Lubu coal project to meet deadline
Contango Holdings, the London-listed natural resource development firm behind the Lubu coking coal project, says it remains on track to meet its March 31, 2022 production deadline.
The London head-quartered firm has a 70 percent interest in the Lubu Coal Project in Zimbabwe, with the remaining 30 percent held by supportive local partners.
The Lubu coal project covers 19 236 hectares of the highly prospective Karroo midZambezi coal basin, located in the established Hwange mining district in north-western Zimbabwe.
“The company expects to mine its first coal by the end of March, with the already ordered wash plant being installed in quarter two of 2022. Thereafter the company can deliver coal to its customers and generate revenue,” the company said in a statement.
Contango said it continued to focus on becoming an integrated producer of coke for the southern African region, supplying steel and ferro-alloy production amongst other things.
It also intends to install a coke battery and scale operations up once it has installed all the associated plant and infrastructure to produce the coke.
The price of coking coal has increased materially in the first quarter of 2022 and to date, the miner has developed the mine without recourse to offtake financing in order to preserve the full sale value of coal.
With production imminent, Contango is now in a position to negotiate coking coal offtake contracts at spot prices and leverage the recent increase in the coking coal price.
The company confirmed that discussions were underway with several interested parties and the company would provide an update as appropriate.
In addition, the company is also in offtake discussions with respect to its expected coke production. “There is significant demand within Africa for coke and the company has also received inquiries from a number of European consumers about the coke product, given the global shortage being experienced and recent macro developments,” the statement read.
The company said it would continue to study global pricing and demand but expects the export of its coke product outside of Africa to remain a valid and ongoing opportunity.
There is belief within the mining company that there is a good possibility any contracts entered into for offtake, either for coking coal or coke, will provide some form of funding, be it prepayment against first production or some other form, which can be utilised in the roll out of its development plan for the manufacture of coke.
In order to associate with the locals, the miner has now renamed the Lubu project locally to Muchesu Coal. Muchesu is the local village in the broader Lubu region and Contango has recently taken delivery of new plant and machinery with the new branding and images of this will be posted on the Company’s social media channels.
Whilst Muchesu is the local name, the company will continue to use the Lubu name in its public statements.
As planned and without incident the company confirmed that it has now commenced resettling a number of people to newly built houses funded by the company. The project continues to receive strong local community support and will provide employment opportunities.-The Herald
