EDL.L Regulatory News (EDL)

05 June 2018

EDENVILLE ENERGY PLC

("Edenville" or the "Company" or the "Group")

Annual Results for the year ended 31 December 2017

Edenville Energy plc (AIM: EDL), the company developing a coal project in southwest Tanzania, is pleased to announce its audited results for the year ended 31 December 2017.

2017 Highlights

· Infrastructure purchased and commissioned to allow mining operations to commence and coal to be processed

· Mining licence enlargement completed

· Commencement of mining at the Company's Rukwa site

· Trial shipments to commercial customers made

· Further progress on Power Plant Project

Post Period Highlights

· Operation of the mine and wash plant developed following the construction phase and a variety of sized coal products are being produced

· From 1 January 2018 to 24 May 2018 approximate numbers show 20,634 tonnes of Run of Mine coal processed, producing 5,665 tonnes of washed coal and 9,285 tonnes of fine coal

· Of the 5,665 tonnes of washed coal, 3,101 tonnes has been shipped and the Company is in receipt of orders that in aggregate total more than the currently stockpiled washed coal

Commenting, Jeffrey Malaihollo, Chairman of Edenville, said: "2017 was a pivotal year for Edenville as we moved from being an exploration company through to producing coal. It is a significant achievement to construct and operate a modern coal mine within approximately eight months and I believe the Company is now well positioned for the future.

"As we move through 2018 we intend to increase production levels from our Rukwa Mine and report further sales and contracts in the coming months, whilst continuing to progress our Power Plant Project."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

For further information please contact:

Chairman's Statement

During 2017 Edenville evolved from an exploration company through to producing coal for trial orders. This is in line with the strategy we set out last year to generate cash flow from mining operations whilst pursuing our longer-term Coal-to-Power Project. We believe that this is the best route to creating a profitable mining company around our coal deposit at the Rukwa site.

In February 2017 we raised £2,000,000, before expenses, to acquire a wash plant, critical mining equipment and commence construction at Rukwa. This was followed by another capital raise of £1,250,000, before expenses, in October to progress the project into production following construction and to develop the mining operation and infrastructure. By early October the Company had started mining coal on a trial basis and the wash plant entered the commissioning phase, with the first shipments of its trial coal being sent to East African customers in November and December.

It is a significant achievement to construct and operate a modern coal mine within approximately eight months. Quotations from contractors to supply equipment and construct the mine were significantly higher than the development route we chose, with some quoted capital costs such as the wash plant more than twice as high. Similarly, quotations for operating costs from contract miners were much higher than what we are able to achieve.

Following the commissioning of the plant, the operation is now producing and selling coal. The majority of orders have, up to now, been for trial coal and the Company is working with these companies with the intention of securing long-term supply contracts. The intention is to break even and achieve a cash flow positive position on the receipt of additional orders. Our target is a regularised 8,000 to 10,000 tonnes of production per month by the end of 2018 and although no guarantees can be given that our intended production target will be met in the desired timeframe, with the implementation of the plant upgrade, the Company's Directors believe this is achievable.

High-level discussions conducted with Tanzania Electric Supply Company ("Tanesco") and our partner Sinohydro Corporation of China, regarding the Power Plant Project, continue to shape our longer-term strategy. Additionally, the mining operation has given the Company valuable input on the character of the coal which will be critical in putting together a Definitive Feasibility Study for the Power Plant Project. Edenville and Sinohydro continue to work together under the terms of their MoU with the intention of progressing the development of the power project within the guidelines given by the Tanzanian authorities.

During the year we have had visits to the mine from various high-level officials and we anticipate that the Power Plant Project will advance more swiftly in the coming months now that the mine is operational. Amongst these visits was a recent inspection in February 2018 by the Deputy Minister of Minerals who also talked with the local community on the impact of the project to date. As one of the larger employers in the region we are very conscious of our role in local community.

Post Period

By January 2018, coal mining was underway and the wash plant was operational, as the Company continued to adjust and optimise production and quality control procedures. As is typical in any start-up operation, the Company faced operational challenges during this period including:

· Unusually heavy rainy season - affecting both the access and regional roads;

· Dependence on third party trucks to transport the coal to customers - affecting the timing of sales of coal and the supply of large-scale commercial samples to customers for long-term contracts; and

· Larger percentage of fine coal - affecting the efficiency of the wash plant.

