LONDON (ShareCast) - (Sharecast News) - Edenville Energy updated the market in light of the Covid-19 coronavirus pandemic on Tuesday, as it looked to shore up its funding amid the ongoing disruption.
The AIM-traded firm's primary operations are in Tanzania, with the Rukwa project around 850 kilometres west of Dar es Salaam.

It said it had one member of staff in Dar Es Salaam itself, who works from home, and just over 40 employees on the project site in the Western Highlands, near the town of Sumbawanga.

As of 5 April, there had been no cases of Covid-19 at the mine site or in the surrounding region, while 22 cases had been reported in Tanzania, with one death.

"However, as with many other countries across the globe, Tanzania has introduced steps in an attempt to curb the further spread of the virus," the board said in its statement.

"As part of this there has been the temporary closure of certain non-essential businesses and the introduction of social distancing protocols."

Edenville said that in response to the pandemic, a business continuity programme had been introduced to protect staff, while ensuring the continued safe operation of the company.

That had resulted in all non-essential travel being cancelled since early March, with all non-operational staff working from home.

As it announced on 4 March, operations at Rukwa restarted in the month, although as expected, the recommencement of mining had been hampered by the continued rainy season.

Edenville said it was able to bring the plant back online after further upgrades, and continued to process stockpiles of coal for sale to a long-term customer in Arusha, who purchased and received more than 500 tonnes of washed coal during March.

"However, given the Tanzanian government's recent advice and that of its customers, Edenville has elected to stand down Rukwa employees and suspend production with immediate effect until the situation is resolved," the board said.

"With the rainy season expected to draw to a close later this month, the company is optimistic that with an improvement in the situation Edenville will be able to commence mining in the Northern Area at short notice, which as previously reported has shown itself to be of a higher quality than areas previously mined at Rukwa.

"A security team will remain present at site during the shutdown."

On 23 January, Edenville announced the completion of an equity financing to raise ?0.7m before expenses at 0.04p per share, which funded the restart of operations at Rukwa, as well as the payment of certain local and international creditors.

In order to effectively manage its working capital position during the pandemic-related uncertainty, the firm said it had engaged with Lind Partners regarding its outstanding funding agreement, that was first announced on 6 November 2018 and further detailed on 29 April 2019 and 23 January 2020.

It said Lind had agreed to a three-month deferral on loan repayments under the funding agreement as a result of the pandemic, starting with the April payment due at the end of the month.

All other historic loan repayments were currently up to date, and a balance of around $0.58m now remained outstanding under the agreement.

In addition, Lind had provided its consent to the company entering into an unsecured loan from a third party of up to ?0.3m, being the proposed loan offered to the firm as announced on 23 January, although Edenville said it had not entered into any such agreement as of Tuesday.

In exchange for the three-month repayment deferral and consent to a potential third party loan, Edenville said it had agreed to grant warrants over 270 million ordinary shares to Lind, with an exercise price of 0.03p each.

The warrants would have a life to expiry of five years from Tuesday, and if exercised, would provide the firm with proceeds of ?81,000.

Edenville said its cash position as at 31 March was around ?60,000, including an upcoming VAT return.

In addition, about $25,000 was owed to Edenville International Tanzania, from customers and an expired bank guarantee in the country.

As it announced on 11 December, and further on 27 February, the firm said it remained in discussions with a potential strategic partner for the project.

The scope of these discussions still included a potential asset-level loan, a possible coal mining agreement and a potential coal marketing agreement.

Edenville said the discussions were progressing, with a number of key commercial terms now agreed in principle.

"Whilst the pace has been slower than originally envisaged given the effects of the pandemic and the subsequent restrictions it has imposed on travel, Edenville's directors remain optimistic that a deal can be concluded in the second quarter of 2020."

The company also announced that, due to the pandemic, its board had temporarily suspended its search for a new non-executive director.

As a result, Rufus Short had agreed to stay on the board in his current role as a non-executive director until a new appointment was made.

"As with much of the world, our operations have naturally been impacted by the rapid spread of Covid-19," said chief executive officer Alistair Muir.

"Our principal focus must always be on the safety of our employees, as well as the moral obligation to do what we can to reduce the spread of the virus.

"Whilst to date there have been few cases of Covid-19 in Tanzania, we fully support the government's initiatives which will hopefully ensure the country remains as sheltered as possible from the pandemic."

Muir said the company believed the steps it had taken should enable it to return to mining as soon as practicable.

"The order book for our coal remains healthy and we have seen consistent demand given our primary market is currently regional industrial players, meaning Rukwa's location gives it cost advantages over certain other operations.

"I look forward to updating the market as and when we return to mining, along with any developments with respect to our potential strategic investor."

At 1231 BST, shares in Edenville Energy were down 26.86% at 0.03p.

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