Aim-listed energy company Edenville Energy has issued 5.71-million shares in an effort to raise £400 000 that it will use to provide additional working capital, to settle outstanding creditors and provide sufficient funds to meet any unexpected adverse judgement as a result of a legal claim.
The company’s board believes the placing is sufficient to ensure it becomes cash flow positive from operations in the coming months, subject to being able to operate during the rainy season.
The miner restarted production at its Tanzania-based Rukwa coal project in October, while Edenville’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.
Edenville CEO Noel Lyons says that, while operations at Rukwa have proved challenging, the company believes it has 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,” he says.
However, while the new management has exceeded expectations, poor production at Rukwa has continued to hinder the ultimate progress of Edenville in the short term, thereby leading to the company not achieving the expected revenue from operations, the company states.
Members of the board visited Tanzania for a prolonged period in November, with Edenville taking action to improve the output and operational efficiency at Rukwa.
As such, certain former stakeholders and suppliers deemed no longer suitable have been removed, while on-the-ground senior management who the board believes were impacting progress of Rukwa have been replaced. These have been complemented with new local advisers and personnel.
Having taken these actions, Edenville believes Rukwa operations are on a “much improved and efficient footing”.
In addition, Edenville reached agreement with Envirom Group for costs amounting to £180 000, 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, Edenville has yet to receive the proceeds of such agreement. As such, Edenville is currently taking advice regarding expediting recovery of the debt.
Further, Edenville also hopes to resolve an ongoing dispute with Upendo Group, having received a claim from former employees of Edenville relating to unfair dismissal as a result of Covid-19.
Based on legal advice received, Edenville says both claims are being robustly defended.
Edenville’s placing of the new ordinary shares, at 1p apiece – a discount of about 33.3%, represents about 21% of its enlarged issued share capital.
The company benefits from having a number of large independent shareholders, of which two-thirds have confirmed ongoing support through participation in the placing.
Pitchcroft Capital, or its executives, who currently hold 2.65-million ordinary shares (12.3% of Edenville’s current issued share capital), have agreed to subscribe for 357 143 of the new shares, representing a cash subscription of £25 000.
John Story, who currently holds 2.32-million ordinary shares (10.7% of Edenville’s current issued share capital), has agreed to subscribe for 860 000 new shares, representing a cash subscription of £60 200.
Oliver Stansfield has agreed to subscribe for 367 584 new shares, worth £25 730.88 and increasing his overall shareholding to 5.5% of the company.