Edenville Energy enters coal offtake agreement with Riftcot

Tanzania-focussed coal project developer Edenville Energy announced on Tuesday that it has entered into a coal offtake agreement with Riftcot.

The AIM-traded company said Riftcot is a coal and commodities trader based in Kenya, with operations across Africa.

Edenville recently started treating coal through its wash plant, and once up to full production - currently anticipated to be in January 2018 - and utilising the current plant and equipment levels, it anticipated production volumes of at least 10,000 tonnes of coal per month.

It said the agreement is for Riftcot to purchase - at a recognised commercial market price - up to 75% of the company's Rukwa Coal Project's yearly production, and would run for an initial term of five years commencing in October 2017.

Pursuant to the agreement, Riftcot will receive an arrangement fee for each delivery of coal to cover marketing and provision of transport.

General supply terms of the agreement include Edenville supplying a specific product to meet the needs of Riftcot's end users, with Riftcot purchasing the coal at the mine gate and in the majority of cases transporting it to the end user.

The Edenville board said that importantly, the agreement allowed major industrial groups in the east Africa region - including Tanzania - to be supplied with Edenville's coal through Riftcot's established marketing and logistical framework.

Edenville said it believed the company would benefit from the commercial and logistical experience Riftcot brought to the operation, and similarly Riftcot would be able to access the only washed coal product currently available in Tanzania and “one of very few” in east Africa as a whole.

The agreement was for commercial production and external sales from the company's Rukwa coal project, and did not include the supply of any coal to the planned mine mouth power plant at Rukwa - Edenvilled Rukwa Coal-to-Power Project.

“The signing of the agreement with Riftcot is another significant step forward for the company,” said Edenville CEO Rufus Short.

“We look forward to working alongside Riftcot to build Edenville's name into a recognised coal brand in East Africa.”

Short said the company saw it as an opportunity to leverage Riftcot's trading platform and experience with Edenville's newly-opened project, which would produce washed coal for the East African market.

“By committing 75% of our production we are able to give volume to Riftcot's supply contracts whilst also having some product in reserve to supply other clients with their individual requirements.

“This is a period of rapid progress for Edenville and we look forward to updating the market as the project progresses.”