TIDMEDL
RNS Number : 6760I
Edenville Energy PLC
06 December 2022
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018.
6 December 2022
EDENVILLE ENERGY PLC
("Edenville" or the "Company")
Placing to raise GBP0.4 million and Operational Update
Edenville Energy Plc (AIM: EDL) is pleased to provide an update
on operations at its Rukwa Coal Project ("Rukwa") in Tanzania,
together with a placing to raise gross proceeds of GBP400,000.
Rukwa Operations
Following the recommencement of production at Rukwa, as
announced on 11 October 2022, the Company's new management team has
been focused on establishing an expanded customer base for Rukwa
coal and also increasing daily production and output of washed
coal. Whilst the former has exceeded expectations, as previously
reported the latter has continued to hinder the ultimate progress
of the Company in the short term.
Members of the Board were in Tanzania for a prolonged period
during November and the Company has now taken action to improve the
output and operational efficiency at Rukwa. Certain former
stakeholders and suppliers deemed no longer suitable have been
removed. Together with the replacement of on-the-ground senior
management who the Board believes were impacting progress of Rukwa,
alongside new local advisers and personnel now in place, the
Directors believe the Company's Rukwa operations are on a much
improved and efficient footing.
The short-term focus of the Company is to now achieve its
targeted state of steady production of 3,000 and then 4,000 tonnes
per month of washed coal. When operational the current wash plant
is achieving an output of approximately 100 tonnes per day of
washed coal from eight-hour shifts. Therefore, the Board believe
3,000 rising to 4,000 tonnes per month is a realistic target from
existing infrastructure, especially in light of the recent actions
taken by management. As outlined below, significant demand now
exists for Rukwa coal. However, it is likely that to meet this
demand of over 10,000 tonnes per month of washed coal, an
additional wash plant will be required. The Company believes upon
achieving the targeted initial stabilised production rate, any
additional wash plant could be funded through a finance lease, hire
purchase or other such financing arrangement.
Sales of coal and fines
As previously reported, during 2022, the Company has
consistently seen increasing demand and price per tonne for Rukwa
coal. Following the Board's efforts in-country last month, the
Company has agreed terms to supply 2,000 tonnes of washed coal per
month at a net of transport price of US$55 per tonne at the mine
gate and up to 1,500 tonnes per month of unwashed coal fines at
US$20-25 per tonne to new customers. These customers have already
purchased their first shipments of washed coal and fines. An
additional confirmed order of approximately 850 tonnes per month of
washed coal has been secured with another customer at a similar
price.
More potential customers have been identified; however, the
Company has refrained from entering into offtake arrangements with
them until such time as the stabilised production rates can service
this additional demand. The Board believe the total cost to produce
washed coal is likely to remain below the current level of US$20
per tonne, with fines produced effectively as a by-product.
The Company also has an existing stockpile of approximately
60,000 tonnes of fines. The market for fines has significantly
increased given the current coal environment and the Company now
has orders to purchase fines at pricing of US$20-25 per tonne.
Fines from the stockpile are collected by customers and, as such,
are expected to make a significant contribution to the revenue of
the Company going forward.
While the tendering process for the appointment of a contract
miner is ongoing, the Company retains the benefit of the entire
proceeds of sale of coal from its operations at Rukwa.
Reasons for and background to the Placing
Given the aforementioned issues with respect to production, the
Company has not achieved the expected revenue from operations. In
addition, as previously reported, the Company reached agreement
with Envirom Group AS ("Envirom") for certain costs, amounting to
GBP180,000, to be recouped following an earlier aborted acquisition
process. While Envirom continues to acknowledge the debt and
reaffirm it will be paid upon the completion of their own financing
initiatives, the Company has yet to receive the proceeds of such
agreement and the Company is currently taking advice regarding
expediting recovery of the debt.
In addition to the previously announced ongoing dispute with
Upendo Group Ltd which the Company hopes to resolve in the coming
weeks, the Company has received a claim from former employees of
the Group relating to unfair dismissal as a result of Covid. Based
on legal advice received, the Company confirms that both claims are
being robustly defended.
In light of these developments the Company has undertaken a
placing to raise gross proceeds of GBP400,000 to provide additional
working capital, to settle outstanding creditors and provide
sufficient funds to meet any unexpected adverse judgement as a
result of the aforementioned legal claims. The Board believes this
placing is sufficient to ensure the Company becomes cash flow
positive from operations in the coming months, subject to being
able to operate during rainy season. Details of the placing are
outlined below.
The Company has raised gross proceeds of GBP400,000 through the
placing of 5,714,286 new ordinary shares of 1 pence each in the
Company (the "Placing Shares") at a price of 7.0 pence per share
(the "Placing"). The Placing price represents a discount of
approximately 33.3 per cent. to the mid-market closing price on AIM
of 10.50 pence per ordinary share on 5 December 2022, being the
latest practicable business day prior to the publication of this
announcement. The Placing was arranged by Tavira Financial Limited
("Tavira"), the Company's broker, and the Placing Shares will
represent approximately 21 per cent. of the Company's enlarged
issued share capital.