All of these challenges have either been or are in the process of being resolved, however they did impact the Company's ability to enter full production in line with its initial timetable.

Customers are taking trial orders of differing quantities, some of several thousand tonnes. As announced on 27 February 2018, one group has entered into a one year contract for 2,000 tonnes of coal per month. Other potential customers are showing interest, so to ensure that current and potential orders can be fulfilled and to provide some additional working capital, the Company took the decision to raise £740,000 (before expenses) from the market in April 2018.

From 1 January 2018 to 24 May 2018 approximate numbers show we have processed 20,634 tonnes of Run of Mine ("ROM coal"), producing 5,665 tonnes of washed coal and 9,285 tonnes of fine coal. Of the 5,665 tonnes of washed coal, 3,101 tonnes has been shipped and we are in receipt of orders that in aggregate total more than the currently stockpiled washed coal. The wet season was a challenging time to start operations, but throughput is now increasing as dry conditions become more prevalent.

In closing I would like to thank all our stakeholders including you the Shareholders, our partners, the local authorities and local communities, my fellow Directors, our employees and contractors who have collectively enabled the Company to transition from exploration to production.

We look forward to increasing the production from our Rukwa Mine and reporting further sales and contracts in the coming months.

Dr Jeffrey Malaihollo

Chairman

Chief Executive Officers Report

I would first like to thank our shareholders and employees for their commitment over the previous year that has enabled the Company to evolve from an exploration project to a mine over the course of 2017.

We finished 2017 with an operating mine producing coal, established in under one year with several trial orders for coal and the prospect of additional long-term orders as production continued to ramp up.

In February 2017 £2,000,000, before expenses, was raised to fund the purchase of critical items for production and the construction of the project. Items included the coal washing plant, sourced from the UK, along with essential mobile equipment such as an excavator for the mine and a wheel loader for the plant stockpile area.

The wash plant was shipped to Tanzania in April and May. The customs formalities and in country transport took longer than we had anticipated, but the plant started to arrive on site in August and construction then proceeded swiftly thereafter, taking advantage of the dry season.

In parallel with the plant assembly we started to open up the mining area, stripping overburden from September onwards. After reviewing several different options for mining we decided to owner manage the project, hiring in relevant equipment as necessary to supplement our own loading units. So far this has proved to be an efficient and cost effective way to mine and we have been able to open up the mine with a minimal fleet of one excavator and three trucks, supported by ancillary equipment such as a hired bulldozer and grader.

In April 2017 the mining licence enlargement was completed to include the previous Primary Mining Licences (PML) in the Mkomolo area. This enabled a smooth transition to mining, with all areas of Mkomolo being held in the one licence, ML562/2016.

We constructed a new road over a length of 16km from the main public road to the west to allow access to site. Where possible existing tracks were utilised and upgraded but over 10km of brand new road was also constructed during the road building process. This road, although primarily for access to the site and use by trucks taking delivery of coal, also serves as a valuable resource for local villages and communities, which is part of our ongoing commitment to corporate social responsibility (CSR).

Once the remaining components were delivered to site in late September the construction was completed with the plant switched on in October. First collections of coal for trail orders were collected by customers in November.

Earlier in the year we had made the decision to expedite the construction process in the Tanzania dry season with the aim of completing the project by November. Whilst this enabled construction to take place in the dry months, it did mean we would be commissioning the new mining and processing operations during the wet season. Heavy rains, particularly in December and running into 2018, provided challenges to site access at times but the mining operation was able to keep pace with demand and plant capacity.

The site infrastructure installed included a weighbridge and a laboratory to analyse the coal for quality before and during shipment.

In parallel with the mine, it was clear the progression of the planned power plant depended to a great extent on the new energy policy and commercial metrics being developed by the Tanzanian Government throughout 2017. During 2017 we held discussions with the Senior Management of Tanesco to move our power project along according to the wishes of the Tanzanian Government. In May 2017 the Company received a formal request from the Ministry of Energy and Minerals (MEM) to proceed with development of the Power Project. This was a very positive step by the Government and we are expecting clarity from the newly formed Ministry of Energy on the timing of the necessary transmission infrastructure and commercial terms for operation in 2018.

