TIDMCGO
RNS Number : 8305F
Contango Holdings PLC
24 March 2022
Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural
Resources
24 March 2022
Contango Holdings Plc
('Contango' or the 'Company')
Unaudited Interim Results for the 6 months to 30 November
2021
Contango Holdings Plc, the London listed natural resource
development company, announces its results for the six-month period
ended 30 November 2021.
Highlights
-- Raised GBP3.5m to advance Lubu into production
-- High-quality of Lubu coking coal confirmed by independent
testwork by Bureau Veritas laboratory, confirming viability for
coke manufacture
-- Increasing global and regional coking coal and coke prices
further enhanced the attractive economics of Lubu
-- Successful exploration activities undertaken at Garalo-Ntiela
to prove up the targeted resource of 1.8Moz-2Moz gold
-- Cash as at 31 November 2021 GBP2,419,266
Post period
-- First production at Lubu expected by the end of Q1 2022
-- Wash plant ordered and installation scheduled in Q2 2022
-- Planning and development of coke batteries at Lubu underway
with installation expected in Q4 2022
-- Discussions underway with several interested parties to
negotiate coking coal offtake contracts for mid-2022 and coke
offtake contracts from Q4 2022.
-- Enquiries from both regional and European customers about the
coke product, whilst significant uplift in coke price has also led
to increased viability for export to Asia.
-- Approaches received from potential domestic and international
investors to support the future development of Garalo-Ntiela and a
site visit as part of the ongoing due diligence of the strategic
parties is scheduled for April 2022
Carl Esprey, Chief Executive Officer of Contango Holdings,
said:
"Contango is now at a real turning point as we make the final
preparations on site at Lubu ahead of first production later this
month, and as we continue our strategic negotiations with potential
investors to support the development of Garalo-Ntiela. With our
attention focussed firmly on commercialising these two significant
assets, we are delivering on our over-arching objective to deliver
cash flow in a short timeframe to support the long-term expansion
of the Company and its portfolio. 2022 is set to be a pivotal year
and I look forward to delivering updates on our progress throughout
the year."
For further information, please visit
www.contango-holdings-plc.co.uk or contact:
Contango Holdings plc E: contango@stbridespartners.co.uk
Chief Executive Officer
Carl Esprey
Tavira Securities Limited T: +44 (0)20 7100 5100
Financial Adviser & Broker
Jonathan Evans
St Brides Partners Ltd T: +44 (0)20 7236 1177
Financial PR & Investor Relations
Susie Geliher / Charlotte Page
Chairman's Statement
It gives me great pleasure to report on the activities and
developments that the Contango team have achieved during the period
and the months following. Our endeavours, and indeed our wider
strategy, have been directed both by the evolving and increasing
demand appetites for commodities and also by the deeper
understanding of our own primary assets: the Lubu Coking Coal
Project in Zimbabwe ('Lubu'), and the Garalo-Ntiela Gold Project in
Mali ('Garalo-Ntiela'). As we move into our next phase of
development at both assets, I believe Contango is in an extremely
strong position to effectively maximise and crystallise the value
of these projects.
Looking firstly at Lubu, our most advanced project, which is now
entering its production phase. Our attention during the period
focussed largely on sample analysis, which evaluated a variety of
metrics and properties derived from 49 samples extracted from the
1A Lower and MSU metallurgical seams including ash, sulphur and
phosphorous contents, as well as yield and calorific values. Whilst
originally intended to provide potential off-takers with a better
insight into the quality of our coal, our strategy developed to
include the production of coal for our own operated coke batteries,
which we intend to install before the end of 2022. Our internal
modelling has confirmed that not only will Contango capture more of
the value chain, and therefore much higher margins for our product,
but we will also gain the opportunity of exporting our coke to an
international market, where it can demand even greater premiums.
