LONDON (Alliance News) - Edenville Energy PLC said Monday operations at Rukwa coal to power project in Tanzania have been "constrained" due to the "low level" of take up for the company's open offer in February.
Shares in Edenville Energy were down 24% Monday at 0.034 pence each.
In February, Edenville raised GBP61,418 from an open offer to existing shareholders and a further GBP15,000 from a subscription from Chair Jeffrey Malaihollo. The company was hoping to raise GBP619,099.
Due to the lower than expected capital raising, Edenville said operations at Rukwa has been limited as the company has implemented cost cutting measures to "preserve working capital".
Edenville was hoping to open up the northern pit at the project, but has been unable to due to the cost cutting.
The company said it will need to raise additional capital in the near term to meets its project and corporate commitments.
The supply of consumables - fuel and magnetite - has been affected by the constrained working capital, which has resulted in a fall in production rates in the first quarter.
Between January 1 and March 26, Edenville processed 17,760 tonnes of run of mine coal, producing about 3,116 tonnes of washed coal and about 7,992 of fine coal. In 2019 to date, Edenville has sold and shipped about 3,510 tonnes of coal, with the majority being washed coal.
Edenville stressed these figures are unaudited and are subject to change.
Until additional capital has been raised, the company does not expect production to increase from current levels. The conservation of capital will allow Edenville to continue production for the company's core customers.
Edenville has stockpiled 40,000 tonnes of fine coal which is being produced on a daily basis, the sale of which is providing an additional income stream for the company. Edenville has received an order for 1,000 tonnes of fine coal which it expects will lead to follow-up orders. The company anticipates monthly orders for between 5,000 and 10,000 tonnes.
Edenville expects fine coal sales to provide an increasing source of revenue throughout the rest of 2019.
The company added it has not received a detailed explanation from the Tanzania Electricity Supply Co - Tanesco - for not moving forward with the anticipated coal to power generation plans.
Edenville said: "The company is concentrating on its commercial coal operations, whilst maintaining a dialogue with Tanesco, until the economic and political environment for coal to power generation in Tanzania is more clearly defined by the appropriate authorities."
The company expects to release its 2018 results in "early June".