Undoubtedly the commissioning of the coal mine and the availability of the coal has contributed to the Project's ability to move to the next stage of the power plant development process. It should be emphasised that prior mine development is crucial to any future power development. Without a clear understanding of the coal and its characteristics as a fuel for the power plant it would be extremely difficult to finance the construction of a power plant that relied exclusively on the coal deposit as a fuel source. Only by opening up the coal and through a significant trial burn of the planned fuel, can an efficient design for the plant be determined.

Along with our EPC (Engineering, Procurement and Construction) partner, Sinohydro, we are now waiting for the power scenario to be clearly mapped out by the newly formed Ministry of Energy and the Tanzanian authorities. The Company continues to work with Sinohydro to progress the power project in line with the Tanzanian Government timeline and policy.

Post Period

Going into 2018 the operation of the mine and wash plant developed following the construction phase. Multiple short-term orders for coal have been fulfilled and there are ongoing orders for approximately 7,000 tonnes of coal. From January to May 2018, the Project had processed approximately 20,000 tonnes of ROM coal. Throughput has now started to increase as the wet season comes to an end and this along with the modifications being carried out on the plant should result in increased production in the coming months ahead.

Mining has proved efficient with our fleet of one excavator and three hired in pit haul trucks achieving mining rates of approximately 40,000 cubic metres (60,000 tonnes) of raw material per month. As production increases we plan to use some of the funds raised in April 2018 to supplement this fleet. A likely scenario being an additional excavator (most likely Company owned) and a further 3 locally hired in pit trucks to open up new mining areas. At this stage the overburden can be excavated without drilling and blasting, keeping mining costs to a minimum.

The wash plant is operating well and can produce a consistent clean, sized product. A variety of sized products are being produced, the majority of these in a range between 10mm to 70mm. The average product quality is currently coming out at approximately 5800kcal/kg on a gross calorific value basis. As the mine has developed we have identified some modifications and improvements that can be made to optimise throughput and treatment of the raw coal to reach our target production levels. A filtration system has been constructed that cleans the fines from the waste water and this is improving water usage and treatment overall. We are also planning on installing a pre-screening module to take out the majority of fines before it reaches the washing circuit and this should greatly improve general throughout rates in the plant.

There is currently around 70% of the ROM coal that is converting to either sized washed coal or fines coal, both of which have an economic value. If this scenario continues, it would be positive in terms of the amounts of coal available for the power plant.

Financing

The Company raised a total of £3,250,000 (before expenses) in 2017, the majority of this being committed to the construction and development of the Rukwa Coal Project. £2,000,000 (before expenses) was raised in February 2017 on the decision to progress to commercial mining which secured various capital items and enabled the construction to be completed by October 2017. This capital also enabled the construction of the access road, compensation for the Stage 1 mining area and the opening up of accessible coal in the mine. A further £1,250,000 (before expenses) was raised in October 2017 predominantly for working capital for the mine to enter the commissioning and production phase. Throughout the process we have continued to be conscious of keeping both operational and construction costs to a minimum and developing the mine in the most cost effective way without debt. The Company now has a fully functioning mining project that can provide a variety of products to our existing customers. The majority of production costs are calculated in the local currency of Tanzanian Shillings, as are the majority of our sales. A small quantity of trial coal sales did occur earlier in 2017 with approximately 200 tonnes being shipped to customers. Sales of trial coal are netted-off against development expenditure, rather than recognised in the income statement.

Corporate Social Responsibility

The Company has continued to take its corporate social responsibility (CSR) very seriously and understands it social licence to operate in Tanzania is an essential part of making its projects viable in the long term. The construction of the mining project provided several opportunities to improve infrastructure for the local community, the most visible being the construction of the road from Kipandi, past Mkomolo village and beyond, to the mine. This has opened up a major artery in the area which services farmers, the local population and communications as well as the mine itself.

Wherever possible we have sought to employ local people from surrounding villages. Many of the operators and management are local and are proving to be highly competent and skilled employees. The positive social benefits also overflow into the general community where enterprising individuals are providing services such as food supply for workers.