This was a strategic decision for Contango and one which we believe
lays the foundation for much more rapid growth in 2023 and
thereafter. Furthermore, having the optionality of coke production
at this early stage in our production journey at Lubu will support
the onward expansion of the project over and above the initial 1A
Lower and MSU seams, ensuring that Contango is in a much stronger
position to realise the full potential of this project, which has a
resource in excess of 1.3 billion tonnes, as identified under NI
43-101 standard.
Looking now to Garalo-Ntiela, our focus has also moved towards
the strategic realisation of its full value. As shareholders will
be aware, this asset has proved to be much larger than originally
envisaged; potentially orders of magnitude larger. With this in
mind, the project really merits greater exploration and development
as it would be ill-advised to expedite production and risk the
sterilisation of potentially highly productive areas for the sake
of quick revenue, especially given the expected significant and
heightened cashflows from Lubu. Accordingly, the Board has taken
the prudent approach to refine its understanding of the wider
resource potential of the project through the application of
aero-magnetic studies, which have yielded multiple high-grade
potential target zones, and the recently completed Induced
Polarisation ('IP') survey. The results of these studies and
surveys will serve to enable the Company to finalise its 2022 drill
programme, intended to firm up the targeted resource of 1.8Moz-2Moz
gold.
Financial Review
Funding
During the period, the Company was funded through a GBP1,000,000
Convertible Loan sourced from existing investors in June 2021 at
the fixed conversion price of 6 pence per share, the funds of which
were used for a pre-production work programme at Garalo-Ntiela, as
well as the aforementioned studies on the Lubu. The Company also
benefited from the exercise of warrants during the period, which
were otherwise due for expiry on 1 November 2021, raising
approximately GBP1,025,000.
A further GBP2,500,000 was raised through a Placing of
41,666,666 New Ordinary Shares of GBP0.01 each at a price of 6
pence per Placing Share in November 2021 in order to fund the fast
tracking into production of the Lubu Coal Project. A further
41,666,666 warrants with an exercise price of 12 pence per share
were issued to the placees. If exercised in full these warrants
would provide a further GBP5,000,000 to the Company.
Revenue
The Company generated no revenue during the period under review
as it was focusing on advancing its assets that Contango believes
will generate revenue for the Company.
Expenditure
The Company has applied its cash resources to the development of
Lubu and Garalo-Ntiela.
Liquidity, cash and cash equivalents
As of 30 November 2021, the Company held GBP2,419,266 (2020:
GBP1,145,301). The Company is fully funded to bring the Lubu Coking
Coal Project into production by the end of Q1 2022.
Outlook
Over the past 12 months, Contango has made enormous progress
towards monetising its assets and delivering both cashflow and
value for investors. Much of this progress has been commercially
sensitive, however I am confident that we are approaching the stage
that this progress can be widely communicated and that the real
tangible value of the work we have done will be reflected in our
valuation. Indeed, as recently reported via RNS in February, the
Company has advised that it has received approaches from potential
domestic and international investors to support the future
development of Garalo-Ntiela and a site visit, hosted by CEO Carl
Esprey, is scheduled for the investors in the coming weeks. The
Board believes that Contango has demonstrated Garalo-Ntiela's
potential to support a significant gold mining operation, and it
would expect any transaction it enters into would need to reflect
this. Further announcements regarding operational advances and
strategic discussions will be made in due course, as will updates
relating to the commencement of coal mining operations at Lubu over
the coming weeks.
I look forward to what I believe will be an exceptionally busy
period for Contango, both operationally and corporately, as we
embark on the next phase of our growth as a production company.
Roy Pitchford
24 March 2022
CEO REPORT
Contango's primary objectives during the period under review
were to advance both the Lubu Coal Project in Zimbabwe and the
Garalo-Ntiela Project Area in Mali towards production.
Lubu Coal Project ('Lubu') - renamed Muchesu Coal post-period
end
Contango has a 70% interest in Lubu, with the remaining 30% held
by supportive local partners.
