Contango misses March production, sales target

Contango Holdings, the London listed natural resource development company, has provided an update on its Lubu Coal Project saying they have missed their end of March first sale target but the firm remains optimistic.

Carl Esprey, chief executive of Contango, said; “We have continued to make excellent progress at site as we prepare for imminent first coking coal production and sales. Next month we intend to activate our wash plant and commence the processing of coal ahead of subsequent sales under our existing offtake agreements. I look forward to providing additional updates over the next few weeks as we transition from developer to producer.”

The wash plant construction is now complete ahead of commissioning and the production of coking coal.

According to the company, refurbishment of the screen, used to sort the coking coal prior to it being fed through the wash plant, is also near completion in Harare and is expected to be delivered to site in early April, with installation immediately thereafter.

Power to the wash plant and other processing facilities will reportedly be connected at the same time, expected to be mid-April. In anticipation of this, the company will connect power to the laboratories this week to enable studies and training to commence.

“The concrete lined recirculation and settlement ponds, along with the TCD (tailings control dam) have been built and are currently being lined with concrete prior to their usage.

“The company intends to undertake grade control drilling for approximately eight days in early April to help ensure the subsequent extraction and processing of the coking coal is optimised, following which, the Wirtgen surface miner will recommence operations and extraction of coal,” Esprey added.

The mining company said; “Construction of our Contango wash plant is now 75
percent complete. Upon completion, crushing and screening will also be installed. Following commissioning and optimisation it is expected to be able to produce 20 000 tonnes of washed coking coal per month.”

Additionally, the company confirmed that the Contango water storage tank has now been constructed with a one million litre capacity as well, pipework to the wash plant has also been installed and the borehole pumps will be connected shortly.

The chief executive reiterated that they remain focused on being able to capture the full value for their product by manufacturing coke for use in the steel and ferro-alloy industries.

Coke is an upgraded product derived from coking coal and commands a significant price premium to coking coal.

The Contango management team said they are still engaging in active discussions with a number of potential off-takers for our proposed coke product, including the existing coking coal off-take partner,

AtoZ, in addition to existing coke producers in Zimbabwe and international commodity trading houses.

-ebusinessweekly