EDL.L Regulatory News (EDL)

14 May 2019

EDENVILLE ENERGY PLC

("Edenville" or the "Company")

Rukwa Coal Project - Update

Edenville Energy Plc (AIM: EDL), the AIM quoted company developing the Rukwa coal project in southwest Tanzania (the "Project"), is pleased to provide an update with respect to its current and targeted operations for the remainder of 2019.

As announced on 1 April 2019, following the limited take up of the Open Offer, the Company was forced to constrain operations in order to maintain capital whilst an alternate funding scenario was secured. This funding solution was provided through the Firm Placing to raise £100,000 and Conditional Placing to raise a further £410,000 as announced on 29 April 2019. With the Firm Placing proceeds now received and the net proceeds from the Conditional Placing expected shortly, subject to shareholder approval at the General Meeting to be held on 17 May 2019, the Company has recommenced activities as follows.

Plant

The Company has utilised the period of limited production to further optimise the plant and facilities. The recalibration of parts of the plant, orders of additional low capex items and reorganisation of the workforce is under way and all upgrades are expected to be completed by the end of June 2019. These are in addition to the plant upgrades such as the installation of the Lamella water treatment plant and the introduction of a pre-screening plant, that have taken place over the last six months and were summarised in the announcement of 29 April 2019.

Upon completion of this optimisation process, the Company expects to eliminate the previous issues that had hindered the throughput and operational capacity of the plant, thereby enabling the plant to reach its targeted initial production capacity of 10,000 tonnes of washed coal per month. Total capital investment in these recent upgrades is expected to be less than US$50,000 and the Company's Directors believe this investment should enhance the future performance of the Project.

Mining Operations

The Company has commenced site preparations for road construction to the new mining area, to the north of current operations. Upon completion of road construction, the Company intends to open up this new pit and commence extracting coal from it before the end of Q3 2019. Prior to opening the northern mining area, the Company plans to continue to mine the existing pit to build up stockpiles and supply to existing customers.

Sales (Washed Coal)

In recent times Edenville has only achieved modest levels of production and as such the inventory of washed coal has been exhausted. The Company has been able to sell all the washed coal it has produced to date and believes the current contracts which are in place for circa 8,000 tonnes per month in aggregate, will be able to be satisfied from opening up the northern mining area.

From recent enquiries received the Company believes there is a potential broader market for in excess of 10,000 tonnes of washed coal per month. As the stockpiles build following the restart of operations, the Company will recommence sales to its existing client base and will continue to target additional orders from new and existing customers.

Sales (Fine Coal)

The Company's Directors believe the Project will become cashflow positive at a steady rate of 6,000 tonnes per month of washed coal sales. The fine coal is effectively produced as a by-product and to that end Edenville is continuing discussions with its previously outlined buyers of fine coal.

Other opportunities available to Edenville with regards to sales of fine coal are also being assessed. These include briquetting or the introduction of secondary processing to beneficiate the coal and improve the calorific value, thereby enhancing the desirability of the product. Although this would require additional capital expenditure, the Company believes this to be modest with a short payback period. The Company's Directors expect to be able to fund any upgrades to infrastructure from free cash flow from future mining operations.

Power

Whilst Edenville's primary focus is to turn the Project cash flow positive within the next 12 months through the sale of washed and fine coal, the Company is continuing discussions relating to power generation. As announced on 21 September 2016 an independent feasibility study provided for an NPV of US$252 million and an IRR of 23% on a 120MW coal-to-power project.

As reported on 14 February 2019, Edenville's Request for Qualification, submitted to Tanzania Electric Supply Company ("Tanesco") in Q4 2018, has been rejected at this stage. However, discussions with Tanesco continue to ascertain the rationale for this decision and the Company continues to explore alternatives to the initial terms proposed. The Directors believe an integrated approach to development of the coal-to-power project in parallel with the roll out of electricity transmission infrastructure in the region is the preferred route forward.

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

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