As previously reported, Lubu has benefitted from significant
previous investment, with previous owners expending more than $20m
on exploration and development, which has enabled a sizeable
resource in excess of 1.3 billion tonnes to be identified to NI
43-101 standard. Contango will initially focus on producing coking
coal from Block B2, where extensive work has also been undertaken
to define the specific properties of the coal. The coal seams
within Block B2 are from surface down to a maximum depth of 47m,
ensuring operating costs are kept at very attractive levels.
Contango undertook analysis from samples extracted from the
metallurgical seams at Lubu in October 2021, with a view to
finalising off-take discussions with various commercial partners.
These results exceeded the Company's expectations and confirmed the
commercial characteristics and viability of the metallurgical coal
in the production of coke. This was a significant development for
the Company as it confirmed the attractive qualities of Contango's
coal project in the context of both off-take opportunities and for
the Company's own independent expansion strategy for Lubu.
The Company's strategy for Lubu, informed by the sample analysis
and after extensive modelling of the demand fundamentals for coking
coal and coke, will not be restricted to an immediate local
off-take solution, but will also incorporate the installation of
the Company's own coke batteries. It is intended that this path
will deliver a far better margin for the end product, as well as
create synergies with the longer-term expansion of Lubu. One
example of this is the opportunity to generate power, capturing
heat from the coke batteries and using it for power generation to
support the rest of the operation.
The current fundamentals for all forms of coal remain highly
attractive with demand rising significantly in the last year and
prices expected to increase further given shortages of coke and
coking coal. Now that production at Lubu is on the horizon,
discussions are currently underway with several interested parties
with regards to coking coal offtake contracts and the coke product
from the expected coal production. Post-period end, a wash plant
has been ordered and is scheduled to be installed in Q2 2022 in
order to allow the delivery of coking coal to our customers and
therefore generate revenue. We are therefore extremely confident
that Lubu is ideally positioned to take advantage of this market
environment, particularly through the application of our coke
battery development, to provide funding in some form for our future
development plans and we look forward to providing further news as
we target first coal production by the end of March.
Garalo-Ntiela Project Area ('Garalo-Ntiela')
In March 2021, the Company acquired the Ntiela licence, which
neighbours the existing Garalo permit. The Ntiela licence
was acquired for approximately GBP750,000, being EUR400,000
(GBP346,517) in cash and 4,000,000 ordinary shares. The share
component will be paid once the formal transfer of the licence is
completed, which is expected to be in mid-2022.
Since acquiring the Ntiela licence, the two permits have been
consolidated to form the Garalo-Ntiela Project Area over which the
Company has undertaken two drilling programmes during the period.
Consistently encouraging results have been received from the
development and activities undertaken, demonstrating its potential
to be a major new mine in the region.
A work programme on the project returned positive results in
June 2021, which was initially designed to assist in fast tracking
it into production, alongside increasing the understanding of the
wider prospectivity of the licences. The majority of the
exploration activities were centred on the Garalo permit, which has
demonstrated its potential for a 1.8Moz-2Moz gold resource.
However, work on the then recently acquired Ntiela concessions
continued to show encouraging results and two major structures were
intersected during the programme.
Subsequent to this work programme, a short low-cost programme of
aeromagnetics and airborne geophysics for the collection of
magnetic and radiometric data began in July 2021 and was completed
across both licences. Although the project area had been drilled
extensively previously, the data from this programme was focused on
properly assessing the upside potential of Garalo's gold resource
and supporting its accelerated development into production. This
programme also particularly focused on Ntiela following the
encouraging results from earlier exploration work undertaken and
targeted some untested areas.
The samples from this work programme were analysed in October
2021, building on the existing drill data. The results from the
completed work programme reconfirmed the expected extensions of the
G1 and G3 targets in the Ntiela licence, which are the main targets
to support the aforementioned targeted resource. A short, targeted
follow up drilling campaign on the two deposits has been planned
for 2022 to test the interpretations to depth alongside infill
drilling. In addition, the plans for a standalone 30,000oz per
annum heap leach gold operation are being refined, which is
expected to generate additional cashflow.
