(Sharecast News) - Tanzanian-focussed coal miner Edenville Energy has entered into an agreement with a private lender to secure a non-convertible loan of £100,000 in order to address its immediate working capital requirements.
The loan carries a fixed coupon rate of 20.0% per annum and must be repaid on or before 25 February 2020. Including the loan funds, Edenville currently has cash resources of approximately $190,000.
Whilst this will provide "sufficient funds" for its immediate needs and enable the group to satisfy orders from an existing customer, the firm warned that working capital would remain insufficient to enable its Rukwa coal project to operate at its planned capacity or to make scheduled repayments to Linde Partners, to which it owes $835,760.
To address this, Edenville entered into discussions relating to an investment at the project level with a potential strategic investor with experience in Tanzania and the neighbouring region.
In the long term, chief executive Alistair Muir believes the project holds the potential to supply in excess of 25,000 tonnes per month. However, the current plant capacity has restricted the firm to being able to produce roughly 12,000 tonnes per month of washed product. Recent production levels were markedly also lower than this figure - with 820 tonnes of washed coal produced from 21 September 2019 to present.
Muir said: "Whilst the current working capital situation is hampering our ability to reach these levels, I am optimistic that all is in place to achieve these production levels in the medium to long term once the working capital situation has been addressed.
"Assuming we are able to source the requisite funds, our aim still remains to become cash flow positive from operations during 2020."
As of 0925 GMT, Edenville shares had tumbled 22.44% to 0.035p.
27 Apr 2016 09:18