EDL.L Regulatory News (EDL)

24 September 2018

EDENVILLE ENERGY PLC

("Edenville" or the "Company")

Interim Results for the six months to 30 June 2018

Edenville Energy plc (AIM: EDL), the company developing a coal project in southwest Tanzania, announces the Company's unaudited interim results for the six months ended 30 June 2018.

Key Period Highlights

· Commercial mining and wash plant operation start full production phase with a variety of sized coal products being produced

· From 1 January 2018 to 30 June 2018 31,169 tonnes of Run of Mine ("ROM") coal processed, producing 8,808 tonnes of washed coal and 13,775 tonnes of fine coal. Of the 8,808 tonnes of washed coal, 4,221 tonnes were shipped

· Revenue recognised for the first time

· Revenues from 1 January 2018 to 16 April 2018 are off-set against development costs as the mine was being tested to ensure it functioned as intended.

· From 17 April 2018 to 30 June 2018 the mine produced 5,348 tonnes of washed coal and 7,004 tonnes of fine coal. Of the 5,348 tonnes of washed coal 2,314 tonnes were sold, resulting in recognised revenue of £59,310

· Company raised £740,000 (before expenses) at 0.35 pence per share in April 2018

· US$455m Powerline financing by World Bank approved which will provide key infrastructure for the planned power plant

· MOU with Sinohydro extended

Post Period Highlights

· Two year contract for coal supply of 4,000 tonnes per month secured

· From 1 July 2018 to 17 September 20,945 tonnes of Run of Mine ("ROM") coal processed, producing 6,186 tonnes of washed coal and 9,523 tonnes of fine coal. Of the 6,186 tonnes of washed coal, 4,947 tonnes were shipped

· Average daily shipments (calculated on a calendar day basis) of coal of 63 tonnes post H1 period, up from 51 tonnes in July 2018 and 23 tonnes for the first half

· Plant upgrade tasks nearing completion

Jeff Malaihollo, Chairman of Edenville, commented: "Edenville continued to make significant progress in the first half of 2018, with commercial coal production starting in earnest. Throughout the period and more recently we have continued to refine the coal production process and install additional equipment, allowing increased production to satisfy the demand we are seeing.

"With progress also being made on the power plant project following the announcement of the power line infrastructure financing, I believe Edenville is well positioned for the future."

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CEO's report

Operational Report

Production of Coal

The Company started 2018 with the Company's newly constructed Rukwa Coal Project entering its commercial production phase in mid-April, following previous trial shipments. This phase started with the completion of overburden stripping and trial runs of the wash plant and is now at the stage where commercial coal sales are being made and production rates increasing.

Our small but efficient mining fleet has operated with high availability and utilisation rates, with our Volvo excavator complimenting the hired truck fleet well. We have been able to rapidly access coal measures and continue to provide raw coal to the process plant as required. The mining fleet continues to operate well and we are targeting new areas of the mine to satisfy the anticipated increased production in the near future.

The newly constructed wash plant has been able to process the ROM coal to provide a washed product of between 5,500GCV and 6,000GCV. However, after opening up the coal deposit and processing coal we have identified areas of the plant that require some modification in order for it to run at an optimal level.

One main area of focus has been how to deal with significant amounts of fine coal in the system, which has slowed the process down and also lead to unwanted contamination. We have opted for a pre-screening unit to take these fines out of the process before they enter the main wash plant module. This is currently under construction and will be operating later in 2018. Additional modifications to the plant have also included the addition of a Lamella water treatment plant that enhances and reduces the water usage profile along with ensuring our site is following recognised international environmental practices. This is currently on site and will be in full operation shortly.

For the six months to June 2018 we processed 31,169 tonnes of ROM coal, producing 8,808 tonnes of washed coal and 13,775 tonnes of fine coal, with shipments of 4,221 tonnes of washed coal. The majority of the remaining washed coal has been shipped and we are in discussions with potential purchasers of fine coal, some of whom have already received trial shipments.

Throughout the development of mining and processing we have followed a conservative step by step approach to ensure capital has been utilised in a responsible way to grow the operation. It is a new mining project, opening up a new coal deposit in a remote area, with a limited mining history. It is also supplying a new product to customers who have a requirement to get comfortable with the coal, the operation and our people's ability to deliver the product. The majority of our employees are local to the operation, supported by a core of Tanzanian mining professionals. They have developed into an effective and competent team. In line with the Tanzanian Government's directives we have to limit the presence of expatriates and currently have one professional providing day to day management and technical input into the operation.

As both our coal and location was new to the market, most of the customers have initially elected to take coal either on a trial basis or on non-contractual terms until they were comfortable with the outcomes. We worked with several customers throughout the first half of 2018 on trials and spot sales with a contract for 4,000 tonnes per month being formalised in August 2018. We are also working on the finalisation of several other longer term contracts and hope to conclude these in the near future. When taking transport considerations into account even relatively small orders or contracts of less than 1,000 tonnes can have a value exceeding US$100,000 per month and we recognise our customers need to fully understand and be comfortable with the outcomes before making a long term commitment.

As we move into the next phase of the operation with increased production, regular customers and formal contracts, the Company is well placed to take advantage of the demand for energy coal in East Africa as a whole. Growth in East Africa is significant and there are several new industrial facilities that we are in discussions with that require coal for their production processes.

Coal to Power Project

Over the first half of 2018 there was considerable discussion within the Tanzanian Government and parastatal organisations such as the state-owned energy company, Tanesco, on the future route for energy production and how coal would fit into this plan. We, along with our EPC partners, Sinohydro, have patiently awaited the developments in policy from the Tanzanian side whilst continuing essential work such as baseline monitoring for the environmental certificate.