Relinquishments

In February 2017 the Company's remaining exploration prospecting licence for uranium was relinquished. This Matiri South licence (PL6147/2009) covered 28.5km2 and was originally acquired for shares at the time of the Company's admission to AIM in 2010. After initial investigation the licence area appeared to contain little indication of economic mineralisation.

Summary

2017 was an important year for the Company where it took its coal resource in Tanzania from pre-development stage to a functioning mining operation in less than 12 months. The project is currently fulfilling orders for various companies with the intention of securing further long-term commitments for offtake of coal. In parallel the Tanzanian Government is firming up its policy and direction on the implementation of coal fired power generation in the country and we expect to integrate our project into this structure as it is finalised by the various government departments and Tanesco. Importantly the Company now has an accessible fuel resource for coal fired power generation and is ready to move forward in parallel with the Tanzanian Government.

Rufus Short

Chief Executive Officer

GROUP STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 DECEMBER 2017

All operating income and operating gains and losses relate to continuing activities.

No separate statement of comprehensive income is provided as all income and expenditure is disclosed above.

GROUP STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2017

The financial statements were approved by the board of directors and authorised for issue on 4 June 2018 and signed on its behalf by:

Rufus Short

Director

Company registration number: 05292528

GROUP STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 31 DECEMBER 2017

GROUP CASH FLOW STATEMENTS

YEAR ENDED 31 DECEMBER 2017

NOTES TO THE GROUP FINANCIAL STATEMENTS

YEAR ENDED 31 DECEMBER 2017

1. General Information

Edenville Energy Plc is a public limited company incorporated in the United Kingdom. The address of the registered office is Aston House, Cornwall Avenue, London, N3 1LF. The company's shares are listed on AIM, a market operated by the London Stock Exchange.

The principal activity of the Group is the exploration, development and mining of energy commodities predominantly coal in Africa.

2. Group Accounting Policies

Basis of preparation and statement of compliance

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, IFRIC Interpretations and the parts of the Companies Act 2006 applicable to companies reporting under IFRS. The Group's financial statements have also been prepared under the historical cost convention, as modified by the revaluation of available for sale investments.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group's financial statements are disclosed in Note 4.

Going concern

At 31 December 2017 the Group had cash balances totalling £951,078.

On 27 April 2018 the company raised £740,000, before expenses, via the issue of 211,428,572 ordinary shares of 0.02p each at 0.35p per share.

Based on the current working capital forecast which includes the recent placing, the Group has sufficient funds in order to allow it to move into production phase. However, if there are delays in the production, impacting revenue generation, or delays in procuring orders, then the Group may require additional funds within twelve months of the date of approval of these financial statements. The ability of the Group to raise additional funds is dependent upon investor appetite.

Expenditure on excavation is related to the level of orders and both head office costs and Tanzanian administration costs can be reduced if the additional funds cannot be raised and the Group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.

Standards and interpretations in issue but not yet effective or not yet relevant

At the date of authorisation of these financial statements the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:

The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the Group's financial statements.

Share based payments

The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:

· including any market performance conditions;

· excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period); and

· excluding the impact of any non-vesting conditions (for example, the requirement of employees to save).

Assumptions about the number of options that are expected to vest include consideration of non-market vesting conditions. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

When the options are exercised, the Group issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

Basis of consolidation

The Group's financial statements consolidate the financial statements of Edenville Energy Plc and all its subsidiary undertakings (Edenville International (Seychelles) Limited, Edenville International (Tanzania) Limited and Edenville Power (TZ) Limited) made up to 31 December 2017. Profits and losses on intra-group transactions are eliminated on consolidation.

Subsidiaries are all entities over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

Business combinations

The Group adopts the acquisition method in accounting for the acquisition of subsidiaries. On acquisition the cost is measured at the fair value of the assets given, plus equity instruments issued and liabilities incurred or assumed at the date of exchange. The assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair value at the date of acquisition. Any excess of the fair value of the consideration over the fair value of the identifiable net assets acquired is recorded as goodwill.

