Local investor increases stake at Muchesu project

HUO Investments Ltd, the investment vehicle of a prominent Zimbabwe-based Chinese national, Mr Wencai Huo, has acquired an additional 6,502 percent of shares in Monaf from a local minority shareholder.

The latest acquisition further cements the investor’s commitment to the project and adds momentum to the development of the Muchesu Project in Binga, Matabeleland North.

The continued financial commitment and strategic interest in Monaf signal confidence in the long-term value and commercial potential of the asset.

In latest update, British investor, Contango Holdings Plc, a company focused on unlocking value from the +2 billion tonnes Muchesu coal project in Zimbabwe, owned by Monaf Investments (Private) Limited, said it has been notified that a company controlled by Mr Huo has purchased 6,502 percent of shares in Monaf from a local minority shareholder.

The company’s interest in Monaf remains unaffected by this purchase, it said.

“As shareholders are aware from previous announcements, the Investor has separately entered into agreements pursuant to which it will acquire a 51 percent shareholding in Monaf from the company, subject to completion of local regulatory procedures,” it said.

Contango chief executive officer, Carl Esprey, said these developments should provide shareholders with further confidence in the investor’s focus on development.

“We note the investor’s purchase of additional shares in Monaf from another minority shareholder and the investor’s continued investment into the Muchesu Project,” he said.

“This should provide shareholders with further confidence of the investor’s focus on the development of the Muchesu Project and reinforce its inherent value.

“The investor has already made a material investment ‘into the ground’ at Muchesu, acquired a 20,42 percent holding, and become Contango’s largest shareholder.

“In addition to this, royalty payments to Contango have commenced. This further increased ownership interest in Monaf and the Muchesu Project bodes well for the investor’s commitment towards fully developing Muchesu,” he added.
This comes as Contango Holdings continues to make strong progress as it transitions into a cash-generative royalty company.

The strategic shift marks a defining period in the company’s history, significantly reducing previous risks associated with being the sole mine operator at Muchesu.

The move to a royalty-focused business model not only provides investors with substantial growth potential but also shields shareholders from uncertainties related to future operational costs, capital expenditure, and working capital requirements.
For instance, in July 2024, an initial $1 million was advanced against a future equity subscription, demonstrating strong confidence in the Muchesu Project.

In January this year, the investor further contributed an additional US$1 million, facilitating the successful closure of the planned US$2 million equity placing.

As a result, the investor has become Contango’s largest shareholder.
Additionally, the company has resized its cost base and expects to reap the benefits of a leaner structure in the upcoming financial year.

The partnership with Huo Investments, formalised through a series of agreements, including the MRA and a US$20 million Revolving Facility Agreement, positions Contango for sustainable growth.

Muchesu Coal Mine is a significant investment project in Zimbabwe under the Second Republic, anticipated to bring substantial benefits to both locals and the broader economy.

In July of 2023, President Mnangagwa inaugurated the project, spanning 19 236 hectares.
Matabeleland North Province plays a vital role in mining activities, contributing significantly to the province’s development and Zimbabwe’s overall progress.

The region is a focal point for investments in the coal-to-energy value chain, poised to unlock potential investments totalling up to US$1 billion in coal and hydrocarbons.

The mining sector, overall, holds strategic importance in Zimbabwe, as it accounts for 75 percent of the country’s export earnings and provides employment to thousands of individuals nationwide.-chrocnil