REG - Contango HoldingsPLC - Interim Results for the six months to 30 Nov 2024
27/02/2025 07:15
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RNS Number : 6175Y Contango Holdings PLC 27 February 2025
Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural Resources
27 February 2025
Contango Holdings Plc
('Contango' or the 'Company')
Unaudited Interim Results for the six months to 30 November 2024
Contango Holdings Plc, the London listed natural resource development
company, announces its results for the six-month period ended 30 November
2024.
Highlights
• Transitioning to a cash-generative royalty
company.
• Strategic partnership formed with Huo Investments
Ltd, the investment vehicle of a prominent Zimbabwe-based Chinese national
(the 'Investor') to drive significant progress at the Muchesu Mine in Zimbabwe
('Muchesu').
• The Investor has already committed significant
funds to Muchesu to increase production capacity:
o Dense media separation ('DMS') plant has been successfully installed,
commissioned and calibrated and a second DMS plant has been ordered.
o Expansion of the open pit at Muchesu to access to substantial additional
resources, ensuring a long-term, sustainable supply of coking coal.
· First royalty payment received post period.
Carl Esprey, CEO Of Contango, commented:
"Contango continues to make strong progress as it transitions to a
cash-generative royalty company and I am pleased with the strides we have made
during this defining period. The decision to transition to a royalty focused
company has removed a number of the previous risks associated with being the
sole mine operator at Muchesu. This strategy not only offers our investors
significant growth potential but also protects shareholders from changes to
future operating, as well as capital expenditure and working capital funding
requirements. Moreover, the Company has now resized its cost base and expects
to see the benefits of a leaner organisation flow through in the next
financial year.
"The Investor has demonstrated his support for the Project by advancing an
initial $1,000,000 in July 2024 against a future equity subscription into the
Company. A Prospectus was published in January 2025, leading to an additional
payment of $1,000,000 by the Investor, enabling the closing of the envisaged
$2,000,000 equity placing, which in turn has made the Investor the largest
shareholder in the Company, owning approximately 20%. Moreover, during the
period the Investor commenced significant material investment into Muchesu to
expand operations and production capacity.
"Post period we received our first royalty payments under the proposed MRA,
which provides for a minimum of $2,000,000 per annum, although the Company
envisages materially higher royalties as operations advance. Accordingly, this
has been a transformational period for Contango, and I look forward to sharing
further updates with our investors in the coming weeks. We have established a
truly collaborative partnership with the Investor and are confident in their
ability to deliver a highly profitable operation at Muchesu."
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 Financial 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
Chairman's Statement
I am pleased to share my chairman's update as we reflect on a pivotal period
for Contango. Throughout this time, we achieved significant progress both
operationally and corporately, and I am confident that the Company is poised
for a bright and prosperous future.
As shareholders are aware, the key milestone for Contango during this period
was the strategic partnership formed with our Investor. This partnership
resulted in the acquisition of a 51% stake in Muchesu and a subscription for
approximately 20% of Contango's shares. This collaboration has proven
transformative, driving significant progress at Muchesu and redefining our
long-term growth vision for Contango.
Our relationship with the Investor continues to flourish, with significant
funds already injected into the Muchesu project. As reported post period end,
the dense media separation ('DMS') plant has now been successfully installed,
commissioned and calibrated, marking a major milestone. The plant, with an
estimated capacity of 3,000 tonnes of washed coal per day, is now operational,
setting the stage for ramping up production as planned. We have also been
advised by the Investor that a second DMS plant has been ordered and we expect
to see the full benefits of these and other upgrades as we progress throughout
2025.
Alongside the ongoing upgrades to the processing infrastructure at Muchesu,
efforts have also focused on expanding the open pit, which unlocks access to
substantial additional resources, ensuring a long-term, sustainable supply of
coking coal. As we near the commencement of full-scale mining operations, we
remain confident in Muchesu's growth potential, with continued enhancements
expected to significantly elevate the mine's overall production capacity.
Funding and Capital Structure
The Company anticipates a significant improvement in its financial performance
during 2025, driven by royalty payments under the Mineral Royalty Agreement
('MRA') with the Investor. The Company has received $500,000 in royalty
payments, with a further $500,000 to be paid shortly. An additional $1,000,000
is expected in Q2 2025 in line with the $2,000,000 per annum minimum royalty
schedule outlined in the MRA.
