant to reach its is 10,000 tonnes of washed coal per month target for initial production.
The total investment in these upgrades is likely to be less than USD50,000 and "should enhance the future performance of the project".
Edenville has begun preparations to build a road to a new mining area in the north, which will allow it to open the new pit and begin extracting coal before the third quarter of the year is over.
Edenville's recent production has been "modest" and its washed coal inventory has been exhausted. The company has sold all the washed coal it has produced so far and has contracts for around 8,000 tonnes per month in total, which will be satisfied from opening up the northern area.
In terms of fine coal, which is produced as a by-product, Edenville is in talks with fine coal buyers. The company is also looking at other options, such as briquetting or processing the coal. While this would need more capital expenditure, Edenville expects this be be modest and have a "short payback period". Such upgrades would be funded from future mining.
While turning Rukwa into a cash flow positive project in the next 12 months is Edenvilles main goal, the company is still in talks regarding power generation. In February, Tanzania Electric Supply Co rejected Edenville's bid to develop a coal power project in Tanzania but Edenville is still in talks to find out why it was rejected and provide alternative terms to Tanzania Electric.
"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," said Edenville.
