Aim-listed Edenville Energy’s subsidiary, Edenville International (Tanzania) Limited (EITL), has entered into a $1-million loan agreement with its strategic partner, privately owned, Tanzanian incorporated company Infrastructure and Logistics Tanzania Limited (ILTL).
This follows on a recently announced coal mining agreement (CMA) with ILTL, which provides for a fixed rate mining and processing contract at the Rukwa coal project in south-west Tanzania.
Edenville is the operator of Rukwa.
The CMA has a contract term of four years and will automatically be renewed for a further period of four years unless terminated by either party.
The company's directors expect a sales and marketing agreement to be signed shortly, representing the last of the three proposed agreements with ILTL.
The sales and marketing agreement, as encapsulated within the CMA, will enable ILTL to market coal to additional customers beyond EITL's existing customer base at an agreed rate per tonne of washed coal that will be paid to EITL, thereby providing Edenville with additional revenue streams.
ILTL will provide an anchor tenancy at Rukwa, via the initial purchase of at least 3 000 t a month of washed coal, before increasing to 5 000 t a month over the ensuing 12-month period.
Edenville expects operations to restart at Rukwa by mid-August, following planned personnel movements by ILTL representatives and the lifting of travel restrictions.
EITL has used the Covid-19-related shutdown to source key plant replacement spares (for example, conveyor belting) following consultation with ILTL, while also finalising the company's mine restart plan.
A security team has remained on site since operations were suspended in April.
“I’m delighted to announce the signing of the loan agreement, which further cements our relationship with ILTL.
"With a comparatively low interest rate for loans of this nature, no material additional charges, implementation fees, penalties or equity kickers, we believe it highlights the collaborative approach both EITL and ILTL are taking on the project and provides Edenville with greater access to capital as required,” says Edenville CEO Alistair Muir.
"The contract mining scenario under the CMA means the historic breakeven tonnages cited by Edenville are no longer relevant, as the company now expects to be profitable from operations from the first tonne of washed coal that is produced.
"The focus of Edenville is therefore to expand the existing coal purchaser client base and to that end, the company expects to announce shortly the sales and marketing agreement with ILTL, which will bring with it not only an anchor tenancy of up to 5 000 t a month of washed coal, but also further incentive for ILTL to use its network to source additional customers,” he adds.