(Sharecast News) - Edenville Energy updated the market on the operation of its Rukwa coal project in Tanzania on Tuesday, announcing the termination of its coal mining agreement with Nextgen.
The AIM-traded firm had said on 18 May that it was in discussions with Nextgen Coalmine to vary the contract for the operation of Rukwa, entered into on 3 February.
It confirmed on Tuesday that it had reached an agreement with NextGen to terminate the contract, and had subsequently resumed full control of the site and mining operations.
Following the termination of the contract, all mining equipment was brought back into service by the company, while an additional pre-strip excavator was added to the fleet.
Up to three additional trucks were also being sourced to "rapidly scale" production.
The firm said its initial goal was to satisfy existing demand from local customers of 1,500 tonnes of washed lump coal product, and 500 tonnes of coal fines in the immediate future, targeting sales of 5,000 tonnes per month of washed coal late in the third quarter of 2022, with coal fines sales also expected to continue and possibly expand.
Edenville said it believed there was "sufficient demand" based on its existing order book and recent discussions with potential customers to sell any coal produced at Rukwa.
Additionally, further to its announcement on 18 May that Upendo Group's current 10% economic interest in the joint venture that holds the Rukwa licences had been transferred to a 10% direct holding on the principal production licence, the company said it was still in talks with its legal advisers regarding the validity of the transfer and consequences thereof.
"The agreed termination of the agreement with Nextgen will enable the company to take advantage of the recent macro changes that have made the economics of our Rukwa project considerably more attractive," said chief executive officer Alistair Muir.
"The company is determined to maximise cash returns in the current global coal environment, especially given the attractive pricing forecast over the coming years.
"To this end Edenville has already started applying a modest proportion of its existing cash resources towards expanding the Rukwa operations to meet this heightened demand."
At 0815 BST, shares in Edenville Energy were up 7.37% at 20.4p.
Reporting by Josh White at Sharecast.com.
