Aim-listed Edenville Energy has reported operational delays, owing to working capital constraints and the start of the rainy season in November, in Tanzania, where the company is developing the Rukwa coal and power project.

The company on Friday said production levels had been lower, with 820 t of washed coal produced from September 21 to date, while the plant had a 12 000 t capacity.

Edenville undertook fund raisings in April and September to undertake wash plant upgrades and buy haul trucks for the project.

The company had also started mining at the new Northern Area, which yielded nearer and thicker coal zones than previously mined areas. However, mining had been hampered by capital constraints and the rains.

The company did have sufficient washed coal in stock and stockpiled to satisfy a long-term customer during the production constraints.

The company continued to identify new potential customers.

To satisfy the company’s immediate working capital requirements, it has entered into an agreement with a private lender to secure a nonconvertible £100 000 loan, which must be repaid before February 25.

However, Edenville stated that this would not be sufficient to operate the project at planned capacity, nor to continue payments of $50 000 a month on a prior loan agreement with Lind Partners.

To address this, the company was in discussions with a potential strategic investor, which has experience in Tanzania and the neighbouring region, relating to an investment at project level.

While these discussions are at an advanced stage and the directors believe they will reach a “heads of terms” with the investor in December, the board cannot guarantee that discussions will result in a positive outcome for the company.

Moreover, to help ensure that Edenville has sufficient time to close this transaction or source additional funds, either at project or company level, the directors had implemented certain cost cutting measures to be able to deploy available capital to the project.

As part of this, the directors either had not taken their salaries or had drawn reduced salaries since September.

In the event that Edenville was unable to secure project level funding by early in the first quarter next year, the company would require a further capital injection.

Following conversations with its broker and major shareholders, who recently participated in the September equity issue at 0.05p apiece, the directors believe sourcing this capital is achievable.