Post-period end, the results from the aeromagnetic studies have
been received and have demonstrated multiple high-grade potential
target zones whilst the Induced Polarisation ('IP') survey has been
completed. These two sets of results, along with those from
historic drilling, will finalise the 2022 drill programme which
intends to confirm the targeted resource of 1.8Moz-2Moz gold.
As previously reported, the Board is also in discussions with a
number of potential investors in relation to Garalo-Ntiela. A site
visit, to be hosted by myself, is scheduled for the strategic
parties to attend as part of their due diligence process for
investing in the project. The Board believes that the exceptional
value of this emerging gold development asset should and would be
reflected in any potential agreement. The Company will provide
further updates on these discussions in due course, as
appropriate.
Carl Esprey
24 March 2022
Condensed Consolidated Statements of Comprehensive Income
For the six months ended 30 November 2021
Audited
Unaudited Unaudited Year to
Six Months Six Months 31 May
ended ended 2021
30 November 30 November
2021 2020
Notes GBP GBP GBP
Administrative fees and
other expenses 3 (636,398) (1,129,659) (3,304,899)
-------------- -------------- ------------
Operating loss (636,398) (1,129,659) (3,304,899)
Finance revenue - - -
Finance expense - - -
-------------- -------------- ------------
Loss before tax (636,398) (1,129,659) (3,304,899)
Income tax - - -
Loss for the period (636,398) (1,129,659) (3,304,899)
-------------- -------------- ------------
Loss attributable to owners
of the parent company (591,350) (1,108,611) (3,248,015)
Loss attributable to non-controlling
interests (45,048) (21,048) (56,884)
-------------- -------------- ------------
(636,398) (1,129,659) (3,304,899)
-------------- -------------- ------------
Basic and diluted loss
per Ordinary Share 4 (0.27) (0.92) (1.49)
Other comprehensive income (40,735) - (48,797)
-------------- -------------- ------------
Total comprehensive loss
for the period (677,133) (1,129,659) (3,353,696)
-------------- -------------- ------------
Total comprehensive loss
attributable to owners
of Contango Holdings PLC (618,569) (1,108,611) (3,281,408)
Total comprehensive loss
attributable to non-controlling
interests (58,564) (21,048) (72,288)
-------------- -------------- ------------
Total comprehensive loss
for the period (677,133) (1,129,659) (3,353,696)
-------------- -------------- ------------
Condensed Consolidated Statements of Financial Position
For the six months ended 30 November 2021
Unaudited Unaudited Audited
as at as at as at
30 November 30 November 31 May
Notes 2021 2020 2021
GBP GBP GBP
Non-current assets
Intangible assets 5 10,515,941 10,898,698 10,118,098
Investments 62,260 62,260 62,260
Property, plant and
equipment 256,641 44 31,168
------------- ------------- ------------
Total non-current assets 10,834,842 10,961,002 10,211,526
Current assets
Other receivables 6 587,348 585,538 135,699
Cash and cash equivalents 2,419,266 1,145,301 22,143
-------------
Total current assets 3,006,614 1,730,839 157,842
Total assets 13,841,456 12,691,841 10,369,368
------------- ------------- ------------
Current liabilities
Trade and other payables 7 (1,155,632) (833,860) (281,664)
------------- ------------- ------------
Total current liabilities (1,155,632) (833,860) (281,664)
Net assets/(liabilities) 12,685,824 11,857,981 10,087,704
------------- ------------- ------------
Equity
Share capital 8 2,687,760 2,396,333 2,279,338
Share premium 8 11,176,636 8,198,148 8,294,643
Shares to be issued 400,000 400,000
Warrant reserve 90,474 83,533 160,074
Option reserve 1,700,505 1,700,505
Merger reserve - 3,214,558 -
Foreign exchange reserve (6,174) (33,393)
Retained earnings (4,744,297) (2,034,591) (4,152,947)
------------- ------------- ------------
Total equity attributable
to owners of owners
owners of Contango
Holdings owners of
Contango Holdings owners
of the parent company 11,304,904 10,428,061 8,648,220
Non-controlling interests 1,380,920 1,429,920 1,439,484
------------- ------------- ------------
Total equity 12,685,824 11,857,981 10,087,704
------------- ------------- ------------
Condensed Consolidated Statements of Changes
in Equity
For the six months ended 30 November 2020
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 November 2021
Shares Total
Share Share to be Warrant Option Translation Retained Equity Non-controlling
