Coal investor expands capacity at Binga plant
CONTANGO Holdings, a natural resource development company listed in London, has experienced considerable growth at its Binga mine site following the involvement of a new investor, which includes the acquisition and delivery of a Dense Media Separation (“DMS”) plant to site, which has estimated production capacity of 3 000 tonnes of washed coal per day.
The growth is attributed to the acquisition of essential equipment, which has facilitated expansion efforts and a consistent financial investment.
The company’s new principal shareholder, Mr Wencai Huo, a Chinese businessman residing in Zimbabwe, has since the execution of the Definitive Agreements in July 2024 already invested substantial capital into the Muchesu project thereby broadening the scope for future production.
The investor has funded the delivery of several capital items, including excavators and trucks that have enabled the stripping of approximately 20 000m² of overburden to date, to enlarge the existing open pit and enable a greater amount of steady production once full-scale mining resumes following the Investor’s upgrades.
Added to that, the investor has acquired and delivered a Dense Media Separation (DMS) Plant to site.
According to the firm, the DMS has an estimated production capacity of 3 000 tonnes of washed coal per day. The concrete foundations of the DMS plant have now been laid and the DMS plant installation is underway.
The investor has confirmed the target is for the DMS plant to be operational before the end of next month. Contango chief executive officer Carl Esprey, said they expect the DMS plant to become operational by the fourth quarter.
This will enable the washing of material amounts of readily accessible coking coal, which in turn is expected to trigger the commencement of royalty payments above and beyond the minimum required under the MRA.
“Since entering into the Definitive Agreements in July 2024, just over two months ago, the Investor has already committed significant capital into Muchesu and expanded the platform for future production,” said Mr Esprey.
“Corporately we have addressed our plc creditors following the advance of US$1 million by the Investor against the Subscription and have also taken this opportunity to rationalise general and administrative costs going forward.
“The board will continue to defer their salaries (combined approximately £100 000) until such time that material royalty income is established.”
Mr Esprey said since Muchesu is now under new stewardship, they will continue to hold a residual non-operated 24,75 percent interest in Muchesu.
“Finally, we are nearing the completion of the Short Form Prospectus which will enable the closing of the Subscription and as a result the Investor will be our largest shareholder, with an approximate holding of 20 percent of the enlarged share capital, further aligning the investor with the company. The company will provide further updates as appropriate.”
The coal mining house recently disposed of its 51 percent stake to Mr Wencai and the United Kingdom firm will maintain a 24 percent stake in the coal project.
Mr Wencai is expected to invest US$20 million into the 2,6 billion-tonne colliery project in which Contango holds its direct interest in Muchesu through a 70 percent controlling stake in Monaf Investments (Pvt) Limited.
An additional 4,76 percent interest in Monaf is expected to be transferred to Contango shortly, increasing Contango’s shareholding to 74,75 percent. Muchesu Coal Mine is one of the signature investment projects under the Second Republic, which is expected to yield high-value benefits for locals and the economy at large.
Matabeleland North has vast mining activities that have been critical to the growth of the province and the country’s development.
The province is the hub of coal-to-energy value chain investments, which is expected to unlock up to US$1 billion under the coal and hydro-carbon sector.-chronicle
