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Coal Mining Agreement, Placing & Corporate Update

Edenville Energy Plc (AIM: EDL), the AIM quoted company operating the Rukwa coal project in southwest Tanzania (the “Project” or “Rukwa”), is pleased to announce that on 5 June 2020 the Company’s subsidiary Edenville International (Tanzania) Limited (“EITL”) entered into a Coal Mining Agreement (the “Agreement”) with Infrastructure and Logistics Tanzania Limited (“ILTL”). The signing of the Agreement follows the completion of extensive negotiation with ILTL and is the culmination of discussions that began last year and which were first announced on 29 November 2019.

The Company’s Directors expect the Agreement to represent the first stage of a wider strategic partnership with ILTL which will also addresses other aspects including an underpinning of sales, marketing, offtake and an asset level loan, all of which are covered in more detail below.

About ILTL

ILTL is a privately owned, Tanzanian incorporated company with a focus on infrastructure development, logistics, mining and marketing. ILTL’s management team has extensive experience in the East and Central Africa region in the field of energy, hospitality, oil & gas and transportation.

Under the terms of the Agreement ILTL are expected to also become a customer of Edenville prior to the recommencement of mining operations in Tanzania, which are currently suspended as a result of the COVID-19 pandemic (the “Pandemic”). It is envisaged under the Agreement that ILTL will enter into a long-term Coal Supply Agreement, which would see ILTL provide an anchor tenancy at the Company’s Rukwa coal project (“Rukwa” or the “Project’) by initially purchasing 3,000 tonnes of washed coal per month at standard market rates, before increasing this to 5,000 tonnes a month over a 12 month period.

ILTL are also expected to use their logistics network and expertise with respect to existing and potential customers. The Directors believe this should improve the likelihood of future customers entering into long-term contracts with the Company, given they would benefit from these anticipated transport and logistics savings.

Further information on the Agreement

The Agreement, which will become effective once business activity can return to normal in Tanzania following the Pandemic, covers the full operation of mining and processing activities at Rukwa. The Agreement has a contract term of four years and will be automatically be renewed for further period of four, years unless terminated by either party.

EITL’s existing equipment at Rukwa has been reviewed by ILTL as part of its due diligence process and confirmed as adequate to execute the initial projected production ramp up. Payment to ILTL for its contract mining will be at a fixed rate, based on per tonne of washed product and includes an allowance for overburden removal. If required there will also be a payment per cubic metre for overburden removal in excess of the previously mentioned overburden allowance. EITL will continue to be the holders of the mining licence and will be responsible for mining approvals and compliance with Government regulations, in particular health and safety and environmental compliance.

The Agreement includes specific reference to a Sales Agreement, which is currently the subject of further discussions and is expected to be signed in the near term. It is documented that the Sales Agreement will enable ILTL to market coal to customers beyond EITL’s current customer base at an agreed rate per tonne of washed coal that will be paid to EITL. Given the anticipated increase in production rates, the Directors believe entering into a Sales Agreement will contribute additional revenue to the Company, especially given ILTL’s network of relationships throughout East Africa. Further, as previously outlined, the Sales Agreement also provides for ILTL to become an anchor tenant themselves via the initial purchase of a minimum of 3,000 tonnes of washed coal per month, before increasing to 5,000 tonnes per month over the ensuing 12 month period.

The Agreement also envisages the entering into of a Loan Agreement prior to the recommencement of mining operations at Rukwa. If the Loan Agreement is executed, the parent company of ILTL will provide a loan amount of up to US$1,000,000 to Edenville. More details will be provided to shareholders should a formal Loan Agreement be required and entered into.

Although no assurances can be given that formal agreements will be reached in relation to either the Sales Agreement or the Loan Agreement, the Directors are confident of a positive outcome based on the discussions to date with ILTL.

The Company will provide further updates regarding both the Sales Agreement and the Loan Agreement as appropriate.

Status of Operations at Rukwa

Operations at Rukwa are currently suspended as a result of the Pandemic, but the Company is on standby to recommence activity as soon as practicable, once it safe to do so. The Tanzanian Government has recently recommenced flights in and out of the country and is now providing a message of “business as usual”. The Company will continue to monitor the situation and will make a decision to recommence operations as soon as it is appropriate to do so.

£500,000 Capital Raise & Creditor Agreements

Given the delays in the anticipated ramp up of production, initially from a protracted rainy season and subsequently from the consequences of the Pandemic, the Company has had to address its working capital position.

The Company is pleased to advise it has successfully raised gross proceeds of £500,000 through the issue of 1,250,000,000 new ordinary shares of 0.02p (“Ordinary Shares”) at a price of 0.04p per Ordinary Share (the “Placing Shares”) (the “Placing”), being the same price as the capital raise in January 2020 and the closing bid price on 5 June 2020. Of this, circa 71.2%, was subscribed for by the Company’s four major shareholders, who will collectively represent approximately 62.3% of the Company’s shares in issue following the admission of the Placing Shares to trading on AIM (“Admission”).

In addition, over recent weeks Edenville has been engaging with the Company’s creditors. Following these discussions the Company has been able to reduce its current liabilities from circa £270,000 to circa £145,000 and would like to thank those creditors for their understanding and support during these unprecedented times.

As a result, circa 25% of the proceeds from the Placing will be applied to settle these creditors, with the balance being used for operations and general working capital purposes. In addition, as part of the settlement agreement with creditors, a total of 257,702,400 warrants have been granted with a 3 year life to expiry and an exercise price of 0.06 pence per Ordinary Share.

