LONDON (Alliance News) - Edenville Energy PLC on Tuesday said the company is still struggling to raise the capital needed to develop its flagship Rukwa coal-to-power project in Tanzania as it reported a wider loss during 2015 due to higher impairments.
The company is focused on developing the Rukwa project, a two-pronged development that will be comprised of a coal mine that will feed a power plant to generate power for the domestic market as Edenville attempts to capitalise from the Tanzanian government's drive to support power distribution infrastructure in the country.
Edenville has completed the feasibility study for the power plant at Rukwa and is expected to release the study covering the coal mine shortly. In the meanwhile, Edenville said site preparations are starting after securing the all-important mining licence earlier this year.
"We have a clear framework for project development, and the team at Edenville remain focused on achieving all milestones in parallel with the Tanzanian government's stated aim to roll out supporting power distribution infrastructure in south western Tanzania," said Chairman and Chief Executive Rufus Short.
However, Short admitted the biggest challenge facing the company, as well as the wider sector, is raising the capital needed to develop Rukwa. The company's cash balance more than halved in 2015, standing at GBP316,652 at the end of 2015 from GBP641,830 at the end of 2014.
"Like most small natural resource companies the challenge the company continues to face is the raising of development capital. However, with the continued support of the Tanzanian authorities, along with the considerable interest shown by international groups and institutions, we will endeavour to continue to source suitable capital when available for the project to continue its progress to development," said Short.
Since the start of 2016, Edenville has made progress. The company has advanced its framework agreement with Tanesco and signed a collaboration deal with Ruhn Power, a Chinese company.
"There has been significant interest from groups and investors wishing to move forward with Edenville to develop the project. These discussions are ongoing and the outcome, including selection of partners and entering into commercial agreements, will be dependent amongst other things on formalisation of the framework agreement with Tanesco which the company is currently working on," said Edenville.
In terms of physical development of the project, Edenville said the equipment is on site and preparations will begin imminently. The initial priorities will be on improving access through roads, defining areas for other mine infrastructure, and the preparation for the removal of a bulk sample of coal to be washed and analysed in South Africa.
That sample will allow Edenville to design its coal-wash plant to ensure it is optimal for the feed.
Edenville reported a wider loss in 2015 amounting to GBP4.5 million compared to the GBP2.3 million loss made in 2014. Although administrative costs were a smidgen lower in the year, a rise in impairments and a fall in finance income pushed Edenville deeper into the red.
Impairments totalled GBP3.6 million in 2015 compared to GBP1.3 million a year earlier as the company impaired three early-stage exploration licenses containing uranium which it relinquished last month. On a more positive note, Edenville believes it will save USD250,000 over the next 12 months by reducing its licence commitments.
Finance income, which is derived from interest on bank deposits, fell to only GBP20,000 in 2015 from GBP1.0 million the year before.
Edenville shares were trading down 13% to 0.0238 pence per share on Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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