Contango Holdings Plc, the London listed natural resource company developing the Lubu Coal Project in the Hwange district, north-west of Zimbabwe says it has secured a first off take partner, AtoZ Investments (Pty) Ltd, for 10,000 tonnes of washed coal per month.
In its results for the year ended 31 May 2022, the group said its focus remains on an initial 10,000 tonnes per month of production before further ramp up to 300,000 tonnes per annum during 2023.
Initial mining at the Lubu Project commenced at the end of Q1 2022, with further development at site post-period.
“We secured a first offtake partner, AtoZ Investments (Pty) Ltd, for 10,000 tonnes of washed coal per month post period. Additional coking coal offtake discussions underway,” the group said.
“Contango is now fast approaching the landmark transition into becoming a cash generative mining company, and importantly, is fully funded to deliver its first two profit centres from coking coal and thermal coal. Our operation at Lubu is nearing its final stages of maiden coking coal production and sales, with first sales now expected to occur in Q1 2023. Whilst the Company had hoped to reach this milestone by year end, delays in import clearance for certain key capital items, including the wash plant has extended the timetable slightly.”
The group said logistics and export solutions were being finalized ahead of thermal coal production and sales in H1 2023 as advancement of coke production strategy and offtake negotiations were also underway ahead of targeted coke production in H2 2023.
It has raised £7,500,000 which makes it fully funded for both its coking and thermal coal strategies and expects to use non-equity alternatives for the funding of its coke strategy.
“However, excellent progress at site continues to be made in expectation of delivery of the wash plant and surface miner. Moreover, we are fully capitalized and well-funded to meet our objectives. This is also providing a very strong position in our ongoing discussions with additional offtakers and I would expect to provide an update on this in the near term,” said Carl Esprey, CEO of Contango Holdings.
“Given the demand for Contango’s products the Company will now also set about expanding the planned footprint of the pit to enable increased production capacity. This positive development is to be funded out of existing cash resources following our £7.5 million capital raise earlier this quarter.
“With this in mind, 2023 is shaping up to be a year of operational and financial delivery, and I look forward to sharing our developments with shareholders over the coming weeks and months.”
