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Placing to raise £0.4 million and Operational Update

Edenville Energy Plc (AIM: EDL) is pleased to provide an update on operations at its Rukwa Coal Project (“Rukwa”) in Tanzania, together with a placing to raise gross proceeds of £400,000.

Rukwa Operations

Following the recommencement of production at Rukwa, as announced on 11 October 2022, the Company’s new management team has been focused on establishing an expanded customer base for Rukwa coal and also increasing daily production and output of washed coal. Whilst the former has exceeded expectations, as previously reported the latter has continued to hinder the ultimate progress of the Company in the short term.

Members of the Board were in Tanzania for a prolonged period during November and the Company has now taken action to improve the output and operational efficiency at Rukwa. Certain former stakeholders and suppliers deemed no longer suitable have been removed. Together with the replacement of on-the-ground senior management who the Board believes were impacting progress of Rukwa, alongside new local advisers and personnel now in place, the Directors believe the Company’s Rukwa operations are on a much improved and efficient footing.

The short-term focus of the Company is to now achieve its targeted state of steady production of 3,000 and then 4,000 tonnes per month of washed coal. When operational the current wash plant is achieving an output of approximately 100 tonnes per day of washed coal from eight-hour shifts. Therefore, the Board believe 3,000 rising to 4,000 tonnes per month is a realistic target from existing infrastructure, especially in light of the recent actions taken by management. As outlined below, significant demand now exists for Rukwa coal. However, it is likely that to meet this demand of over 10,000 tonnes per month of washed coal, an additional wash plant will be required. The Company believes upon achieving the targeted initial stabilised production rate, any additional wash plant could be funded through a finance lease, hire purchase or other such financing arrangement.

Sales of coal and fines

As previously reported, during 2022, the Company has consistently seen increasing demand and price per tonne for Rukwa coal. Following the Board’s efforts in-country last month, the Company has agreed terms to supply 2,000 tonnes of washed coal per month at a net of transport price of US$55 per tonne at the mine gate and up to 1,500 tonnes per month of unwashed coal fines at US$20-25 per tonne to new customers. These customers have already purchased their first shipments of washed coal and fines. An additional confirmed order of approximately 850 tonnes per month of washed coal has been secured with another customer at a similar price.

More potential customers have been identified; however, the Company has refrained from entering into offtake arrangements with them until such time as the stabilised production rates can service this additional demand. The Board believe the total cost to produce washed coal is likely to remain below the current level of US$20 per tonne, with fines produced effectively as a by-product.

The Company also has an existing stockpile of approximately 60,000 tonnes of fines. The market for fines has significantly increased given the current coal environment and the Company now has orders to purchase fines at pricing of US$20-25 per tonne. Fines from the stockpile are collected by customers and, as such, are expected to make a significant contribution to the revenue of the Company going forward.

While the tendering process for the appointment of a contract miner is ongoing, the Company retains the benefit of the entire proceeds of sale of coal from its operations at Rukwa.

Reasons for and background to the Placing

Given the aforementioned issues with respect to production, the Company has not achieved the expected revenue from operations. In addition, as previously reported, the Company reached agreement with Envirom Group AS (“Envirom”) for certain costs, amounting to £180,000, to be recouped following an earlier aborted acquisition process. While Envirom continues to acknowledge the debt and reaffirm it will be paid upon the completion of their own financing initiatives, the Company has yet to receive the proceeds of such agreement and the Company is currently taking advice regarding expediting recovery of the debt.

In addition to the previously announced ongoing dispute with Upendo Group Ltd which the Company hopes to resolve in the coming weeks, the Company has received a claim from former employees of the Group relating to unfair dismissal as a result of Covid. Based on legal advice received, the Company confirms that both claims are being robustly defended.

In light of these developments the Company has undertaken a placing to raise gross proceeds of £400,000 to provide additional working capital, to settle outstanding creditors and provide sufficient funds to meet any unexpected adverse judgement as a result of the aforementioned legal claims. The Board believes this placing is sufficient to ensure the Company becomes cash flow positive from operations in the coming months, subject to being able to operate during rainy season. Details of the placing are outlined below.

The Company has raised gross proceeds of £400,000 through the placing of 5,714,286 new ordinary shares of 1 pence each in the Company (the “Placing Shares”) at a price of 7.0 pence per share (the “Placing”). The Placing price represents a discount of approximately 33.3 per cent. to the mid-market closing price on AIM of 10.50 pence per ordinary share on 5 December 2022, being the latest practicable business day prior to the publication of this announcement. The Placing was arranged by Tavira Financial Limited (“Tavira”), the Company’s broker, and the Placing Shares will represent approximately 21 per cent. of the Company’s enlarged issued share capital.