Moving forward, royalty payments during the second half of 2025 and beyond
will be directly tied to operational productivity at Muchesu. The Investor's
primary focus remains on the production and sale of coking coal, which
generates a royalty payment of US$8/tonne to the Company.
Following the publication of a Short Form Prospectus ('SFP') in January 2025,
the Company raised gross proceeds of £1,850,000, with the Investor
subscribing for 142,000,000 shares. Following the Subscription and
subsequent on-market acquisition of shares in the Company, the Investor
currently holds 154,750,000 shares in the Company resulting in a holding of
approximately 20.42%, establishing the Investor as the Company's largest
shareholder, further aligning the Investor's interests with those of the
Company.
The Subscription funds paid by the Investor, in addition to the received and
expected royalty payments, will principally be used to repay outstanding
investor loans, which stood at £4,418,062 at 30 November 2024 (the 'Investor
Loans').
The Board has agreed with the holders of the Investor Loans, many of whom are
long-standing shareholders of the Company, that any additional income will
initially be applied to the repayment of the Investor Loans and for general
working capital purposes before the Company implements its intended dividend
policy. The Board will continue to update shareholders on the production
levels at Muchesu and royalties are paid one month in arrears.
Outlook
Looking forward, I remain highly optimistic about the outlook for the
remainder of 2025 and beyond. We are well positioned to transition from being
a mining operation to a profitable royalty business, with the infrastructure
now in place to support continued growth. As we ramp up production at Muchesu
and begin to see the full impact of the DMS plants, we expect operational
momentum to accelerate, translating into increased sales and increasing
royalty receipts.
I am confident that the steps we have taken, alongside the continued support
from our Investor, will enable us to deliver on our strategy and create
lasting value for all stakeholders. I would like to express my sincere
gratitude to our shareholders for their continued trust and support.
We look forward to providing further updates on operational developments and
the continued success of the Muchesu project.
Roy Pitchford
26 February 2025
Condensed Consolidated Statements of Comprehensive Income
For the six months ended 30 November 2024
Audited Year to
Unaudited Six Months ended Unaudited Six Months ended 31 May 2024
30 November 2024 30 November 2023
Notes £ £ £
Administrative fees and other expenses (330,715) (514,912) (1,538,818)
Operating loss (330,715) (514,912) (1,538,818)
Finance expense (413,394) (496,383) (957,416)
Loss before tax (744,109) (1,011,295) (2,496,234)
Income tax - - -
Loss for the period from continuing operations (744,109) (1,011,295) (2,496,234)
Loss for the period from discontinued operations 3 (126,129) (365,039) (1,927,461)
Loss for the period (870,238) (1,376,334) 4,423,695
Loss attributable to owners of the parent company (832,402) (1,257,498) (3,799,059)
Loss attributable to non-controlling interests (37,837) (118,836) (624,636)
(870,238) (1,376,334) (4,423,695)
Other comprehensive income (282,086) (24,296) (30,140)
Total comprehensive loss for the period (1,152,324) (1,400,630) (4,453,835)
Total comprehensive loss attributable to owners of Contango Holdings Plc (1,033,444) (1,269,069) (3,819,326)
Total comprehensive loss attributable to non-controlling interests (118,880) (131,561) (634,509)
Total comprehensive loss for the period (1,152,324) (1,400,630) (4,453,835)
Basic and diluted loss per share from total operations (pence) 4 (0.16) (0.27) (0.78)
Basic and diluted loss per share from continuing operations 4 (0.14) (0.22) (0.50)
Basic and diluted loss per share from discontinued operations 4 (0.02) (0.05) (0.28)
Condensed Consolidated Statements of Financial Position
For the six months ended 30 November 2024
Notes Unaudited as at Unaudited as at Audited as at
30 November 2024 30 November 2023 31 May 2024
£ £ £
Non-current assets
Intangible assets - 14,213,896 -
Investments 5,811 40,071 5,811
Property, plant and equipment 43,670 2,947,166 43,670
Total non-current assets 49,481 17,201,133 49,481
Current assets
Other receivables 5 31,238 184,105 164,385
Cash and cash equivalents 1,090 90,150 1,166
