More prospective buyers approach Contango Holdings

LONDON-listed natural resource development firm behind the Lubu coking coal project, Contango Holdings is inundated with prospective buyers for coke and subsequent by-products.

The mining house started production recently and is one of the transformative development strides in Matabeleland North province given its impact on jobs, community development and downstream industries.

According to the investor, President Mnangagwa is expected to officially commission the massive Project in Binga district on July 21.

President Mnangagwa

The mining firm has been accelerating the assembling of machinery in recent months and this has been facilitated by the successful £7,5 million fundraising in October.

Coal mining is expected to contribute significantly to the realisation of the US$12 billion mining industry by the end of this year.

In a trading update, Contango Holdings said since entering into an offtake agreement with AtoZ Investments (Pty) Ltd it has had numerous approaches from other parties interested in offtakes for not only coking coal but also coke and by-products.

The first offtake was signed with AtoZ Investments (Pty) Ltd to purchase 10 000 tonnes per month of washed coking coal.

“More recently, the board has been focusing its efforts on completing discussions with a global multi-national company.

The Company’s primary objective is to become a fully integrated producer of coke products.
Contango said the offtake agreement with Atoz does not block it from entering into other such agreements with other parties.

“Contango Holdings Plc, the London listed natural resource development company, notes recent speculation with respect to its offtake with AtoZ Investments (Pty) Ltd (‘AtoZ’). Given the subsequent volatility in the share price, the Company seeks to clarify as follows:

“Contango’s subsidiary, Monaf Investments, entered into an offtake arrangement with AtoZ in June 2022 for the sale of 10 000 tonnes per month of washed coking coal at mine gate for not lower than the MMCZ price in Zimbabwe, which has remained constant at $120 per tonne throughout this period. For the avoidance of doubt this contract remains in effect.

“However, the offtake with AtoZ is not exclusive and Contango has the right to deliver coal to an alternate buyer should it decide to. Since entering into the agreement with AtoZ the Company has received a number of approaches from other parties interested in offtakes for not only coking coal, but also coke and subsequent by-products.”

Coal

More recently, the firm said its board has been focusing its efforts on completing discussions with a global multi-national company, under the MOU announced in December 2022.

“The Company’s primary objective is to become a fully integrated producer of coke product. These negotiations are commercially sensitive and are expected to reach a conclusion as the Company approaches first revenue imminently.

The Company reassures its shareholders that there are a number of groups that wish to purchase coking coal product from Lubu.”

It said formal disclosures on partnerships and offtakes will be announced through appropriate channels.
Announcing the arrangement in December, Contango said it entered into a non-binding Memorandum of Understanding with a leading multi-national company.

Money – Image taken from Pixabay

The MoU outlines a framework for collaboration across not only coking coal, but also in the manufacture of coke and follows several site visits and a preliminary analysis of a 50kg sample of Muchesu washed coking-coal.

Chief executive officer Mr Carl Esprey said the unnamed firm is active in Zimbabwe and is a world leader in its field.

“I believe their interest in the Muchesu Coal Project is testament to its highly attractive characteristics, both in terms of scale and coal quality.

Contango Chief executive officer, Mr Carl Esprey

The due diligence process is underway, and one of the first steps has been to deliver a tonne of coking-coal sample to the MNC for further testing.

The ongoing discussions are focused on the viability of a long-term offtake and the potential of a joint venture partnership in establishing coke batteries and developing an underground mine,” said Mr Esprey in December.

The coming on-stream of the mine feeds into the Vision 2030 agenda as hundreds of jobs will be created for locals directly while others will be employed by downstream industries.

By exploiting its huge untapped coal deposits, Binga, which shares the borders with Hwange, Lupane, and Gokwe districts, is primed to leapfrog development and increase its contribution to the mainstream economy through enhanced economic activities covering mainly tourism, mining, fishing and agriculture.

Muchesu Coal Project

The investment comes at a time when the Government under the Second Republic is taking deliberate steps to develop Binga in line with the devolution agenda, which aims to ensure inclusive development across the country.

As part of its broader strategic plans, Contango Holdings has also cast its eyes on producing coke by installing coke batteries that process coking coal into coke for the industrial and ferro-alloy industries.-chonicles