Crucially, in June 2018 funding of US$455 million was approved for the Tanzania-Zambia Interconnector Project (TAZA) which includes the section of transmission line from Sumbawanga to Tunduma. Sumbawanga is located approximately 25km from our mine site. Now that this vital part of the infrastructure for the power plant is funded we can begin to move forward our power plant plans in parallel.

Of particular note, post period, is the release in September of the Invitation for Qualification (IFQ) documents from Tanesco. These provide the framework for Tanesco and potential power suppliers to move forward through the various steps towards agreement and then subsequent development of power generation facilities. In light of the previous feasibility and other work the Company has carried out and importantly the development of the coal mine, the Company been asked to participate in the qualification process over the coming months. This is a major milestone for our Coal to Power Project and we believe this, in parallel with the power line funding, places the Company in a very positive position to move forward.

The fact that we have now opened up the mining area along several hundred metres of strike length and to a depth of over 30 metres means we have started to gain an excellent understanding of the coal characteristics for any future power plant development. This information and understanding will be crucial in the final design of the power plant to ensure it is optimal both technically and financially.

Our cooperation with Synohydro, one of the largest Chinese EPC companies, has been extended for 18 months until 25 December 2019. Whilst a feasibility study on a 120MW plant has already been carried out, the potential for a significantly larger plant of up to 300MW is now being considered and much of Sinohydro's work will be focused towards this option.

Financial Results

For the six months period ended 30 June 2018 the Company reports sales revenue for the first time of £59,310. This only reflects sales from 17 April 2018 onwards as sales in the first half to 16 April 2018, amounting to £60,065, were part of the testing phase of the mine to ensure it was functioning as intended and have been capitalised in accordance with the Company's accounting policy. As production of washed coal increases the unit sales cost will progressively fall. The Company's sales post period continue to strengthen with 4,947 tonnes being shipped from 1 July to 17 September 2018.

In the first half the Company made a gross profit of £4,467 on sales of £59,310. The Company made a loss after taxation of £544,959 (H1 2017 £551,337). The net assets at 30 June 2018 amounted to £7,568,436 (30 June 2017 £6,805,216).

The total comprehensive loss for the period was £387,412 (H1 2017 £841,877), which included a gain of £157,457 (H1 2017 loss of £290,540) arising from the translation of the Tanzanian subsidiary accounts from US Dollars to Sterling.

Summary

The Company is making further progress in the second half of 2018 with continuing orders for coal and a two year supply contract in place. We see more contracts being finalised in the near future and plant upgrades are in progress to increase production to satisfy demand.

With the announced financing of the power line near to our proposed power plant project we expect to make significant progress in the near future on the structure of the power plant development process with Tanesco and the Ministry of Energy, in conjunction with our partner, Sinohydro.

Rufus Short

Chief Executive Officer

EDENVILLE ENERGY PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2018

The income for the period arises from the Group's continuing operations.

EDENVILLE ENERGY PLC

CONSOLIDATED statement of financial position

as at 30 june 2018

EDENVILLE energy PLC

CONSOLIDATED statement of changes in equity

FOR THE SIX MONTHS ENDED 30 JUNE 2018

EDENVILLE ENERGY PLC

consolidated CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2018

EDENVILLE ENERGY PLC

NOTES TO THE INTERIM REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2018

1. Financial information and basis of preparation

The interim financial statements of Edenville Energy Plc are unaudited consolidated financial statements for the six months ended 30 June 2018 which have been prepared in accordance with IFRSs as adopted by the European Union. They include unaudited comparatives for the six months ended 30 June 2017 together with audited comparatives for the year ended 31 December 2017.

The interim financial statements do not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 December 2017 have been reported on by the company's auditors and have been filed with the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) contained a "Material uncertainty relating to going concern paragraph and (iii) did not contain any statement under section 498 of the Companies Act 2006.

The interim consolidated financial statements for the six months ended 30 June 2018 have been prepared on the basis of accounting policies expected to be adopted for the year ended 31 December 2018. These are anticipated to be consistent with those set out in the Group's latest financial statements for the year ended 31 December 2017. These accounting policies are drawn up in accordance with adopted International Accounting Standards ("IAS") and International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and adopted by the EU.

2. Loss per share

The calculation of the basic and diluted loss per share is based on the following data:

The loss attributable to equity shareholders and weighted average number of ordinary shares for the purposes of calculating diluted earnings per ordinary share are identical to those used for basic earnings per ordinary share. This is because the exercise of share options and warrants would have the effect of reducing the loss per ordinary share and is therefore anti-dilutive.

3. Dividends

No dividends are proposed for the six months ended 30 June 2018 (six months ended 30 June 2017: £nil, year ended 31 December 2017: £nil).

4. Tangible assets

5. Intangible assets

On completion of development all assets under development expenditure are transferred to Mineral assets and depreciation commences

The outcome of ongoing exploration and evaluation, and therefore whether the carrying value of exploration and evaluation assets will ultimately be recovered, is inherently uncertain. The directors have assessed the value of exploration and evaluation expenditure carried as intangible assets. In their opinion there has been no impairment loss to intangible exploration and evaluation assets in the period. 

6. Share capital

7. Distribution on interim report to shareholders

The interim report will be available for inspection by the public at the registered office of the company during normal business hours on any weekday and from the Company's website http://www.edenville-energy.com/. Further copies are available on request.