Contango receives $1 million payment from new shareholder

CONTANGO Holdings, a London-listed natural resource development company, has announced that it has received an advance payment of US$1 million from the firm’s new majority shareholder, Mr Wencai Huo, a Chinese businessman based in Zimbabwe, as planning is underway to expand the size of the existing open pit as well as engineering designs for underground mining.

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. In an update, the firm said in keeping with the collaborative relationship between the Investor and Contango, it has now received a payment of US$1 million as an advance against the subscription.

The firm also said the project investment under the revolving facility agreement (RFA) has started. “Also as reported on July 3, 2024, the investor has entered into an RFA, whereby it will provide unsecured debt finance of up to US$20 million into the operating subsidiary Monaf Investments (Private) Limited, for the purpose of funding the development and expansion of operations at Muchesu.

“The company is pleased to report that under this agreement, the investor has already commenced delivery of some capital equipment and operational items. The first convoy carrying parts for a new wash plant has arrived at site with the remaining convoys expected to arrive during July,” said the company.

According to the update, a team of engineers are already on site to oversee operations and the installation of the new wash plant. When complete, the wash plant is expected to have a washing capacity of 3 000 tonnes per day, significantly greater than the company’s existing washing capabilities, which will continue to remain operational.

“Orders have now been placed for a further five heavy-duty excavators, four of which are to be delivered from South Africa. Also, another front-end loader and accessories have been ordered. All these items are due at Muchesu before the end of July 2024,” said the company.
Contango chief executive officer, Mr Carl Esprey said there is significant activity at the mine site noting that planning is also underway to expand the size of the existing open pit as well as engineering designs for underground mining.

“We are now seeing significant activity at Muchesu. A new wash plant is being delivered and constructed to materially increase production capacity, while other earth moving and processing equipment are expected to arrive on site in the forthcoming weeks.

We are also integrating members of the existing operational team with the team assembled by the Investor. We believe the resultant outcome will leave Muchesu on a much firmer footing and poised for significant growth,” he said.

“Finally, planning is also underway to expand the size of the existing open pit as well as engineering designs for underground mining.“These steps should lead to a significant increase in mining output, which the company stands to benefit from through both its royalty arrangements and residual 24,75 percent interest in Muchesu.”-chroncile