Any deficiency of the fair value of the consideration below the fair value of identifiable net assets acquired is credited to the income statement in the period of the acquisition.

The results of subsidiary undertakings acquired or disposed of during the year are included in the group statement of comprehensive income statement from the effective date of acquisition or up to the effective date of disposal.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group. Inter-company transactions and balances between group companies are eliminated.

Revenue recognition

Revenue from the sale of energy commodities is recognised upon delivery of goods to the customers. Interest income is recognised on a proportional basis taking into account the effective interest rates applicable to the financial assets.

Whist the group is in the development stage revenue from test sales is capitalised within development costs within intangible assets.

All revenue is stated net of the amount of sales tax.

Currently the group does not generate any revenue.

Presentational and functional currency

This financial information is presented in pounds sterling, which is the Group's functional currency.

In preparing the financial statements of individual entities, transaction in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date.

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations (including comparatives) are expressed in pounds sterling using exchange rates prevailing at the balance sheet date. Income and expense items are translated at the average exchange rate for the period. Exchange differences arising, if any, are classified as equity and transferred to the Group's foreign currency translation reserve. Such translation differences are recognised in the income statement in the period in which the foreign operation is disposed.

Financial instruments

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, or financial liability or an equity instrument in accordance with the substance of contractual arrangement.

Financial instruments are recognised on the balance sheet at fair value when the Group becomes a party to the contractual provisions of the instrument.

Financial assets

Financial assets comprise investments, cash and cash equivalents and receivables. Unless otherwise indicated, the carrying amounts of the Group's financial assets are a reasonable approximation of their fair values.

Recognition and measurement

Investments are initially recognised at fair value plus transactions costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when rights to receive cash flows from investments have expired or the group has transferred substantially all the risks and rewards of ownership. Available for sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost.

Equity investments available for sale

Equity investments available for sale are non-derivatives that are either designated in this category or not classified in any of the other categories. Equity investments available for sale do not have a quoted market price in an active market. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. Investments are initially classified at fair value. Gains and losses arising from changes in fair value are recognised directly in equity, until the security is disposed of or is determined to be impaired. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. If any such evidence exists the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss previously recognised in statement of comprehensive income, is removed from equity and recognised in the statement of comprehensive income.

Where the fair value cannot be reliably measured as a result of a lack of an active market and/or reliable estimates could not be made the equity investments are measured at cost.

Trade and other receivables

Provision for impairment of trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is the difference between the receivables carrying amount and the present value of the estimated future cash flows.

An assessment for impairment is undertaken at least annually.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand, demand deposits and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to insignificant risk of changes in value.

Financial liabilities

Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities comprise only trade and other payables.

All financial liabilities are recorded at amortised cost, using the effective interest method, with interest-related charges being recognised as an expense under finance costs in the Income Statement.

A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged, is cancelled, or expires.

Property, plant and equipment

Property, plant and equipment are stated at cost on acquisition less accumulated depreciation and accumulated impairment losses.

Depreciation is provided on all property, plant and equipment categories at rates calculated to write off the cost, less estimated residual value on a reducing balance basis over their expected useful economic life. The depreciation rates are as follows:

Costs capitalised include the purchase price of an asset and any costs directly attributable to bringing it into working condition for its intended use.

Finance costs

Finance costs of debt, including premiums payable on settlement and direct issue costs are charged to the income statement on an accruals basis over the term of the instrument, using the effective interest method.

Income taxation

The taxation charge represents the sum of current tax and deferred tax.

The tax currently payable is based on the taxable profit for the period using the tax rates that have been enacted or substantially enacted by the balance sheet date. Taxable profit differs from the net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.

Deferred taxation

Deferred tax is recognised, using the liability method, in respect of temporary differences between the carrying amount of the Group's assets and liabilities and their tax base. Deferred tax liabilities are offset against deferred tax assets within the same taxable entity or qualifying local tax group. Any remaining deferred tax asset is recognised only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable profits, within the same jurisdiction, in the foreseeable future against which the deductible temporary difference can be utilised. Deferred tax is determined using tax rates that are expected to apply in the periods in which the asset is realised or liability settled, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is recognised in the income statement, except when the tax relates to items charged or credited directly in equity, in which case the tax is also recognised in equity.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as deduction, net of tax, from the proceeds.