capital premium issued reserve reserve reserve earnings of Owners interests Total
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance
as at 31
May 2020 429,500 368,978 - 84,874 - - (904,932) (21,580) - (21,580)
Loss for
the year - - - - - - (3,248,015) (3,248,015) (56,884) (3,304,899)
Other
comprehensive
income
Translation
differences - - - - - (33,393) - (33,393) (15,404) (48,797)
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Total
comprehensive
income for
the year - - - - - (33,393) (3,248,015) (3,281,408) (72,288) (3,353,696)
Transactions
with owners
Share issues
- cash
received
net 1,819,838 7,815,665 - - - - - 9,635,503 - 9,635,503
Share issues
- warrants
exercised 30,000 110,000 - (10,600) - - - 129,400 - 129,400
Shares to
be issued - - 400,000 - - - - 400,000 - 400,000
Warrants
issued - - - 85,800 - - - 85,800 - 85,800
Options
issued - - - - 1,700,505 - - 1,700,505 - 1,700,505
Minority
interest
share of
intangible
asset
acquisitions - - - - - - - - 1,511,772 1,511,772
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Total
transactions
with owners 1,849,838 7,925,665 400,000 75,200 1,700,505 - - 11,951,208 1,511,772 13,462,980
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Balance
at 31 May
2021 2,279,338 8,294,643 400,000 160,074 1,700,505 (33,393) (4,152,947) 8,648,220 1,439,484 10,087,704
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Loss for
the period - - - - - - (591,350) (591,350) (45,048) (636,398)
Other
comprehensive
income
Translation
differences - - - - - 27,219 - 27,219 (13,516) 13,703
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Total
comprehensive
income for
the period - - - - - 27,219 (591,350) (564,131) (58,564) (622,695)
Transactions
with owners
Share issues
- cash
received
net 157,172 2,230,327 - - - - - 2,387,499 - 2,387,499
Share issues
- warrants
exercised 251,250 651,666 - (69,600) - - - 833,316 - 833,316
Shares to
be issued - - - - - - - - - -
Warrants
issued - - - - - - - - - -
Options
issued - - - - - - - - - -
Minority
interest
share of
intangible
asset
acquisitions - - - - - - - - - -
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Total
transactions
with owners 408,422 2,881,993 - (69,600) - - - 3,220,815 - 3,220,815
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Balance
at 30 Nov
2021 2,687,760 11,176,636 400,000 90,474 1,700,505 (6,174) (4,744,297) 11,304,904 1,380,920 12,685,824
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Condensed Consolidated Statements of Cash Flows
For the six months ended 30 November 2021
Unaudited Unaudited Audited
Six Months Six Months Year
ended ended ended
30 November 30 November 31 May
Notes 2021 2020 2021
GBP GBP GBP
Operating activities
Loss after tax (636,398) (1,129,659) (3,304,899)
Adjustment for:
Depreciation 11,200 67 4,443
Share based transactions (69,600) - 1,175,705
Revaluation of intangible
asset - - (54,986)
Changes in working capital
(Increase)/decrease in trade
and other receivables (451,650) (182,375) 212,334
Increase in trade and other
payables 873,968 398,687 (153,509)
------------- ------------- ------------
(Decrease) in Net cash from
operating activities (272,480) (913,280) (1,520,912)
------------- ------------- ------------
Investing activities
Purchase of exploration licences - (825,748) (1,145,678)
Spending on exploration licences (372,143) - (136,781)
Purchase of fixed assets (221,846) (35,397)
Purchase of investment - (62,260) (62,260)
------------- ------------- ------------
(Decrease) in Net cash from
investing activities (593,989) (888,008) (1,380,116)
------------- ------------- ------------
Financing activities
Ordinary Shares issued (net
of issue costs) 5 3,290,415 2,936,271 2,940,674
------------- ------------- ------------
Net cash flows from financing
activities 3,290,415 2,936,271 2,940,674
------------- ------------- ------------
Increase/(decrease) in cash
and short-term deposits 2,423,946 1,134,983 39,646
Cash and short-term deposits
as at the start of the period 22,143 10,430 10,430
Effect of foreign exchange
changes (26,823) (112) (27,933)
------------- ------------- ------------
Cash at the end of the period 2,419,266 1,145,301 22,143
------------- ------------- ------------
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 November 2021
1 General information
The Company was incorporated in England under the Laws of
England and Wales with registered number 10186111 on 18 May 2016.
