JOHANNESBURG (miningweekly.com) – Production of washed coal from the Rukwa coal project, in south-west Tanzania, is expected to start later this week, Aim-listed thermal coal company Edenville Energy announced on Wednesday.
The company plans to produce 5 000 t of washed coal in October, and aims to ramp this up to at least 10 000 t/m by January 2018. A range of sizes of washed coal will be produced to allow for the product to meet specific end-user requirements.
Since Edenville’s decision in January to proceed with development, the Rukwa project has taken only eight months to construct. Opening of the mine has already exposed considerable coal supplies in the upper seams.
Meanwhile, the company has raised £1.25-million in an oversubscribed subscription to develop the project.
“Management expects the net proceeds of the subscription to take the project through to full production and [to generate] positive cash flows.”
Edenville Energy will apply the net proceeds of the subscription to transport logistics and the completion of construction work at Rukwa. It will also be used as working capital to fund the increase in production over the next six months and, in the appropriate circumstances, initiate expansion options.
“The net proceeds from this oversubscribed placing are expected to take the project to the point where it is cash flow positive, a fundamental advance for Edenville,” said Edenville CEO Rufus Short.
“We are in detailed negotiations with coal customers and believe we currently have sufficient interest to justify our plans. We look forward to Edenville becoming a significant coal producer in the East Africa region.”
The subscription raised £1.25-million (before expenses) through the issue of about 208-million new ordinary shares of 0.02 pence each in the capital of Edenville Energy at 0.6 pence per new ordinary share to new and existing shareholders.
In addition, the company has issued about 104-million warrants to the subscribers on the basis of one warrant for every two new ordinary shares, exercisable at 0.8 pence a warrant at any time over the next 12 months.