Exploration and evaluation assets

Capitalisation

Certain costs (other than payments to acquire the legal right to explore and costs which are directly attributable to those payments) incurred prior to acquiring the rights to explore are charged directly to the income statement. All costs incurred after the rights to explore an area have been obtained, such as geological and geophysical costs and other direct costs of exploration and appraisal are accumulated and capitalised as intangible exploration and evaluation ("E&E") assets. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the areas or where activities in the areas have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves.

E&E costs are not amortised prior to the conclusion of appraisal activities.

At completion of appraisal activities, if technical feasibility is demonstrated and commercial reserves are discovered, then, following development sanction, the carrying value of the relevant E&E asset will be reclassified as a development and production ("D&P") asset, but only after the carrying value of the relevant E&E asset has been assessed for impairment, and where appropriate, its carrying value adjusted. If after completion of appraisal activities in the area, it is not possible to determine technical feasibility and commercial viability or if the legal right to explore expires or if the Company decides not to continue exploration and evaluation activity, then the costs of such unsuccessful exploration and evaluation are written off to the income statement in the period the relevant events occur.

Impairment

Management consider on a regular basis the geological resources and exploration and evaluation results of each licence and based on their analysis may relinquish or abandon a particular licence area. When this occurs the costs related to the relinquished area are written off to the income statement.

Where the licences will be retained an impairment review is performed when facts and circumstances indicate that the carrying value of E&E assets may exceed its recoverable amount.

For E&E assets when there are such indications, an impairment test is carried out by grouping the E&E assets with the D&P assets belonging to the same geographic segment to form the Cash Generating Unit ("CGU") for impairment testing. The equivalent combined carrying value of the CGU is compared against the CGU's recoverable amount and any resulting impairment loss is written off to the income statement. The recoverable amount of the CGU is determined as the higher of its fair value less costs to sell and its value in use.

 Development assets

When the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, the Group:

· stops capitalising E&E costs for that area

· tests recognised E&E assets for impairment; and

· ceases classifying any unimpaired E&E assets (tangible and intangible) as E&E.

For Evaluation and Exploration assets reclassified to development assets, the Group classifies such assets either as tangible or intangible development assets. Intangible E&E assets may be reclassified into tangible development assets or intangible development assets and vice versa. Identifiable tangible assets that cease to be classified as E&E assets are generally classified as tangible development assets. Any costs incurred in testing the assets to determine if they are functioning as intended, are capitalised, net of any proceeds received from selling any product produced while testing. Identifiable intangible E&E assets may continue to be classified as an intangible asset, or may be reclassified as a tangible asset if the intangible asset is considered to be integral to the tangible development asset and the tangible element of the asset is more significant.

Amortisation

On reclassification of E&E assets, an entity depreciates (amortises) the resulting tangible development assets. Intangible development assets are not depreciated until the production stage is reached at which point both tangible and intangible development assets, are depreciated using the units-of-production method is used.

Goodwill

At the date of acquisition of a subsidiary undertaking, fair values are attributed to the acquired identifiable assets, liabilities and contingent liabilities. Goodwill represents the difference between the fair value of the purchase consideration and the acquired interest in the fair value of those net assets.

Goodwill is initially recognised at fair value. Any negative goodwill is credited to the income statement in the year of acquisition. If an undertaking is subsequently sold, the amount of goodwill carried on the balance sheet at the date of disposal is charged to the income statement in the period of disposal as part of the gain or loss on disposal.

Goodwill is associated with exploration and evaluation and development assets, the impairment of which is discussed in the accounting policy note for exploration and evaluation assets.

3. Financial risk management

Fair value estimation

The carrying value less impairment provision of trade receivables and payables is assumed to approximate their fair values, due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments. 

4. Critical accounting estimates and areas of judgement

The Group makes estimates and assumptions concerning the future, which by definition will seldom result in actual results that match the accounting estimate. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are those in relation to:

· the impairment of intangible assets;

· classification of exploration and evaluation assets; and

· share based payments.