The Company benefits from having a number of large independent shareholders. Edenville is pleased to confirm their ongoing support via participation in the Placing for over two-thirds of the total capital raise.

Tavira has entered into an agreement with Edenville (the “Placing Agreement”) under which, subject to the conditions set out therein, Tavira has been instructed by Edenville to use its reasonable endeavours to procure subscribers for the Placing Shares. The Placing Agreement includes customary provisions including that the Placing Agreement can be terminated in certain circumstances.

Total Voting Rights

The Placing Shares will be issued under the Company’s existing share authorities and will rank pari passu in all respects with the Company’s existing ordinary shares. The Placing is conditional, inter alia, on there being no breach of the Company’s obligations under the Placing Agreement prior to admission of the Placing Shares to trading on AIM (“Admission”), and such Admission becoming effective. Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the Placing Shares on AIM will commence at 8.00 a.m. on or around 9 December 2022.

On Admission, the Company’s issued share capital will consist of 27,359,861 ordinary shares, each with one voting right. There are no shares held in treasury. Therefore, the Company’s total number of ordinary shares and voting rights will be 27,359,861 and this figure may be used by shareholders following Admission 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 Company under the FCA’s Disclosure Guidance and Transparency Rules.

Significant Shareholder and Related Party Participation

Pitchcroft Capital Limited or its executives, (collectively the “Pitchcroft Group”), who currently hold 2,655,487 Ordinary Shares, representing 12.3% of the Company’s current issued share capital, have agreed to subscribe for 357,143 Placing Shares representing a cash subscription of £25,000. Following Admission, the Pitchcroft Group’s revised holding of 3,012,630 Ordinary Shares will represent 11.0% of the Company’s issued share capital as enlarged by the Placing.

John Story, who currently holds 2,320,397 Ordinary Shares, representing 10.7% of the Company’s current issued share capital, has agreed to subscribe for 860,000 Placing Shares representing a cash subscription of £60,200. Following Admission, John Story’s revised holding of 3,180,397 Ordinary Shares will represent 11.6% of the Company’s issued share capital as enlarged by the Placing.

Oliver Stansfield has agreed to subscribe for, in aggregate, 367,584 Placing Shares representing a cash subscription of £25,730.88. Oliver Stansfield currently holds 1,132,416 Ordinary Shares, representing 5.2% of the Company’s issued share capital and following Admission will hold 1,500,000 Ordinary Shares, representing 5.5% of the Company’s issued share capital. However, in the 12 months prior to the Placing, Oliver Stansfield, alongside his former employer, Brandon Hill Capital, collectively held over 10% of the Company’s current issued share capital. Accordingly, under AIM Rule 13 he and Brandon Hill Capital are still deemed to be a related party by virtue of the combined holding.

Related Party Transactions

The Pitchcroft Group, John Story and Oliver Stansfield (when combined with his former employer, Brandon Hill Capital) are, or have been within the last 12 months, Substantial Shareholders holding in each case more than 10% of the Company’s issued share capital 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 constitute related party transactions pursuant to Rule 13 of the AIM Rules for Companies. The Directors, having consulted with the Company’s nominated adviser, Strand Hanson Limited, consider that the terms of the Related Parties’ participation in the Placing are fair and reasonable insofar as Edenville’s shareholders are concerned.

Noel Lyons, CEO of Edenville, commented:

“Whilst the operations at Rukwa have proved challenging, we believe we have now put in place an operational structure that will enable the potential of Rukwa to be properly exploited. We are seeing significant demand for our coal at attractive prices and our focus is on ensuring that this demand can be met. The proceeds from the Placing are expected to enable Edenville to become cashflow positive and to be able to take advantage of the demand we are seeing. I would particularly like to thank our long-term shareholders for their support in the Placing.

“In addition to our focus on Rukwa, we continue to explore options, that when operational cashflows permit, could allow Edenville to significantly increase the scale and scope of its mining operations through the potential acquisition of attractive additional assets.

“We look forward to providing further updates on our progress in due course.”

For further information please contact:

Edenville Energy Plc

Nick Von Schirnding – Chairman | Noel Lyons – CEO

+44 (0) 20 3934 6630

Strand Hanson Limited (Financial and Nominated Adviser)

James Harris | Rory Murphy

+44 (0) 02 7409 3494

Tavira Securities Limited (Broker)

Oliver Stansfield | Jonathan Evans

+44 (0) 20 7100 5100

IFC Advisory Limited (Financial PR and IR)

Tim Metcalfe | Florence Chandler

+44 (0) 20 3934 6630

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