Aim-listed Edenville Energy is in discussions with NextGen Coalmine to vary the existing contract mining arrangement the companies have on the Rukwa coal project, in Tanzania, and to potentially take back control of the operations.
Edenville believes this will enable the company to capture a larger percentage of future sales, either on a contract basis or direct operation basis.
The company entered into a contract arrangement with NextGen early this year; however, Edenville says it has yet to enjoy any material benefit from the contract mining arrangement, owing to operational issues, which it is seeking to address.
In the meantime, Edenville is assisting NextGen on the ground and with limited funding to allow operations at Rukwa to be increased on a timely basis.
The company confirms that it is working with urgency to get the situation sorted, since international and domestic coal prices have increased significantly, with there being heightened interest from customers to enter into offtake agreements for coal from Rukwa.
“Since entering into the agreement with NextGen, a number of things have changed on a macro level that have made the economics of Rukwa considerably more attractive. The company is determined to maximise cash returns in the current global coal environment, especially given the attractive pricing forecast over the coming years.
“Given its current financial position, Edenville now has capacity to expand operations organically and to meet this heightened demand,” explains Edenville CEO Alistair Muir.
Meanwhile, Edenville has also advised that Upendo Group’s 10% economic interest in the joint venture holding the licences governing the Rukwa project has been transferred to a 10% direct holding on the principal production licence.
This may require Upendo making contributions to operations going forward, to which Edenville is seeking clarification.