All of the Company's Ordinary Shares were admitted to the London
Stock Exchange's Main Market and commenced trading on 1 November
2017. The company was re-registered as a public company under
Companies Act 2006 on 1 June 2017, by the name Contango Holdings
plc.
The Company is listed on the Standard Market of London Stock
Exchange plc.
The unaudited interim consolidated financial statements for the
six months ended 30 November 2021 were approved for issue by the
board on 16 March 2022.
The figures for the six months ended 30 November 2021 and 30
November 2020 are unaudited and do not constitute full accounts.
The comparative figures for the period ended 31 May 2021 are
extracts from the annual report and do not constitute statutory
accounts.
2 Basis of Preparation and Risk Factors
The Company Financial Information has been prepared in
accordance with and comply with IFRS as adopted by the European
Union, International Financial Reporting Interpretations Committee
interpretations and the Companies Act 2006. The financial
statements have been prepared under the historical cost convention
as modified for financial assets carried at fair value.
The financial information of the company is presented in British
Pound Sterling ("GBP").
The accounting policies and methods of calculation adopted are
consistent with those of the financial statements for the year
ended 31 May 2021.
The business and operations of the Company are subject to a
number of risk factors which may be sub-divided into the following
categories:
Exploration and development risks, including but not limited
to:
-- Mineral exploration is speculative and uncertain
-- Verification of historical washability analysis
-- Independent verification of internal resource estimation at Garalo
-- Mining is inherently dangerous and subject to conditions or
events beyond the Company's control, which could have a material
adverse effect on the Company's business
-- The volume and quality of coal recovered may not conform to current expectations
-- The extend and grade of gold mineralisation at Garalo may not
conform to current expectations
Permitting and title risks, including but not limited to:
-- Licence and permits
-- The Company will be subject to a variety of risks associated
with current and any potential future joint ventures, which could
result in a material adverse effect on its future growth, results
of operations and financial position
Political risks, including but not limited to:
-- Political stability
-- Enforcement of foreign judgements
-- Potential legal proceedings or disputes may have a material
adverse effect on the Company's financial performance, cash flow
and results of operations
Financial risks, including but not limited to:
-- Foreign exchange effects
-- Valuation of intangible assets
-- The Company may not be able to obtain additional external
financing on commercially acceptable terms, or at all, to fund the
development of its projects
-- The Company will be subject to taxation in several different
jurisdictions, and adverse changes to the taxation laws of such
jurisdictions could have a material adverse effect on its
profitability
-- The Company's insurance may not cover all potential losses,
liabilities and damage related to its business and certain risks
are uninsured and uninsurable
Commodity prices, including but not limited to:
-- The price of coal may affect the economic viability of ultimate production at Lubu
-- The revenues and financial performance are dependent on the price of coal
-- The price of gold may affect the economic viability of ultimate production at Garalo
Operational risks, including but not limited to:
-- Availability of local facilities
-- Adverse seasonal weather
-- The Company's operational performance will depend on key
management and qualified operating personnel which the Company may
not be able to attract and retain in the future
-- The Company's directors may have interests that conflict with its interests
-- Risk relating to Controlling Shareholders
The Company's comments and mitigating actions against the above
risk categories are as follows:
Exploration and development risks
There can be no assurance that the Company's development
activities will be successful however significant exploratory work
has been conducted to date at Lubu and Garalo which supports the
Board's confidence that a profitable mining operation can be
developed.
