Binga investor targets first quarter coal sales
LONDON Alternative Investment (AIM)-listed miner — Contango Holdings is upbeat on prospects of transitioning into a fully-fledged and cash-generative production company towards the end of the current quarter when first sales of coking coal are expected.
In recent weeks, the firm has been on an acceleration drive installing several key infrastructure components at Lubu Coal Project in Binga District.
A surface miner Wirtgen 2200 machine, which has a cutting width of 2200mm, ideal for selective mining, and can mine up to 500 tonnes per hour has now been delivered on site.
Another key mining machine, a wash plant expected to produce 20 000 tonnes of washed coking coal per month has been installed while the construction of a one million-litre storage tank has been completed.
In unaudited interim results for the six months to November 30, 2022 issued on Friday, chief executive officer, Mr Carl Esprey, expressed optimism of starting production in the first quarter.
Lubu Coal Project
“We expect Contango to transition into cash flow towards the end of the current quarter with first sales of coking coal,” he said.
He said Lubu’s advancement over recent months has been facilitated by the successful £7,5 million fundraising during the period under review, which has enabled investment in building mining and processing operations.
“These development initiatives are now reaching their conclusion, with the wash plant now at site and being assembled ahead of commissioning.
Once calibrated and operating efficiently, the wash plant is expected to be able to produce 20 000 tonnes of washed coking coal per month, which will satisfy its first offtake partner, AtoZ Investments (Pty) Ltd, and also provide sufficient supply to secure further offtakes for our coking coal.”
The unaudited interim results highlight that £7,5 million was raised in October last year at 6p to support the Lubu Coal Project to first coking coal production from the first quarter.
The first offtake was signed with AtoZ Investments (Pty) Ltd to purchase 10 000 tonnes per month of washed coking coal produced at Lubu.
Mr Esprey said coking coal and coke tests undertaken through an installed one-tonne per hour test plant confirmed the excellent quality of coal from Lubu further strengthening Contango’s position to complete additional offtake agreements.
In addition to that, an expansion of production strategy to include both thermal coal and coke development scenarios to provide additional near-term high-value revenues streams has been put in place.
Detailing developments in the period under review, Mr Esprey said a Memorandum of Understanding was signed with a leading multi-national company for collaboration across coking coal and the manufacturing of coke at Lubu.
In December, the firm received a boost after getting the Environmental Management Agency (EMA) awarded the Environmental Impact Assessment Certificate for the company’s Coal Project.
Environmental Management Agency (EMA)
The certificate, which was issued on December 9, 2022 and received by the company on December 13, 2022, has been awarded for the statutory two-year period and is automatically renewed on an ongoing basis assuming continued operations.
It recognised the highest environmental standards imposed by Contango at the mine, the firm said.
The Lubu coal-mining project was previously owned by Consolidated Growth Holdings before Contango entered into heads of acquiring agreements in December 2017.
The previous owners spent more than US$20 million on Lubu, which has enabled a sizeable resource in excess of 1,3 billion tonnes to be identified under NI 43-101 standard.
The project covers 19 236 hectares of the highly prospective Karoo Mid Zambezi coal basin, located in established north-western Zimbabwe.
Coal remains the dominant energy mineral for Zimbabwe and the country boasts of vast reserves of the mineral, particularly in the north-west and southern parts of the country.
President Mnangagwa
The new investment will also boost the country’s prospects of meeting mining revenue targets of US$12 billion by 2023 under the mining roadmap launched by President Mnangagwa. The coal sector is expected to contribute US$1 billion.
Now renamed Muchesu Coal, the new Lubu Coal Project, is expected to trigger a string of economic spin-offs for the community including job creation while boosting the country’s energy sector as well as exports.
The investment comes at a time when the Government under the Second Republic is taking deliberate steps to mainstream speedy development of Binga in line with the devolution agenda, which aims to ensure inclusive development across the country.-chronicle.co.zw