Total current assets 32,328 274,255 165,551
Disposal Group assets 6 16,677,801 - 16,667,773
Total assets 16,759,610 17,475,388 16,882,805
Current liabilities
Trade and other payables 7 (2,243,787) (1,312,574) (1,081,195)
Investor loans (4,418,062) (3,395,706) (4,184,740)
Total current liabilities (6,661,849) (4,708,280) (5,265,935)
Disposal Group liabilities 6 (637,569) - (1,004,354)
Total liabilities (7,299,418) (4,708,280) (6,270,289)
Net assets/(liabilities) 9,460,192 12,767,108 10,612,516
Equity
Share capital 8 5,667,240 4,727,240 5,667,240
Share premium 8 17,285,180 17,332,180 17,285,180
Shares to be issued - - -
Warrant reserve 1,022,515 2,101,664 2,107,277
Option reserve - - -
Foreign exchange reserve (2,261) 207,477 198,781
Retained earnings (15,728,173) (13,438,972) (15,980,533)
Total equity attributable to owners of Contango Holdings owners of the parent 8,244,501 10,929,589 9,277,945
company
Non-controlling interests 1,215,691 1,837,519 1,334,571
Total equity 9,460,192 12,767,108 10,612,516
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 November 2024
Share capital Share premium Warrant Translation reserve Retained earnings Total Equity of Owners Non-controlling interests Total
reserve
£ £ £ £ £ £ £ £
Balance at 31 May 2023 4,727,240 17,332,180 2,101,664 219,048 (12,181,474) 12,198,658 1,969,080 14,167,738
Loss for the year - - - - (3,799,059) (3,799,059) (624,636) (4,423,695)
Other comprehensive income
Translation differences - - - (20,267) - (20,267) (9,873) (30,140)
Total comprehensive income for the year - - - (20,267) (3,799,059) (3,819,326) (634,509) (4,453,835)
Transactions with owners 940,000 - - - - 940,000 - 940,000
Share issues
Share issue costs - (47,000) - - - (47,000) - (47,000)
Warrants issued - - 5,613 - - 5,613 - 5,613
Total transactions with owners 940,000 (47,000) 5,613 - - 898,613 - 898,613
Balance at 31 May 2024 5,667,240 17,285,180 2,107,277 198,781 (15,980,533) 9,277,945 1,334,571 10,612,516
Loss for the period - - - - (832,402) (832,402) (37,837) (870,238)
Other comprehensive income
Translation differences - - - (201,042) - (201,042) (81,044) (282,086)
Total comprehensive income for the period - - - (201,042) (832,402) (1,033,444) (118,880) (1,152,324)
Transactions with owners - - - - - - - -
Share issues
Share issue costs - - - - - - - -
Warrants expired - - (1,084,762) - 1,084,762 - - -
Total transactions with owners - - (1,084,762) - 1,084,762 - - -
Balance at 30 Nov 2024 5,667,240 17,285,180 1,022,515 (2,262) (15,728,173) 8,244,501 1,215,691 9,460,192
Condensed Consolidated Statements of Cash Flows
For the six months ended 30 November 2024
Notes Unaudited Six Months Unaudited Six Months Audited Year
ended ended ended
30 November 2024 30 November 2023 31 May 2024
£ £ £
Operating activities
Loss after tax (744,109) (1,011,295) (2,496,234)
Adjustment for:
Depreciation - 11,407 45,487
Share based transactions - - 5,613
Loan facility fees 233,322 488,525 924,558
Impairment of listed investment - - 34,260
Impairment of exploration licences - - 23,157
Writing off of debtor balance - - -
Changes in working capital
(Increase) in trade and other receivables 5,550 26,193 52,515
Increase in trade and other payables (234,264) (32,779) (205,186)
Cash used in continuing operating activities (739,501) (517,949) (1,615,830)
Cash used in discontinued operating activities (732,345) (365,039) (425,790)
Decrease in cash from operating activities (1,471,846) (882,988) (2,041,620)
Investing activities
Cash used investing in continuing operating activity - - -
Cash used investing in discontinued operating activity (26,060) (1,056,811) (1,163,524)
Net cash outflow from investing activities (26,060) (1,056,811) (1,163,524)
Financing activities
Ordinary Shares issued - - 940,000
Share issue costs - - (47,000)
Proceeds from investor loans - 1,855,000 2,208,000
Proceeds from Huo subscription payments 1,522,753 - -
Net cash flows from financing activities 1,522,753 1,855,000 3,101,000
Increase/(Decrease) in cash and cash equivalents 24,847 (84,799) (104,144)
Cash and short-term deposits as at the start of period 1,166 75,692 75,692
Effect of foreign exchange changes (24,923) 99,257 29,618
Cash at the end of the period 1,090 90,150 1,166
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 November 2023
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 2024 were approved for issue by the board on 26 February
2025.
