TIDMEDL
RNS Number : 1859P
Edenville Energy PLC
08 June 2020
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014. Market soundings, as
defined in MAR, were taken in respect of the Placing with the
result that certain persons became aware of inside information, as
permitted by MAR. That inside information is set out in this
announcement and has been disclosed as soon as possible in
accordance with paragraph 7 of article 17 of MAR. Therefore, those
persons that received inside information in a market sounding are
no longer in possession of inside information relating to the
Company and its securities.
8 June 2020
EDENVILLE ENERGY PLC
("Edenville" or the "Company")
Coal Mining Agreement
Placing to raise GBP500,000 at 0.04p per share
Corporate Update
Edenville Energy Plc (AIM: EDL), t he AIM quoted company
operating the Rukwa coal project in southwest Tanzania (the
"Project" or "Rukwa"), is pleased to announce that on 5 June 2020
the Company's subsidiary Edenville International (Tanzania) Limited
("EITL") entered into a Coal Mining Agreement (the "Agreement")
with Infrastructure and Logistics Tanzania Limited ("ILTL"). The
signing of the Agreement follows the completion of extensive
negotiation with ILTL and is the culmination of discussions that
began last year and which were first announced on 29 November
2019.
The Company's Directors expect the Agreement to represent the
first stage of a wider strategic partnership with ILTL which will
also addresses other aspects including an underpinning of sales,
marketing, offtake and an asset level loan, all of which are
covered in more detail below.
About ILTL
ILTL is a privately owned, Tanzanian incorporated company with a
focus on infrastructure development, logistics, mining and
marketing. ILTL's management team has extensive experience in the
East and Central Africa region in the field of energy, hospitality,
oil & gas and transportation.
Under the terms of the Agreement ILTL are expected to also
become a customer of Edenville prior to the recommencement of
mining operations in Tanzania, which are currently suspended as a
result of the COVID-19 pandemic (the "Pandemic"). It is envisaged
under the Agreement that ILTL will enter into a long-term Coal
Supply Agreement, which would see ILTL provide an anchor tenancy at
the Company's Rukwa coal project ("Rukwa" or the "Project') by
initially purchasing 3,000 tonnes of washed coal per month at
standard market rates, before increasing this to 5,000 tonnes a
month over a 12 month period.
ILTL are also expected to use their logistics network and
expertise with respect to existing and potential customers. The
Directors believe this should improve the likelihood of future
customers entering into long-term contracts with the Company, given
they would benefit from these anticipated transport and logistics
savings.
Further information on the Agreement
The Agreement, which will become effective once business
activity can return to normal in Tanzania following the Pandemic,
covers the full operation of mining and processing activities at
Rukwa. The Agreement has a contract term of four years and will be
automatically be renewed for further period of four, years unless
terminated by either party.
EITL's existing equipment at Rukwa has been reviewed by ILTL as
part of its due diligence process and confirmed as adequate to
execute the initial projected production ramp up. Payment to ILTL
for its contract mining will be at a fixed rate, based on per tonne
of washed product and includes an allowance for overburden removal.
If required there will also be a payment per cubic metre for
overburden removal in excess of the previously mentioned overburden
allowance. EITL will continue to be the holders of the mining
licence and will be responsible for mining approvals and compliance
with Government regulations, in particular health and safety and
environmental compliance.
The Agreement includes specific reference to a Sales Agreement,
which is currently the subject of further discussions and is
expected to be signed in the near term. It is documented that the
Sales Agreement will enable ILTL to market coal to customers beyond
EITL's current customer base at an agreed rate per tonne of washed
coal that will be paid to EITL. Given the anticipated increase in
production rates, the Directors believe entering into a Sales
Agreement will contribute additional revenue to the Company,
especially given ILTL's network of relationships throughout East
Africa. Further, as previously outlined, the Sales Agreement also
provides for ILTL to become an anchor tenant themselves via the
initial purchase of a minimum of 3,000 tonnes of washed coal per
month, before increasing to 5,000 tonnes per month over the ensuing
12 month period.
