Aim-listed Edenville Energy's subsidiary Edenville International, based in Tanzania, has entered into a sales and marketing agreement with Dubai-based MarTek Global.
MarTek is a Dubai-based sister company to Infrastructure and Logistics Tanzania Limited (ILTL).
The sales and marketing agreement follows the recently announced coal mining agreement that Edenville signed with ILTL, which provided for a fixed rate mining and processing contract at the Rukwa coal project, in Tanzania.
The coal mining agreement is effective from September 1 and will be carried out for four years, with an automatic renewal unless terminated by either party.
Moreover, the coal mining agreement was complemented by a $1-million loan agreement with ILTL, which further aligned the respective interests of both ILTL and Edenville.
The sales and marketing agreement, therefore, was the final piece in the strategic partnership. The agreement has come into effect immediately and will remain in place for at least four years.
MarTek will provide an anchor tenancy at Rukwa, of 3 000 t a month of washed coal and increasing to 5 000 t of coal a month over the first 12 months of the contract term.
MarTek’s purchase price for Rukwa coal is the highest that Edenville has achieved to date and should provide the company with a healthy margin on tonnes sold.
Edenville International and MarTek will share marketing and sales responsibilities in Tanzania for any sales above the anchor tenancy.
MarTek will have exclusive rights to market Rukwa coal internationally at a pre-agreed sales price, with any transport costs to be added to the sales price.
MarTek will leverage its logistics capabilities to supply these new markets.
Edenville International, MarTek and ILTL have agreed to focus on maximising production from the Rukwa project, with a target of increasing capacity in the near term to around 12 500 t a month.
Edenville CEO Alistair Muir says this third and final contract brings to conclusion the restructuring of Edenville's Tanzanian operations. He believes these agreements will collectively address prior challenges that the company had experienced in terms of mining, processing and sales.
“Feedback from ILTL and MarTek has been encouraging with respect to the appetite for Rukwa coal and all parties are now focused on adding to the order book, which has been underpinned by the anchor tenancy and MarTek's purchase price.
“While concluding all three agreements has taken longer than envisaged as a result of the Covid-19 pandemic, we are excited to have now reached this point. Mining and processing is underway again at Rukwa and I look forward to providing our shareholders with further updates in due course.”