TIDMCGO
RNS Number : 6478A
Contango Holdings PLC
03 June 2021
Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural
Resources
Contango Holdings Plc ('Contango' or the 'Company')
3 June 2021
Operational & Corporate Update
Highlights:
-- Further positive exploration results in Mali from Garalo and Ntiela
-- 8,000m of additional RC drilling in Mali
-- Zero Coupon GBP1M Convertible Loan entered into at 6p
Contango Holdings Plc, the London listed natural resource
development company, is pleased to provide a summary of recent work
undertaken at the Garalo-Ntiela Gold Project Area ('the Project')
in Southern Mali. The work programme was designed to assist in the
Company's previously reported focus of fast tracking the Project
into production by the end of 2021, as well as further increasing
the understanding of the wider prospectivity of the licences.
Given the focus on early production and cash generation, most of
the exploration activities have centred on the Garalo permit, which
has demonstrated potential for a 2Moz Resource. However, work on
the more recently acquired Ntiela concession, has also continued to
yield encouraging results with the intersection of two major
structures already. A summary of operations is presented below:
Work performed
-- Detailed regolith mapping on both Garalo and Ntiela sites;
-- Interpretation of historic data across both sites, identifying multiple new gold anomalies;
-- Over 1,000 samples collected and sent to in-country laboratory;
-- Land clearance completed for new operational camp, with
buildings expected to arrive later this month
Planned work programme:
-- Aeromagnetics and airborne geophysics for the collection of
magnetic and radiometric data - expected to commence in July
2021
-- 8,000m of RC drilling to further increase the resource and understanding of the orebody
-- Core will be sent for oxide / sulphide testing to support
final design work for the initial low-cost early production
plant
-- First production remains targeted for end 2021
GBP1M Convertible Loan
The Company is pleased to advise it has received commitments for
GBP1,000,000 in a Convertible Loan. The Convertible Loan has a
fixed conversion price of 6 pence per share and conversion is
mandatory on 4 January 2022. The Convertible Loan carries zero
interest and upon conversion into shares, each subscriber will
receive one warrant for every two ordinary shares they receive,
with an exercise price of 8p and a life of 2 years.
Existing major shareholder RAB Capital, has agreed to invest
GBP200,000 in the Convertible Loan. As Philip Richards is a
director of the Company, this Subscription is deemed a related
party transaction as defined under DTR 7.3. The independent
director, Roy Pitchford (Non-Executive Chairman), considers the
terms of the Director participation in the Fundraising are fair and
reasonable insofar as the Company's shareholders are concerned.
Carl Esprey, Chief Executive Officer of Contango Holdings, said:
"Our exploration and development activities at Garalo and the newly
acquired Ntiela permit continue to deliver highly encouraging
results which point to the Project having the potential to be a
major new mine in the region. Our work in the short-term is
focussed on properly assessing the upside potential to the current
2Moz gold resource we are contemplating at Garalo and establishing
the optimum route to first production by the end of 2021. As a
result, we have made the decision to undertake a short, low-cost
drill programme to help with our understanding and
optimisation.
"To fund this expanded pre-production work programme, the
Company has sourced GBP1M, primarily from existing investors at the
current market price. The convertible is a zero-coupon instrument
and has a mandatory conversion at 6p at the end of 2021,
highlighting the belief of the subscribers in the inherent value
Contango offers. The subsequent development to first production of
Garalo is still intended to be funded via a mixture of royalties
and debt as previously outlined.
"We look forward to providing further updates over the coming
weeks as we receive results from the laboratory and begin our
aeromagnetic and airborne geophysics programme, as well as
additional drilling."
Project Background
The combined Garalo-Ntiela Project covers an area of 161.5km(2)
and is in the department of Bougouni within the Sikasso region in
southern Mali, 200km south-south-east of Bamako and close to the
Guinea border. The Project is surrounded by several
multi-million-ounce gold deposits and the region is home to some of
the world's leading gold miners, which has helped to establish Mali
as the third largest gold producer in Africa.
An NI 43-101 Independent Technical Report delivered in March
2021 highlighted the potential for the Garalo to have up to 2Moz
Resource. The Company believes that there is still room for
improvement over and above this threshold as, in addition to G1 and
G3 targets (the basis for 2Moz), numerous other clusters of
anomalous zones with potential for gold discovery have been
identified in both the Garalo and contiguous Ntiela permit area.
With this background and given the excellent infrastructure in the
vicinity, historical exploration, and the deposit's surface
location, the Company aims to establish a processing hub in the
region, capable of supporting multiple open pit operations
targeting initial production of gold in Q4 2021 in conjunction with
an exploration programme including expansion drilling.
Accordingly, as part of the exploration programme, Contango has
completed a detailed regolith mapping exercise across both permits
to gain a better understanding of the geology/structures of the
area, as well as collecting key data like anomalous structural
site, gold endowment, hydrothermal alteration, and mineralisation,
and deep mantle related fertility indicators. The Company has also
undertaken an interpretation exercise relating to historical data
which has identified multiple new gold anomalies.
To facilitate the exploration and development campaigns now
gaining momentum at Garalo-Ntiela, a camp is being constructed
capable of supporting up to 20 employees and contractors, along
with a secure storage building for drill core. Ground clearance has
now been completed at the selected site and the specialist camp
buildings are due to be shipped from South Africa to Mali in the
next 3 weeks. This camp will support a permanent presence on site
at Garalo-Ntiela as work programmes intensify ahead of first
production.
These work programmes will begin with an aeromagnetics and
airborne geophysics campaign and this will be followed by 8,000m of
RC drilling. The over-arching strategy of this work is to better
define the extents and characteristics of the orebody, considering
the significant increase in resource quantum that is now
contemplated at Garalo. As previously announced, the Company is
advancing the development of a 30,000oz per annum heap leach
operation from the shallow oxides given the high margins and low
capex for its development. Given the increased resource potential
highlighted in the NI 43-101 Independent Technical Report released
in March 2021, the proposed drilling campaign is designed to
complement this strategy and help realise and optimise the asset's
full potential, as Contango looks to establish a large standalone
gold mine with multiple open pit operations across both permit
areas.
**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 E: info@stbridespartners.co.uk
Financial PR & Investor Relations
Susie Geliher / Cosima Akerman
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END
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