Contango Holdings PLC Lubu Coking Coal Update (5953Y)
May 14 2021 - 1:00AM
UK Regulatory
TIDMCGO
RNS Number : 5953Y
Contango Holdings PLC
14 May 2021
Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural
Resources
14 May 2021
Contango Holdings Plc
('Contango' or the 'Company')
Lubu Coking Coal Update
Contango Holdings Plc, the London listed natural resource
development company, is pleased to announce an update following the
announcement of 26 March 2021 regarding the Company's discussions
relating to a potential long-term offtake for coking coal produced
at Contango's Lubu Coking Coal Project (the "Project") with the
Zimbabwean subsidiary of a major Chinese industrial company and one
of the world's largest stainless-steel producers (the "Potential
Offtake Partner"). As previously reported the Potential Offtake
Partner has a sizeable footprint in Zimbabwe, with plans to
construct a US$1bn carbon steel plant in the country and is
currently in the process of constructing several coke batteries in
the Hwange region of Zimbabwe.
Contango is pleased to advise a productive site visit recently
took place at Lubu with senior members of the Potential Offtake
Partner in attendance. Since the site visit discussions have
continued to make good progress, with an agreement now reached
between Contango and the Potential Offtake Partner on the next
steps to advance the Project.
Contango will now focus on extracting bulk samples of the high
value coking and metallurgical coals found in the 1A Lower and MSU
seams. Although close to surface, this will be treated as an
underground operation, like those previously mined around Hwange
Colliery, enabling the Company to focus specifically on the high
value product of particular interest to the Potential Offtake
Partner for its newly built coke batteries, expected to be
commissioned later this month.
Given the increasing likelihood of a positive outcome with the
Potential Offtake Partner, Contango will shortly approve the
appointment of a mining engineer, who will be charged with
identifying the best areas for underground mining, specifically
looking at fresh coal characteristics and strength importance,
needed to determine mine depth cut-off. In addition, liaising with
Contango's technical team, the engineer will also help select the
best excavation position for a 4m x 4m shaft, from which the bulk
sample will be taken.
Completion of the shaft and collection of the approximate 150
tonnes bulk sample is expected to take approximately 45 days. The
bulk samples will then be transferred to Hwange, where it will be
washed by the Potential Offtake Partner's plant before being run
through its laboratory and coke batteries at the Potential Offtake
Partner's cost.
Given the work already undertaken by Contango and the Potential
Offtake Partner, the Company believes there will be a good level of
confidence in the positive results of this testwork, which will
enable the two parties to finalise the long-term formal offtake
agreement. Moreover, this targeted underground approach is expected
to be funded from existing cash resources, having minimised the
upfront capital expenditure by Contango prior to finalising an
offtake agreement, with the Potential Offtake Partner also bearing
some of the testwork costs.
Carl Esprey, Chief Executive Officer of Contango Holdings, said:
"Discussions with the Potential Offtake Partner continue to
progress well, and I am pleased we have now reached a clear path to
enable formal offtake agreements to be entered into. Our potential
partner is one of the largest companies in Zimbabwe and its parent
company is one of the largest steel producers in the world. The
synergies between us are evident and I have every belief that upon
completion of this brief and low-cost test work we will be able to
enter a mutual and highly beneficial arrangement.
"I look forward to updating the market on our progress at Lubu
in due course and also expect to provide an update on our Mali gold
operations before the end of the month."
**ENDS**
For further information, please visit
www.contango-holdings-plc.co.uk or contact:
Contango Holdings plc E: info@contango-holdings-plc.co.uk
Chief Executive Officer
Carl Esprey
Brandon Hill Capital Limited T: +44 (0)20 3463 5000
Financial Adviser & Broker
Jonathan Evans
St Brides Partners Ltd T: +44 (0)20 7236 1177
Financial PR & Investor Relations
Susie Geliher / Cosima Akerman
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