Edenville seeks to end contract mining arrangement with NextGen

21May 2022
The Guardian
Edenville seeks to end contract mining arrangement with NextGen

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.

The Rukwa Coal Mine has the potential to produce significant free-cash to Edenville from its operations, particularly in the global coal pricing environment PHOTO/FILE

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 percent economic interest in the joint venture holding the licences governing the Rukwa project has been transferred to a 10 percent direct holding on the principal production licence.

This may require Upendo making contributions to operations going forward, to which Edenville is seeking clarification.

The Company believes this transaction may require Upendo Group Ltd to make contributions to operations going forward.

The Company is seeking formal clarification of the transfer and is in discussion with its Tanzanian legal advisers to understand its implications. The Company says will provide a further update once these are received.

From 1 February 2022 to 30 April 2022, 610 tonnes of washed coal was sold and 453 tonnes of fines were sold ex-stockpile, according to the company report.

“Rukwa has the potential to produce significant free-cash to Edenville from its operations, particularly in the global coal pricing environment,” the company CEO added.

Top Stories