Contango
Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural
Resources
31 October 2024
Contango Holdings
PLC
("Contango" or the
"Company")
Operational & Financial
Update
Contango Holdings Plc, a company
focused on unlocking value from the +2 billion tonne Muchesu coal
project in Zimbabwe ("Muchesu"), is pleased to provide an update on
its progress over the last month.
Publication of Short Form Prospectus and Settlement of
Subscription
As reported on 3 July 2024, the
Company entered into a Subscription Agreement with Huo Investments
(Pvt) Limited (the "Investor"). The closing of the US$2,000,000 was
subject to the issuance of a Short Form Prospectus ("SFP") to allow
the Company to issue more than 20% of its issued share capital in a
12-month period. The Company expects to issue the SFP shortly
following the publication of its Audited Annual Report and
Financial Statements for the 12-month financial period ended 31 May
2024 (the "2024 Annual Report").
Publication of the 2024 Annual Report
Moore Kingston Smith LLP ("MKS") was
appointed as auditor to the Company in July 2024 and is currently
finalising the 2024 Annual Report. The latest advice from MKS is
the report will be ready for publication in approximately two
weeks. Once published the Company will arrange to lift the
temporary suspension from trading on the London Stock Exchange so
that the shares may commence trading again.
Project Investment under the Revolving Facility Agreement
("RFA")
The Investor has continued to make
material investments at Muchesu throughout October under the
US$20,000,000 RFA. The primary areas of the mine to receive
investment are:
i) the
construction of a 3,000 tonne per day Dense Media Separation
("DMS") Plant; and
ii) the significant
expansion of the open pit to enable higher mining and processing
capacity.
The DMS installation is nearing
completion, with testing and commissioning expected in the first
half of November, ahead of the start of production and processing
in the second half of November. As previously reported the DMS
plant will be calibrated to process readily available coking coal.
Under the Mineral Royalty Agreement ("MRA") entered into with the
Investor, a royalty of US$8 per tonne is payable to Contango for
washed coking coal on a monthly basis in arrears.
A minimum of US$2,000,000 per annum
is payable in terms of royalties to Contango, however the Company
expects to benefit by materially higher royalty payments. In
keeping with the highly collaborative relationship, the Investor
has confirmed an inaugural royalty payment of US$1,000,000 will be
made before the end of 2024, with a second US$1,000,000 expected
around the end of Q1 2025. Thereafter the additional royalty
payments to the Company will be in line with operational
productivity at Muchesu.
The Investor has also advised it
intends to deliver at least one further DMS plant to site under the
RFA along with further capital investment to unlock additional
revenue streams from Muchesu coal.
Carl
Esprey, CEO of Contango, commented:
"During October we have continued to see material investment
into the Muchesu site. Visually the landscape is changing on a
weekly basis and the speed of that change is very exciting. Muchesu
has always been a world class deposit, and it is now benefiting
from the level of investment required to unlock its full
potential.
"Whilst I understand shareholder's frustrations over the
temporary suspension, this too is expected to be lifted in the very
near term following the completion of the audit and publication of
the 2024 Accounts, which will coincide with the commencement of
processing operations in earnest at site.
"With the expectation of a first royalty payment this year and
welcoming the Investor as the largest shareholder in the Company
following the issue of the SFP, the outlook for the Company is
looking overwhelmingly positive.
"We
look forward to providing further updates as
appropriate."
**ENDS**
Contango Holdings plc
Chief Executive
Officer
Carl
Esprey
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E: contango@stbridespartners.co.uk
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Tavira Financial Limited
Financial Adviser &
Broker
Jonathan Evans
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T: +44 (0)20 7100 5100
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St
Brides Partners Ltd
Financial PR & Investor
Relations
Susie
Geliher / Charlotte Page
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T: +44 (0)20 7236 1177
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