Impairment - intangible assets

The Group is required to perform an impairment review, on reclassification of exploration and evaluation assets to development assets, for each CGU to which the asset relates. Impairment review is also required to be performed on goodwill annually and on other intangible assets when facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. The recoverable amount is based upon the Directors' judgements and are dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development and future profitable production or proceeds from the disposal until the technical feasibility and commercial viability of extracting a mineral resource becomes demonstrable, at which point the value is estimated based upon the present value of the discounted future cash flows.

The outcome of ongoing exploration and evaluation and development assets, and therefore whether the carrying value of exploration and evaluation and development assets will ultimately be recovered, is inherently uncertain.

In assessing whether an impairment is required for the carrying value of an asset, its carrying value is compared with its recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and value in use. Given the nature of the Group's activities, information on the fair value of an asset is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently, unless indicated otherwise, the recoverable amount used in assessing the impairment charges described below is value in use.

The calculation of value in use is most sensitive to the following assumptions:

· Production volumes

· Discount rates

· Coal prices

· Operating overheads

Estimated production volumes are based on the production capability of the plant and estimated customer demand.

 The Group generally estimates value in use using a discounted cash flow model. The future cash flows are adjusted for risks specific to the asset and discounted using a pre-tax discount rate of 10%.

The directors have assessed the value of exploration and evaluation expenditure and development assets and goodwill carried as intangible assets. In their opinion there has been no impairment loss to these intangible assets in the period, other than the amounts charged to the income statement.

At the reporting date, the carrying value of evaluation expenditure and development assets is £4,757,087 (2016: £4,358,699) and the carrying value of goodwill is £314,231 (2016: £347,091).

Classification of exploration and evaluation assets

E&E assets are reclassified from Exploration and Evaluation, to development assets, when evaluation procedures have been completed and the Directors consider commercial viability has occurred. The Directors consider commercial viability occurs when the project development reaches a stage where the mining and processing of the mineral is at commissioning stage and the project has been successfully built or developed in such a way that cash flow can be received for the product in question. Critically this point shows the project has been able to be developed for a cost that can be both quantified and also sourced in some way to allow the project to reach this stage. Commissioning is generally defined in mineral exploitation as the point at which the project can deliver products in a regular and sustainable way, be that from the mine or a processing plant.

When the commissioning stage has completed, it is considered that the mine has moved into the production phase of its lifecycle.

Share based payments

The estimate of share based payments costs requires management to select an appropriate valuation model and make decisions about various inputs into the model including the volatility of its own share price, the probable life of the options, the vesting date of options where non-market performance conditions have been set and the risk free interest rate. 

5. Segmental information

The Board considers the business to have one reportable segments being Coal exploration and development projects, the Uranium exploration projects were fully written off in 2016.

Other represents unallocated expenses and assets held by the head office. Unallocated assets primarily consist of cash and cash equivalents.

6. Administration expenses

7. Auditors' remuneration

8. Employees

Included with exploration and evaluation assets (note 14) are capitalised wages and salary costs of £212,572 (2016: £202,264).

The average number of employees and directors during the year was as follows:

9. Directors' remuneration

The highest paid director received remuneration of £197,260 (2016: £130,124).

Directors' interest in outstanding share options per director is disclosed in the directors' report.

10. Finance income

11. Income tax

No corporation tax charge arises in respect of the year due to the trading losses incurred. The Group has Corporation Tax losses available to be carried forward and used against trading profits arising in future periods of £5,550,871 (2016: £4,827,266).

A deferred tax asset of £943,110 (2016: £819,918) calculated at 17% (2016: 17%) has not been recognised in respect of the tax losses carried forward due to the uncertainty that profits will arise against which the losses can be offset.

The tax assessed for the year differs from the standard rate of corporation tax in the UK as follows:

12. Earnings per share

13. Property, plant and equipment

14. Intangible assets

Tanzanian Licences and Goodwill

The Tanzanian licences comprise a mining licence and various prospecting licences. The licences are located in a region displaying viable prospects for both uranium and coal and occur in a country where the government's policy for development of the mineral sector aims at attracting and enabling the private sector to take the lead in exploration mining, development, mineral beneficiation and marketing.

