EDL.L Regulatory News (EDL)

17 December 2018

EDENVILLE ENERGY PLC

("Edenville" or the "Company")

Project Update

Edenville Energy plc (AIM: EDL), the company developing a coal project in southwest Tanzania, is pleased to provide an update on recent developments, in particular in relation to the Company's commercial coal production. The Company's Rukwa Coal Project (the "Project") has continued to develop since the release of the interim results on 24 September 2018 and the two significant coal supply contracts announced and entered into in October 2018.

Use of Lind Convertible Agreement Proceeds

As announced on 6 November 2018 the Company entered into a Conditional Convertible Funding Agreement (the "Convertible Agreement") with an entity managed by Lind Partners LLC ("Lind") to make up to US$2,750,000 available to the Company for working capital and expansion purposes.

The Convertible Agreement split the potential funds to be received by the Company into two amounts: an initial US$750,000 loan (the "Initial Loan") that was provided immediately; and a further loan of up to US$2,000,000 that may be drawn with mutual agreement between the Company and Lind (the "Further Loan").

The Company has agreed to convene a General Meeting to be held no later than 16 February 2019 to seek shareholder approval for the issue and allotment ordinary shares in the Company to Lind pursuant to the terms of the Convertible Agreement.

Both the Initial Loan and any amounts drawn under the Further Loan are secured against the assets of the Company by a debenture which ranks in priority over other debts which may exist within the Company. Further, subject to the Company obtaining the necessary share allotment authorities at the General Meeting, the aggregate value of both the Initial Loan and the Further Loan will also be secured against 36,000,000 ordinary shares of 0.02 pence each in the Company ("Ordinary Shares") which will be issued and allotted to Lind following the General Meeting and which will then be transferred or credited back to the Company at the end of the term of the Convertible Agreement.

A circular convening the General Meeting will be sent to the Company's shareholders in due course.

As stated in the 6 November 2018 announcement the net proceeds of the US$750,000 Initial Loan are being used by the Company for:

· the purchase of a second loader to load the pre-screen plant and coal delivery trucks. This has been purchased and is now operating at site. This is allowing feed of the plant and loading of customers trucks to take place in parallel, resulting in a more efficient operation of the plant and stockpile area. The Management estimate that just having this second loader operational will increase production of washed tonnes by approximately 400 tonnes per month without taking the pre-screen unit, currently being installed, into account. When the pre-screen unit is switched on the second loader will also be utilised for loading of Run of Mine ("ROM") coal;

· the purchase of a second excavator to open up the new mining area to the north of the current excavations. This second excavator has been identified and will be acquired to allow for increased mining rates once the northern mining area is operational. The land compensation process and required regulatory documents for the northern mining area have been completed and submitted by the Company to the relevant Tanzanian Government authorities. Sign off of these is anticipated to be later this month, but there can be no guarantee on this timing. Previous drilling and modelling undertaken in conjunction with the Company's mining consultants, Sound Mining, indicate coal measures in the northern area are extensive and in excess of 20m thick in parts. The Company's mining plan indicates the area will provide in excess of 10 years of production at a low strip ratio of approximately 1:1 to produce 10,000 tonnes of washed product per month;

· mobile in-pit lighting to allow 24 hour per day operation is being installed;

· an additional spares package is being progressively purchased for the site plant and equipment to reduce any unforeseen delays in production; and

· for general working capital purposes as the Company fulfils existing and new coal purchase orders.

Other Coal Processing Equipment

Construction and commissioning of the Lamella clarifier water treatment plant, that was delivered to site at the end of August 2018, is now completed and the plant is expected to be operational within the next two weeks. Management consider this will improve both water qualities in the plant process and in the return ponds, which in turn should lead to increased coal processing plant productivity.

After reviewing a number of options for acquiring a pre-screening plant to remove the majority of coal fines before they reach the washing circuit, both in Tanzania and overseas, a suitable configuration was selected in August 2018. The Company experienced some delays due to contractor performance in initial construction and logistics and the Edenville team has subsequently taken over the completion of the pre-screen assembly. The pre-screen unit is now largely complete with the screen frame, screen box and underside conveyor in place. Assembly is taking place on the feed hopper and conveyor and it is expected to be completed within the next 21 days. This unit will take out both fine and oversized coal before the main circuit and allow both throughput rates and yields in the plant to increase substantially. Once operational the Company has a target of 100 tonnes per hour through the plant, with a washed coal yield estimated at 50%.

Coal Production Orders and Volumes Processed

At present the Company has long-term contracts in place for 8,000 tonnes of washed coal per month and several additional regular monthly orders (totalling around 1,000 tonnes for a mix of washed and unwashed material). The site improvements and expansion outlined above are essential to fulfil this production and to provide appropriate infrastructure to deliver anticipated further orders that are currently being discussed with various groups, although at present no assurances can be given that these discussions will lead to firm orders.

· From 17 September 2018 (the date of the previous production update) to 11 December 2018 approximate numbers show that Edenville has processed 26,659 tonnes of ROM coal, producing 6,647 tonnes of washed coal and 13,022 tonnes of fine coal. 4,655 tonnes have been sold and shipped, the majority being washed coal.

· This equates to an average daily (calculated on a calendar day basis) throughput of ROM coal of 310 tonnes per day from 17 September 2018 to 11 December 2018 and average daily sale shipments of 54 tonnes.

The above production numbers are unaudited and may be subject to variations upon plant and mine reconciliation.

Commenting, Rufus Short, CEO of Edenville, said, "We are pleased with the progress we are making as we continue to develop the Project into a significant supplier of coal in East Africa. The delays to the completion of the pre-screening plant have been frustrating and largely outside our control, but by the Company taking over the construction it is back on track for completion before the end of 2018. Since our last update we have made significant progress in other areas including two new contracts to supply a further 4,000 tonnes per month. We are deploying the funds provided by Lind to expand the Project and provide much needed additional equipment to satisfy our customer's demands. We believe we are well positioned to further develop the Project in 2019 and I look forward to providing our shareholders with further updates as appropriate."

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

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