The Agreement also envisages the entering into of a Loan
Agreement prior to the recommencement of mining operations at
Rukwa. If the Loan Agreement is executed, the parent company of
ILTL will provide a loan amount of up to US$1,000,000 to Edenville.
More details will be provided to shareholders should a formal Loan
Agreement be required and entered into.
Although no assurances can be given that formal agreements will
be reached in relation to either the Sales Agreement or the Loan
Agreement, the Directors are confident of a positive outcome based
on the discussions to date with ILTL.
The Company will provide further updates regarding both the
Sales Agreement and the Loan Agreement as appropriate.
Status of Operations at Rukwa
Operations at Rukwa are currently suspended as a result of the
Pandemic, but the Company is on standby to recommence activity as
soon as practicable, once it safe to do so. The Tanzanian
Government has recently recommenced flights in and out of the
country and is now providing a message of "business as usual". The
Company will continue to monitor the situation and will make a
decision to recommence operations as soon as it is appropriate to
do so.
GBP500,000 Capital Raise & Creditor Agreements
Given the delays in the anticipated ramp up of production,
initially from a protracted rainy season and subsequently from the
consequences of the Pandemic, the Company has had to address its
working capital position.
The Company is pleased to advise it has successfully raised
gross proceeds of GBP500,000 through the issue of 1,250,000,000 new
ordinary shares of 0.02p ("Ordinary Shares") at a price of 0.04p
per Ordinary Share (the "Placing Shares") (the "Placing"), being
the same price as the capital raise in January 2020 and the closing
bid price on 5 June 2020. Of this, circa 71.2%, was subscribed for
by the Company's four major shareholders, who will collectively
represent approximately 62.3% of the Company's shares in issue
following the admission of the Placing Shares to trading on AIM
("Admission").
In addition, over recent weeks Edenville has been engaging with
the Company's creditors. Following these discussions the Company
has been able to reduce its current liabilities from circa
GBP270,000 to circa GBP145,000 and would like to thank those
creditors for their understanding and support during these
unprecedented times.
As a result, circa 25% of the proceeds from the Placing will be
applied to settle these creditors, with the balance being used for
operations and general working capital purposes. In addition, as
part of the settlement agreement with creditors, a total of
257,702,400 warrants have been granted with a 3 year life to expiry
and an exercise price of 0.06 pence per Ordinary Share.
Following the completion of the Placing and the payment to
creditors, Edenville will have a cash balance of approximately
GBP375,000. When coupled with the proposed loan to be provided by
ILTL, Edenville is comfortable it will have sufficient funds to
bring Rukwa into a position where it is cashflow positive from
operations.
Significant Shareholder Participation
Brandon Hill and its executives, namely Neal Griffith and Oliver
Stansfield (collectively the "Brandon Hill Group"), who currently
hold 1,387,293,450 Ordinary Shares representing 20.36% of the
Company's issued share capital, have agreed to subscribe for, in
aggregate 277,625,000 Placing Shares representing a cash
subscription of GBP111,050. Following Admission, the Brandon Hill
Group's revised holding of Ordinary Shares will represent 20.65% of
the Company's enlarged share capital.
The Brandon Hill Group have been granted warrants over
125,000,000 Ordinary Shares as a result of the Placing (the "Broker
Warrants"). The Broker Warrants have a 3 year life and an exercise
price of 0.04 pence per Ordinary Share.
Pitchcroft Capital Limited and its executives, namely Alexander
Fullard, William Orgee and David Thomas (collectively the
"Pitchcroft Group"), who currently hold 1,028,959,224 Ordinary
Shares representing 15.1% of the Company's issued share capital,
have agreed to subscribe for, in aggregate, 250,000,000 Placing
Shares representing a cash subscription of GBP100,000. Following
Admission, the Pitchcroft Group's revised holding of 1,278,959,224
Ordinary Shares will represent 15.86% of the Company's enlarged
share capital.