Additionally, the phased development route which will be
employed at Lubu seeks to mitigate risks along the development life
cycle of the project.
Permitting and title risks
The Company complies with existing laws and regulations and
ensures that regulatory reporting and compliance in respect of each
permit is achieved. Applications for the award of a permit may be
unsuccessful. Applications for the renewal or extension of any
permit may not result in the renewal or extension taking effect
prior to the expiry of the previous permit. There can be no
assurance as to the nature of the terms of any award, renewal or
extension of any permit.
The Company regularly monitors the good standing of its
permits.
Political risks
The Company maintains an active focus on all regulatory
developments applicable to the Company, in particular in relation
to the local mining codes.
In recent years the political and security situations in
Zimbabwe and Mali have been particularly volatile.
Financial risks
The board regularly reviews expenditures on projects. This
includes updating working capital models, reviewing actual costs
against budgeted costs, and assessing potential impacts on future
funding requirements and performance targets.
Commodity prices
As projects move towards commercial mining the Company will
increasingly review changes in commodity prices so as to ensure
projects remain both technically and economically viable.
Operational risks
Continual and careful planning, both long-term and short-term,
at all stages of activity is vital so as to ensure that work
programmes and costings remain both realistic and achievable.
COVID-19 outbreak
In addition to the foregoing comments and mitigating actions
against the above risk categories the Company has implemented
various protocols in relation to the current COVID-19 outbreak.
Contango places the health and safety of its employees and
contractors as its highest priority. Accordingly, a business
continuity programme has been put in place to protect employees
whilst ensuring the safe operation of the Company.
Having spoken with, amongst others, local government, staff and
contractors, strict protocols have been implemented to reduce the
risk of transmission of COVID-19 at all the Company's
operations.
The situation in respect of COVID-19 is an evolving one and the
Board will continue to review its potential impact on its staff and
the business.
3 Loss before taxation
Loss before income tax
is stated Unaudited Unaudited
after charging: Six Months Six Months
Ended 30 Ended 30 Audited Year
November November Ended 31
2021 2020 May 2021
GBP GBP GBP
Directors' remuneration 50,400 52,800 103,800
Contango share-based bonus
on IPO - 100,000 100,000
Relisting costs - 417,642 203,727
Ongoing listing costs 151,177 80,661 191,091
Salaries 217,184 174,755 370,337
Consultancy fees - 80,695 117,867
Legal and accountancy fees 4,869 2,280 8,053
Travel 174,673 69,287 257,333
Office costs 66,742 85,186 189,454
Share performance options - - 1,700,505
Net warrant issue costs (69,600) - 75,200
Depreciation 11,200 - 4,443
Other 29,753 66,353 -
Group audit fee
- -
Fee payable to the Company's
auditor in respect of all
other non-audit services - - 25,000
Fees paid to auditors for
non-audit work services - - 2,475
4 Loss per Ordinary Share
The calculation of the basic and diluted loss per Ordinary Share
is based on the following data:
Unaudited Unaudited Audited
Six Months Six Months Year
to to to
30 November 30 November 31 May
2021 2020 2021
GBP GBP GBP
Earnings
Loss from continuing operations
for the period attributable
to the equity holders of the
Company (591,350) (1,108,611) (3,248,015)
Number of Ordinary Shares
Weighted average number of
Ordinary Shares for the purpose
of basic and diluted earnings
per Ordinary Share (number) 222,711,321 120,346,178 218,418,394
------------- ------------- ------------
Basic and diluted loss per
Ordinary Share (pence) (0.27) (0.92) (1.49)
------------- ------------- ------------
There are no potentially dilutive Ordinary Shares in issue.