The figures for the six months ended 30 November 2024 and 30 November 2023 are
unaudited and do not constitute full accounts. The comparative figures for the
period ended 31 May 2024 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 ("£").
The accounting policies and methods of calculation adopted are consistent with
those of the financial statements for the year ended 31 May 2024.
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
• There can be no assurance that the development and production
activities at Muchesu will be successful.
Permitting and title risks, including but not limited to:
• Licence and permits
• The Group 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 Group's financial performance, cash flow and
results of operations
Financial risks, including but not limited to:
• Foreign exchange effects
• Valuation of intangible assets
• The Group may not be able to close the
previously referenced Definitive Agreements entered with the Investor
• The Group 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 Group'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 Muchesu
• The revenues and financial performance are
dependent on the price of coal and coke
Operational risks, including but not limited to:
• Availability of local facilities
• Adverse seasonal weather
• The Group's operational performance will depend
on key management and qualified operating personnel which the Group may not be
able to attract and retain in the future
• The Group's directors may have interests that
conflict with its interests
3. Discontinued activities
Unaudited As at Unaudited As at Audited As at
30 November 30 November 31 May
2024 2023 2024
£ £ £
Revenue - - 64,218
Cost of sales - - (408,548)
Gross loss - - (344,330)
Administrative fees and other expenses (126,129) (365,039) (1,583,131)
Operating loss (126,129) (365,039) (1,583,131)
Finance expense - - -
Loss before tax (126,129) (365,039) (1,927,461)
Income tax - - -
Loss for the year from discontinued operations (126,129) (365,039) (1,927,461)
4. Loss per Ordinary Share
The calculation of the basic and diluted loss per Ordinary Share is based on
the following data:
Unaudited Six Months to Unaudited Six Months to Audited Year
30 November 30 November to
2024 2023 31 May
2024
£ £ £
Earnings
Loss from continuing operations for the period attributable to the equity (832,402) (1,257,498) (3,799,059)
holders of the Company
Number of Ordinary Shares
Weighted average number of Ordinary Shares for the purpose of basic and
diluted earnings per Ordinary Share (number)
532,987,037 472,724,023 485,858,270
Basic and diluted loss per Ordinary Share (pence) (0.16) (0.27) (0.78)
Basic and diluted loss per Ordinary Share (pence) on continuing activities (0.14) (0.22) (0.50)
Basic and diluted loss per Ordinary Share (pence) on discontinued activities (0.02) (0.05) (0.28)
There are no potentially dilutive Ordinary Shares in issue.
5. Other receivables
Unaudited As at Unaudited As at Audited As at
30 November 30 November 31 May
2024 2023 2024
£ £ £
Prepayments 28,544 29,859 28,545
Other debtors 2,694 154,246 135,840
31,238 184,105 164,385
6. Asset held for sale
Unaudited As at Unaudited As at Audited As at
30 November 30 November 31 May
2024 2023 2024
£ £ £
Assets of disposal group classified
classified as held for sale
Property, plant & equipment 2,285,925 - 2,287,421
Intangible assets 14,240,549 - 14,259,569
Cash at bank 50,726 - 24,690
Other current assets 100,601 96,093
16,677,801 - 16,667,773
Liabilities of disposal group
classified as held for sale
Other current liabilities (637,569) - (1,004,354)
Net assets of disposal group
classified as held for sale 16,040,232 - 15,663,419
7. Trade and other payables
Unaudited As at Unaudited As at Audited As at
30 November 30 November 31 May
2024 2023 2024
£ £ £
Trade payables (406,723) (1,135,621) (536,127)
Accruals and other payables (314,311) (176,953) (545,068)
Huo share subscription payable (1,522,753) - -
(2,243,787) (1,312,574) (1,081,195)
8. Share capital
Number of Ordinary Shares issued and fully paid Share Capital Share Premium Total Share Capital
£ £ £
As at 01 June 2024 566,724,023 5,667,240 17,285,180 22,952,420
Shares issued - - - -
As at 30 November 2024 566,724,023 5,667,240 17,285,180 22,952,420
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 £7,220,000 ordinary shares at £0.01 per
share resulting in 722,000,000 ordinary shares.
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