Aim-listed Edenville Energy has introduced a business continuity programme to protect its staff, while ensuring the continued and safe operation of the company, in response to the Covid-19 pandemic.
The move has resulted in all nonessential travel being cancelled since early March, and all nonoperational staff working from home.
Owing to the pandemic, Edenville’s board of directors have also temporarily suspended its search for a new nonexecutive director. As a result, Rufus Short will stay in his role as nonexecutive director until a successor is appointed.
The company’s flagship Rukwa coal project, in Tanzania, did restart in March, although the restart of mining has been hampered by the continued rainy season.
Edenville was, however, able to bring the plant back on line after further upgrades and continued to process stockpiles of coal for sale to a long-term customer in Arusha, Tanzania, who bought and received more than 500 t of washed coal last month.
However, given the Tanzanian government's recent advice and the requirements of its customers, Edenville has elected to stand down Rukwa employees and suspend production with immediate effect until the situation is resolved.
While the rainy season is expected to draw to a close later this month, Edenville says it is optimistic that, with an improvement in the situation, the company will be able to start mining in the Northern Area at short notice.
A security team will remain present at site during the shutdown.
Earlier this year, in January, Edenville also announced the completion of an equity financing to raise £700 000, before expenses, at 0.04p a share, which funded the restart of operations at Rukwa, as well as the payment of certain local and international creditors.
To effectively manage its working capital position during this period of uncertainty, Edenville has engaged with Lind Partners regarding its outstanding funding agreement, which was first announced in November 2018.
Lind agreed to a three-month deferral on loan repayments pursuant to the funding agreement as a result of the pandemic, starting with the payment due at the end of April. All other historic loan repayments are currently up to date and a balance of about $580 000 now remains outstanding under the funding agreement.
In addition, Lind has given its consent to Edenville entering into an unsecured loan from a third party for up to £300 000 such as the proposed loan offered to the company, although the company has not entered into any such agreement yet.
In exchange for the three-month repayment deferral and consent to a potential third-party loan, Edenville has agreed to grant warrants over 270-million ordinary shares of 0.02p each in the company to Lind with an exercise price of 0.03p a share.
The warrants will have a life to expiry of five years from April 7 and, if exercised, will provide the company with proceeds of £81 000.
Meanwhile, Edenville is also continuing discussions with a potential strategic partner for the Rukwa project, the scope of which still includes a potential asset-level loan, a potential coal mining agreement and a potential coal marketing agreement.
These discussions are progressing, with a number of key commercial terms now agreed in principle, Edenville confirmed on April 7. While the pace has been slower than originally envisaged given the effects of the Covid-19 pandemic and the subsequent restrictions it has imposed on travel, Edenville's directors remain optimistic that a deal can be concluded in the second quarter of this year.