5. Intangible Asset
Unaudited Unaudited Audited As
As at As at at
30 November 30 November 31 May
2021 2020 2021
GBP GBP GBP
At 1 June 2021 10,118,098 - -
Additions - on acquisition - 9,797,701 8,235,849
Additions - during
year 397,843 1,100,997 1,882,249
Amortisation - -
------------------- -------------- ------------
Total 10,515,941 10,898,698 10,118,098
------------------- -------------- ------------
Mining rights Zimbabwe 8,495,807 9,797,701 8,299,256
Mining rights Mali
(Garalo) 1,273,617 1,100,997 1,072,325
Mining rights Mali
(Nthiela) 746,517 - 746,517
10,515,941 10,898,698 10,118,098
------------------- -------------- ------------
The intangible asset represents the mining rights and technical
information acquired when the Group acquired its 70% shareholding
in Monaf Investments (Pty) Ltd on 18 June 2020; its 75% share in
the Garalo gold licence in Mali bought for $1 million on 22 October
2020; and its 100% share in the Nthiela gold licence (adjacent to
Garalo) in Mali. The Nthiela licence was acquired for approximately
GBP750,000 - being EUR400,000 (GBP346,517) in cash and 4,000,000
ordinary shares at GBP0.10 to be issued during 2022.
6. Other receivables
Unaudited Unaudited Audited As
As at As at at
30 November 30 November 31 May
2021 2020 2021
GBP GBP GBP
Prepayments 16,332 - 24,254
Other debtors 571,016 585,538 111,445
587,348 585,538 135,699
------------------- -------------- ------------
7. Trade and other payables
Unaudited Unaudited Audited As
As at As at at
30 November 30 November 31 May
2021 2020 2021
GBP GBP GBP
Trade payables 221,919 76,809 180,974
Accruals and other
payables 101,963 757,051 100,690
Convertible debt 831,750 - -
1,155,632 833,860 281,664
-------------------- --------------- -------------
The convertible loan note was announced on 3(rd) June 2021
and had a fixed conversion price of 6 pence per share, with
a mandatory conversion to take place on 4 January 2022.
Due to a lack of headroom to issue new shares in January
all note holders unanimously agreed to extend the life of
the instruments by a further six months with no additional
charges or penalties. The revised date for mandatory conversion
is therefore 4 July 2022. The term of the attaching one
warrant for every two ordinary shares, with an exercise
price of 8p, remains unchanged.
8 Share capital
Number of
Ordinary
Shares
issued Total
and fully Share Share Share
paid Capital Premium Capital
GBP GBP GBP
As at 01
June 2021 242,633,276 2,279,338 8,294,643 10,573,981
Placement
November
2021 41,666,666 416,667 2,083,333 2,500,000
Warrants
Exercised 25,124,990 104,255 798,660 902,915
Less share
issue
costs (112,500) (112,500)
----------------------- --------------------- ---------------------- ----------------------
As at 31
May 2021 309,424,932 2,687,760 11,176,636 13,864,396
----------------------- --------------------- ---------------------- ----------------------
The Ordinary Shares issued by the Parent Company have par value
of 1p each and each Ordinary Share carries one vote on a poll vote.
The Authorised share capital of the Parent Company is GBP5,000,000
ordinary shares at GBP0.01 per share resulting in 500,000,000
ordinary shares.
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