Brian McMaster, who currently holds 750,000,000 Ordinary Shares
representing 11.0% of the Company's issued share capital, has
agreed to subscribe for 137,500,000 Placing Shares representing a
cash subscription of GBP55,000. Following Admission, Brian
McMaster's revised holding of 887,500,000 Ordinary Shares will
represent 11.0% of the Company's enlarged share capital.
John Story, who currently holds 969,488,982 Ordinary Shares
representing 14.23% of the Company's issued share capital, has
agreed to subscribe for 225,000,000 Placing Shares representing a
cash subscription of GBP90,000. Following Admission, John Story's
revised holding of 1,194,488,982 Ordinary Shares will represent
14.82% of the Company's enlarged share capital.
Related Party Transaction
The Brandon Hill Group, the Pitchcroft Group, John Story and
Brian McMaster are Substantial Shareholders of the Company 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 and the issue of Broker Warrants to the Brandon Hill Group
constitute related party transactions pursuant to Rule 13 of the
AIM Rules for Companies.
The Directors, having consulted with the Company's nominated
adviser, consider that the terms of the Related Parties'
participation in the Placing and the issue of the Broker Warrants
to the Brandon Hill Group are fair and reasonable insofar as
Edenville's shareholders are concerned.
Corporate Update
Financial Results for 31 December 2019
The Company also announces that the audit process for 2019 has
commenced but there will be a delay in the publication of the
Company's audited financial results for the year ended 31 December
2019 (the "Final Results") as a result of the Pandemic.
The Company's auditors PKF Littlejohn LLP ("PKF") have confirmed
that the impact of the Pandemic will delay their ability to obtain
the relevant information required for their audit work. At the
request of PKF , Edenvillle has therefore requested and received an
extension to its filing deadline for the Company's Final Results
from 30 June 2020 to 30 September 2020.
Proposed Board Change
The Company stated previously that it had identified a new
non-executive director who will replace Rufus Short on the
Company's Board. The Company expects to announce this appointment
shortly, in conjunction with Rufus Short stepping down from the
Board.
Broker Update
The Placing was executed by Edenville's broker Brandon Hill
Capital Limited, who will act as sole broker to the Company from
now on.
Commenting, CEO of Edenville Alistair Muir, said:
"I'm delighted to be able to make this announcement as I believe
it heralds a new chapter for Edenville. It has taken some time to
finalise the Coal Mining Agreement, largely due to global
developments in 2020. However, I am confident we have now struck a
beneficial arrangement for our shareholders, which we hope will set
the pattern for our future strategic partnership with ILTL.
"I would like to thank all Edenville shareholders for their
patience over the last few months. I would also like to thank our
major shareholders, who once again have all subscribed for at least
their pro rata in this capital raise, representing over 70% of the
total raise. Their long-term support is greatly appreciated and I
believe continues to highlight the value proposition Edenville
offers. I hope to deliver on various milestones over the coming
weeks and months and look forward to providing our shareholders
with further updates on these matters as appropriate."
Admission to AIM
Application will be made for Admission, which is expected to
occur at 8am on or around 11 June 2020. The Placing Shares will
rank pari passu with the existing Ordinary Shares.
Total Voting Rights
Following Admission, the Company will have 8,062,241,762
Ordinary Shares in issue, each share carrying the right to one
vote. The Company does not hold any Ordinary Shares in treasury.
The above figure of 8,062,241,762 Ordinary Shares may be used by
shareholders in the Company 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 share capital of
the Company under the Financial Conduct Authority's Disclosure and
Transparency Rules.
For further information please contact:
Edenville Energy Plc
Jeff Malaihollo - Chairman
Alistair Muir - CEO +44 (0) 20 3934 6630
SP Angel Corporate Finance LLP
(Nominated Adviser)
David Hignell
Charlie Bouverat
Abigail Wayne +44 (0) 20 3470 0470
Brandon Hill Capital Ltd
(Broker)
Oliver Stansfield, Jonathan Evans +44 20 7936 5200
IFC Advisory Limited
(Financial PR and IR)
Tim Metcalfe
Florence Chandler +44 (0) 20 3934 6630
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END
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