The Company benefits from having a number of large independent
shareholders. Edenville is pleased to confirm their ongoing support
via participation in the Placing for over two-thirds of the total
capital raise.
Tavira has entered into an agreement with Edenville (the
"Placing Agreement") under which, subject to the conditions set out
therein, Tavira has been instructed by Edenville to use its
reasonable endeavours to procure subscribers for the Placing
Shares. The Placing Agreement includes customary provisions
including that the Placing Agreement can be terminated in certain
circumstances.
Total Voting Rights
The Placing Shares will be issued under the Company's existing
share authorities and will rank pari passu in all respects with the
Company's existing ordinary shares. The Placing is conditional,
inter alia, on there being no breach of the Company's obligations
under the Placing Agreement prior to admission of the Placing
Shares to trading on AIM ("Admission"), and such Admission becoming
effective. Application will be made to the London Stock Exchange
for the Placing Shares to be admitted to trading on AIM. It is
expected that Admission will become effective and that dealings in
the Placing Shares on AIM will commence at 8.00 a.m. on or around 9
December 2022.
On Admission, the Company's issued share capital will consist of
27,359,861 ordinary shares, each with one voting right. There are
no shares held in treasury. Therefore, the Company's total number
of ordinary shares and voting rights will be 27,359,861 and this
figure may be used by shareholders following Admission as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change to their
interest in, the Company under the FCA's Disclosure Guidance and
Transparency Rules.
Significant Shareholder and Related Party Participation
Pitchcroft Capital Limited or its executives, (collectively the
"Pitchcroft Group"), who currently hold 2,655,487 Ordinary Shares,
representing 12.3% of the Company's current issued share capital,
have agreed to subscribe for 357,143 Placing Shares representing a
cash subscription of GBP25,000. Following Admission, the Pitchcroft
Group's revised holding of 3,012,630 Ordinary Shares will represent
11.0% of the Company's issued share capital as enlarged by the
Placing.
John Story, who currently holds 2,320,397 Ordinary Shares,
representing 10.7% of the Company's current issued share capital,
has agreed to subscribe for 860,000 Placing Shares representing a
cash subscription of GBP60,200. Following Admission, John Story's
revised holding of 3,180,397 Ordinary Shares will represent 11.6%
of the Company's issued share capital as enlarged by the
Placing.
Oliver Stansfield has agreed to subscribe for, in aggregate,
367,584 Placing Shares representing a cash subscription of
GBP25,730.88. Oliver Stansfield currently holds 1,132,416 Ordinary
Shares, representing 5.2% of the Company's issued share capital and
following Admission will hold 1,500,000 Ordinary Shares,
representing 5.5% of the Company's issued share capital. However,
in the 12 months prior to the Placing, Oliver Stansfield, alongside
his former employer, Brandon Hill Capital, collectively held over
10% of the Company's current issued share capital. Accordingly,
under AIM Rule 13 he and Brandon Hill Capital are still deemed to
be a related party by virtue of the combined holding.
Related Party Transactions
The Pitchcroft Group, John Story and Oliver Stansfield (when
combined with his former employer, Brandon Hill Capital) are, or
have been within the last 12 months, Substantial Shareholders
holding in each case more than 10% of the Company's issued share
capital and are therefore related parties as defined by the AIM
Rules for Companies (the "Related Parties").
Accordingly, the participation of the Related Parties in the
Placing constitute related party transactions pursuant to Rule 13
of the AIM Rules for Companies. The Directors, having consulted
with the Company's nominated adviser, Strand Hanson Limited,
consider that the terms of the Related Parties' participation in
the Placing are fair and reasonable insofar as Edenville's
shareholders are concerned.
Noel Lyons, CEO of Edenville, commented:
"Whilst the operations at Rukwa have proved challenging, we
believe we have now put in place an operational structure that will
enable the potential of Rukwa to be properly exploited. We are
seeing significant demand for our coal at attractive prices and our
focus is on ensuring that this demand can be met. The proceeds from
the Placing are expected to enable Edenville to become cashflow
positive and to be able to take advantage of the demand we are
seeing. I would particularly like to thank our long-term
shareholders for their support in the Placing.
"In addition to our focus on Rukwa, we continue to explore
options, that when operational cashflows permit, could allow
Edenville to significantly increase the scale and scope of its
mining operations through the potential acquisition of attractive
additional assets.
"We look forward to providing further updates on our progress in
due course. "
For further information please contact:
Edenville Energy Plc Via IFC Advisory
Nick Von Schirnding - Chairman
Noel Lyons - CEO
Strand Hanson Limited +44 (0) 20 7409 3494
(Financial and Nominated Adviser)
James Harris
Rory Murphy
Tavira Securities Limited +44 (0) 20 7100 5100
(Broker)
Oliver Stansfield
Jonathan Evans
IFC Advisory Limited +44 (0) 20 3934 6630
(Financial PR and IR)
Tim Metcalfe
Florence Chandler
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END
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