Goodwill arose as a result of the valuation placed on the original six Tanzanian licences acquired on the acquisition of Edenville (Tanzania) Limited. The allocation of the Goodwill was based on the valuation of the Group's licences and was been allocated between coal and uranium licences.

In 2015 as the Group focused firmly on the development of the Rukwa Coal to Power Project the directors have looked at rationalisation of other licences which will allow available funds to be focussed on the development of the Group's core asset at Rukwa.

During 2016 the group wrote off the last of its uranium licences and associated goodwill; the licence was subsequently relinquished in February 2017.

During 2017 the company evolved from an exploration company to a development company, as a result its exploration and evaluation assets were transferred to development expenditure.

The Directors carried out an impairment review on reclassification of exploration and evaluation assets to development assets. Further, IAS 36, requires that an annual impairment review is carried out goodwill. Following the impairment reviews the Directors did not consider the intangible assets to be impaired. 

15. Trade and other receivables

There was no provision for impairment of receivables at 31 December 2017 (2016: £nil).

Included within VAT receivable is VAT owed to Edenville International (Tanzania) Limited which is only recoverable against future sales made by Edenville International (Tanzania) Limited. The Group expects to start producing commercial coal later in 2018, from which Vatable income would be generated against which the Directors expect to be able to commence recovery of the VAT receivable.  

16. Cash and cash equivalents

Cash and cash equivalents include the following for the purposes of the cash flow statement:

17. Trade and other payables

18. Deferred Taxation

A deferred tax liability of £Nil (2016: £Nil) calculated at 30% (2016: 30%) has been provided in respect of the potential tax liability arising on licences acquired on the acquisition of Edenville International (Tanzania) Limited. The deferred tax liability related to a fair value adjustment made to the original six Tanzanian prospecting licences. During 2016, one of these licences was written off, having already written off five previously, resulting in the fair value adjustment relating to this licence. As a consequence, the deferred tax liability was reduced by £173,450.

19. Share capital

a) On 7 March 2016 the Company issued 1,333,333,333 new ordinary shares of 0.02p each for a consideration of 0.03p per share. The Company also issued 666,666,666 warrants with an exercise price of 0.04p each.

b) On 1 June 2016 the Company issued 63,333,333 new ordinary shares of 0.02p each for consideration of 0.03p in satisfaction of creditors totalling £19,000.

c) On 17 June 2016 the Company issued 1,922,222,222 new ordinary shares of 0.02p each for a consideration of 0.0225p per share. The Company also issued 961,111,111 warrants with an exercise price of 0.03p each

d) On 30 August 2016 undertook a capital reorganisation comprising three subdivisions:

· The company subdivided of the 64,179,632 existing deferred shares of £0.0008 each in the capital of the Company into 5,134,370,560 deferred shares of £0.00001 each in the capital of the Company.

· Then, the 12,427,060,094 Existing Ordinary Shares were subdivided into two share classes:

(i) 12,427,060,094 ordinary shares of £0.00001 each in the capital of the Company (the "Subdivided Ordinary Shares"); and

(ii) 12,427,060,094 deferred shares of £0.00019 each in the capital of the Company (the "New Deferred Shares") (the "Second Subdivision").

· The 12,427,060,094 new deferred shares will then be subdivided into 236,114,141,786 deferred shares of 0.001p each.

· The subdivided Ordinary Shares were consolidated into 621,353,005 ordinary shares of £0.0002 each in the capital of the Company (the "Consolidated Shares") (the "Consolidation"), the Consolidated Shares have the same rights and are subject to the same restrictions as the Existing Ordinary Shares.

e) On 9 November 2016 the Company issued 1,602,563 Ordinary shares of 0.02p each for consideration of 0.54p each on exercise of warrants.

f) On 4 October 2016 the Company issued 125,000,000 Ordinary shares of 0.02p each for consideration of 0.40p each. The company also issued 62,500,000 warrants with an exercise price of 0.54p each

g) On 25 October 2016 the Company issued 6,247,330 Ordinary shares of 0.02p in settlement of invoices totalling £28,000.

The deferred shares have no voting rights, dividend rights or any rights of redemption. On return of assets on winding up the holders are entitled to repayment of amounts paid up after repayment to ordinary share holders