TIDMEDL
RNS Number : 4058D
Edenville Energy PLC
31 January 2018
31 January 2018
EDENVILLE ENERGY PLC
("Edenville" or the "Company")
Company Update
Edenville Energy plc (AIM: EDL), the company developing a coal
project in southwest Tanzania, is pleased to provide an update on
activities in connection with its recently established commercial
coal production and coal to power project.
Commercial Coal Production
Since the start of commercial coal production in October 2017,
the Company has been refining all aspects of the operation and
selling coal to commercial customers.
Mining
Edenville's mining operations are proceeding as anticipated,
with high quality near surface coal being extracted from the
Mkomolo deposit. Mining operations have been able to keep pace with
demand and plant capacity despite the seasonal heavy rains.
To help fulfil the demand for coal we are experiencing and to
potentially increase the amount of unprocessed coal the Company can
sell, the Company has taken the decision to also start mining the
Namwele deposit. Namwele, which sits to the south of the Mkomolo
deposit, will be mined by our Tanzanian partner, Upendo Group Ltd
("Upendo"). Upendo has already started clearing the overburden and
we expect the first Namwele coal to be mined before the end of Q1
2018.
Coal Quality
We are very pleased to report that coal quality, in terms of
both calorific value and ash content, is exceeding management's
initial expectations when mining commenced. Both the raw mined and
processed coal has been extensively tested at our on-site
laboratory and has returned values that meet our customer's
requirements.
Recent results from our on-site laboratory have given
encouraging calorific values for Mkomolo, including 6,734 GCV
(Gross Calorific Value in Kcal/Kg) on an air-dried basis,
correlating with previous results from December 2017. Additionally,
and of particular note, is the energy value contained in our raw
coal fines material (material generally less than one sixteenth of
an inch in size), recently testing at 4,753 GCV on an as received
basis.
Should these values continue to be seen, we consider this will
not only have a positive effect in terms of the value of commercial
sales, but also on the long-term economics of the power plant
development and related coal supply. This material would not
require washing, thereby increasing the potential fuel supply for
the coal to power project. Additionally, there may be the potential
to sell some of this high calorific coal without it having to be
processed through the wash plant, increasing the amount of coal the
Company can sell.
Processing plant
The Company's wash plant and associated equipment is currently
running at a throughput of 30 to 40 tonnes per hour, operating six
days a week for 8 to 10 hours a day. Edenville is therefore in a
position to process 8,000 to 10,000 tonnes of mined material per
month.
During the ramp up of operations higher than expected amounts of
mudstone and fines were encountered, which reduced throughput in
the processing plant. As a result, unit processing costs were
marginally higher than management expected, however, this was
offset by lower than expected unit mining costs.
Subsequently the Company intends to install both a Lamella water
treatment system and pre-screen technology to improve the overall
efficiency of the plant. The Lamella water treatment system will
remove mudstone and coal fines from the water, providing the plant
with cleaner water and the pre-screen technology will pre-screen
the mined material, removing coal fines before they reach the wash
plant. Once implemented, hourly production rates should increase to
80 to 100 tonnes per hour, thereby bringing operational costs per
tonne back in line with management expectations, in parallel with
the plant reaching its full production capacity.
Coal orders
Throughout January we have continued to process and ship the
bulk preliminary orders detailed in the announcements made on 23
November 2017 and 8 January 2018. We remain in detailed discussions
regarding contractual terms with several of these groups and others
regarding potential long-term orders that total over 10,000 tonnes
of coal per month.
Additionally, the Company has received further orders for trial
material in the last fortnight. These requests include one for
4,000 tonnes of coal from an industrial customer. This customer has
indicated that, if the product is demonstrated to be appropriate
for their needs in trials, they would seek to increase their
order.
In aggregate, trial and other orders for approximately 9,000
tonnes of coal have now been received and these have either been
shipped or are in the process of being fulfilled. All have been, or
are being, supplied on a commercial, paid for, basis.
These trial orders have been substantially larger that we
initially envisaged and continue to be received and shipped.
Through these we believe we are demonstrating the quality of our
coal and the ability of Edenville to be a trusted and reliable
supplier. The entering into of the long-term coal supply contracts
we are currently discussing crucially depends on the ability to
secure reliable and cost-effective transport for the coal. To that
end, we and our customers are in negotiations with a number of
transport providers. Additionally, we are investigating the
appropriateness of having our own base fleet of trucks to ship coal
to customers, reducing our dependence on third party transport
providers. At present, no assurances can be given as to the form
that any long-term coal supply contracts may take, but we are
confident that once logistical issues are resolved long term
contracts can be entered into and further updates will be provided
as appropriate.
Coal to Power Project
The Company continues to work with its partner Sinohydro
Corporation of China ("Sinohydro") to progress the Company's coal
to power project. Sinohydro's representatives have completed their
pre-feasibility and economic assessment work and remain very
supportive of the project. Since the last update on 23 November
2017 further productive meetings have been held with the Tanzanian
Ministry for Energy (the "Ministry") and Tanzania Electric Supply
Company ("Tanesco") to progress the project. It should be noted the
opening up of the mine has provided the Company with valuable data
on the coal quality and structure of the deposit, critical when
considering the power plant design which will depend on this fuel
source.
In line with other coal to power projects in Tanzania, the
Company is progressing discussions with a view to, in the first
instance, entering into an MOU with the Ministry and Tanesco
setting out, inter alia, the size of the project, the proposed
structure of a Power Purchase Agreement (PPA), tariff levels, and
connectivity into the planned transmission line that will pass
through the Sumbawanga Region. The timing of this is largely in
government hands, although we continue to have a very good working
relationship with them and they recognise the demonstrable benefits
Edenville's project would bring to the region.
The Company looks forward to continuing to provide updates as
appropriate both on our commercial coal production and the coal to
power project during this exciting and rapidly developing period
for Edenville.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
For further information please contact:
Edenville Energy Plc
Jeff Malaihollo - Chairman +44 (0) 20 3934
Rufus Short - CEO 6632
Northland Capital Partners Limited
(Nominated Adviser)
Gerry Beaney
David Hignell +44 (0) 20 3861
Jamie Spotswood 6625
Optiva Securities Limited
(Broker)
Jeremy King +44 (0) 20 3137
Graeme Dickson 1902
IFC Advisory
(Financial PR and IR)
Tim Metcalfe
Graham Herring +44 (0) 20 3934
Heather Armstrong 6630
This information is provided by RNS
The company news service from the London Stock Exchange
END
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