Following the completion of the Placing and the payment to creditors, Edenville will have a cash balance of approximately £375,000. When coupled with the proposed loan to be provided by ILTL, Edenville is comfortable it will have sufficient funds to bring Rukwa into a position where it is cashflow positive from operations.

Significant Shareholder Participation

Brandon Hill and its executives, namely Neal Griffith and Oliver Stansfield (collectively the “Brandon Hill Group”), who currently hold 1,387,293,450 Ordinary Shares representing 20.36% of the Company’s issued share capital, have agreed to subscribe for, in aggregate 277,625,000 Placing Shares representing a cash subscription of £111,050. Following Admission, the Brandon Hill Group’s revised holding of Ordinary Shares will represent 20.65% of the Company’s enlarged share capital.

The Brandon Hill Group have been granted warrants over 125,000,000 Ordinary Shares as a result of the Placing (the “Broker Warrants”). The Broker Warrants have a 3 year life and an exercise price of 0.04 pence per Ordinary Share.

Pitchcroft Capital Limited and its executives, namely Alexander Fullard, William Orgee and David Thomas (collectively the “Pitchcroft Group”), who currently hold 1,028,959,224 Ordinary Shares representing 15.1% of the Company’s issued share capital, have agreed to subscribe for, in aggregate, 250,000,000 Placing Shares representing a cash subscription of £100,000. Following Admission, the Pitchcroft Group’s revised holding of 1,278,959,224 Ordinary Shares will represent 15.86% of the Company’s enlarged share capital.

Brian McMaster, who currently holds 750,000,000 Ordinary Shares representing 11.0% of the Company’s issued share capital, has agreed to subscribe for 137,500,000 Placing Shares representing a cash subscription of £55,000. Following Admission, Brian McMaster’s revised holding of 887,500,000 Ordinary Shares will represent 11.0% of the Company’s enlarged share capital.

John Story, who currently holds 969,488,982 Ordinary Shares representing 14.23% of the Company’s issued share capital, has agreed to subscribe for 225,000,000 Placing Shares representing a cash subscription of £90,000. Following Admission, John Story’s revised holding of 1,194,488,982 Ordinary Shares will represent 14.82% of the Company’s enlarged share capital.

Related Party Transaction

The Brandon Hill Group, the Pitchcroft Group, John Story and Brian McMaster are Substantial Shareholders of the Company and are therefore related parties as defined by the AIM Rules for Companies (the “Related Parties”).

Accordingly, the participation of the Related Parties in the Placing and the issue of Broker Warrants to the Brandon Hill Group constitute related party transactions pursuant to Rule 13 of the AIM Rules for Companies.

The Directors, having consulted with the Company’s nominated adviser, consider that the terms of the Related Parties’ participation in the Placing and the issue of the Broker Warrants to the Brandon Hill Group are fair and reasonable insofar as Edenville’s shareholders are concerned.

Corporate Update

Financial Results for 31 December 2019

The Company also announces that the audit process for 2019 has commenced but there will be a delay in the publication of the Company’s audited financial results for the year ended 31 December 2019 (the “Final Results”) as a result of the Pandemic.

The Company’s auditors PKF Littlejohn LLP (“PKF”) have confirmed that the impact of the Pandemic will delay their ability to obtain the relevant information required for their audit work. At the request of PKF, Edenvillle has therefore requested and received an extension to its filing deadline for the Company’s Final Results from 30 June 2020 to 30 September 2020.

Proposed Board Change

The Company stated previously that it had identified a new non-executive director who will replace Rufus Short on the Company’s Board. The Company expects to announce this appointment shortly, in conjunction with Rufus Short stepping down from the Board.

Broker Update

The Placing was executed by Edenville’s broker Brandon Hill Capital Limited, who will act as sole broker to the Company from now on.

Commenting, CEO of Edenville Alistair Muir, said:

“I’m delighted to be able to make this announcement as I believe it heralds a new chapter for Edenville. It has taken some time to finalise the Coal Mining Agreement, largely due to global developments in 2020. However, I am confident we have now struck a beneficial arrangement for our shareholders, which we hope will set the pattern for our future strategic partnership with ILTL.

“I would like to thank all Edenville shareholders for their patience over the last few months. I would also like to thank our major shareholders, who once again have all subscribed for at least their pro rata in this capital raise, representing over 70% of the total raise. Their long-term support is greatly appreciated and I believe continues to highlight the value proposition Edenville offers. I hope to deliver on various milestones over the coming weeks and months and look forward to providing our shareholders with further updates on these matters as appropriate.”

Admission to AIM

Application will be made for Admission, which is expected to occur at 8am on or around 11 June 2020. The Placing Shares will rank pari passu with the existing Ordinary Shares.

Total Voting Rights

Following Admission, the Company will have 8,062,241,762 Ordinary Shares in issue, each share carrying the right to one vote. The Company does not hold any Ordinary Shares in treasury. The above figure of 8,062,241,762 Ordinary Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Conduct Authority’s Disclosure and Transparency Rules.

For further information please contact:

Edenville Energy Plc

Jeff Malaihollo – Chairman

Alistair Muir – CEO

+44 (0) 20 3934 6630

Strand Hanson Limited

(Financial and Nominated Adviser)

James Harris

Rory Murphy

+44 (0) 20 7409 3494

IFC Advisory Limited

(Financial PR and IR)

Tim Metcalfe

Florence Chandler

+44 (0) 20 3934 6630

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