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Edenville Energy PLC on Wednesday said it is in talks with NextGen Coalmine Ltd to vary the existing mining contract the companies have.
In February, Edenville's subsidiary entered into a contract with NextGen for the operation of the Rukwa coal project in Tanzania. Under the agreement, the contractor will pay Edenville a royalty of $10 per tonne of washed coal sold and a royalty of $5 per tonne of any coal fines sold.
Since then, both the international and domestic coal price has increased significantly.
‘This has coincided with heightened interest from potential customers to enter into an offtake agreement for coal from Rukwa,’ it said.
In addition, earlier this month, Edenville said it is yet to enjoy ‘any material benefit’ from the contracted mining agreement.
Accordingly, Edenville said that it is in talks with NextGen to vary the existing contract and are also assessing the viability of bringing operations back under the company's control. It expects this will enable the company to capture a larger percentage of future sales, either on a contract or direct operation basis.
In the meantime, Edenville is assisting NextGen on the ground and providing limited funding to allow operations at Rukwa to be increased on a timely basis.
Chief Executive Alistair Muir commented: ‘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.’
Shares in Edenville Energy closed down 3.6% at 20.25 pence in London on Wednesday.
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