REG - Contango HoldingsPLC - Interim Results
24/02/2023 07:01
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RNS Number : 8894Q Contango Holdings PLC 24 February 2023
Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural Resources
24 February 2023
Contango Holdings Plc
('Contango' or the 'Company')
Unaudited Interim Results for the six months to 30 November 2022
Contango Holdings Plc, the London listed natural resource development
company, announces its results for the six-month period ended 30 November
2022.
Highlights
· £7.5 million raised ("Fundraise") in October 2022 at 6p to support
the Lubu Coal Project ("Lubu") to first coking coal production from Q1 2023.
· £1.0 million Convertible Loan converted at 6p on 5 July 2022 for
16,666,667 ordinary shares
· First offtake signed with AtoZ Investments (Pty) Ltd to purchase
10,000 tonnes per month of washed coking coal produced at Lubu.
· Coking coal and coke tests undertaken through installed 1 tonne per
hour test plant confirmed the excellent quality of coal from Lubu further
strengthening Contango's position to complete additional offtake agreements.
· Expansion of production strategy to include both thermal coal and
coke development scenarios to provide additional near-term high value revenues
streams.
· Contango's operating subsidiary declared the winner of the 2022
Excellence in Community, Empowerment & Social Impact Award recognising its
work at Lubu.
Post period
· MOU signed with a leading Multi-National Company for collaboration
across coking coal and manufacture of coke at Lubu.
· Award of Environmental Impact Assessment certificate for Lubu
recognising the highest environmental standards imposed by Contango at the
mine.
· Delivery of the Lubu wash plant in early February and assembly ahead
of commissioning in March 2023 - capacity to produce 20,000 tonnes per month.
· Delivery of surface miner (Wirtgen 2200SM) which has a cutting width
of 2200mm, ideal for selective mining, and can mine up to 500 tonnes per hour
of hard rock and up to 1,000 tonnes per hour of coking coal.
· Laboratory delivered to site in February representing the last of the
significant capital items ahead of first production and sales at the end of Q1
2023.
Carl Esprey, Chief Executive Officer of Contango Holdings, said:
"We expect Contango to transition into cash flow towards the end of the
current quarter with first sales of coking coal. Lubu's advancement over
recent months has been facilitated by the successful £7.5 million fundraising
during the period, which has enabled investment in building mining and
processing operations. These development initiatives are now reaching their
conclusion, with the wash plant now at site and being assembled ahead of
commissioning. Once calibrated and operating efficiently the wash plant is
expected to be able to produce 20,000 tonnes of washed coking coal per month
which will satisfy its first offtake partner, AtoZ Investments (Pty) Ltd, and
also provide sufficient supply to secure further offtakes for our coking coal.
"I would like to thank our long-standing shareholders for their support, and
welcome the new entrants to our register, as I reiterate my excitement and
enthusiasm for what is in store for Contango over the coming weeks and months
and we transition into a fully-fledged and cash generative production
company."
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
Activity at the Lubu Coal Mine in Zimbabwe ("Lubu") is intensifying as the
technical team and our various consultants direct the final elements of our
mining and processing operations to deliver first coking coal production and
sales by the end of the current quarter. Activity levels on site are now
significant marking the culmination of substantial operational, commercial,
and corporate undertakings orchestrated by the team over the past two and half
years since Contango acquired the project.
As shareholders will be aware, we are now in our final phase of pre-production
at Lubu as we approach commissioning of the wash plant and we anticipate first
sales to our first offtake partner, AtoZ Investments (Pty) Ltd ("AtoZ"), by
the end of the current quarter. During this development phase, the Contango
team has also advanced other commercial negotiations and post period end,
Contango signed a Memorandum of Understanding with a leading Multi-National
Company ("MNC"), which has the potential to support both a further expansion
of the Company's coking coal production capabilities and also its future
higher-margin coke production strategy. Final due diligence is underway, and
we will report on these findings in due course. Given the MOU's broader focus
than just coking coal offtake and subsequent potential to unlock significant
value, the Company has not elected to enter into any additional offtake
arrangements at this time, despite clear demand and interest from several
groups keen to acquire Lubu washed coking coal.
Alongside these technical and commercial deliverables, I was delighted to
learn that our vision for sustainable development was also recognised with our
operating company in Zimbabwe, Monaf Investments, being declared the winner of
the 2022 Excellence in Community, Empowerment & Social Impact Award.
Specifically, Monaf Investments was selected as the winner of this prestigious
award by Corporate Social Responsibility Network Zimbabwe (CSRNZ), together
with the Minister of Provincial Affairs and Devolution for Matabeleland North
Province, recognising our efforts in supporting issues of sustainability in
the Province of Matabeleland North, and developing and promoting the
Zimbabwean Government's Vision 2030 and Sustainable Development Goals. We look
forward to a long and harmonious partnership with the local communities and
authorities in Zimbabwe as we commit to upholding the sustainable and
responsible production philosophies that we have developed since commencing
work at Lubu.
Looking now to our Garalo-Ntiela Gold Project in Mali, our focus remains on
the strategic realisation of its full value. The team in Mali continue to
undertake low-cost exploration activities however the work to date has pointed
to the project's strong potential to host a resource of 1.8Moz-2Moz gold, and
the board has determined that comprehensive drill campaigns are merited to
fully delineate the wider resource potential of this asset. Our primary focus
is now on Lubu, particularly given the significant cashflows expected from
this asset in the near-term, and so discussions regarding strategic investment
to fund future exploration and development work at Garalo-Ntiela is being
prioritised. There remains healthy interest from various parties and the
Contango board are carefully considering numerous opportunities to ensure the
Company benefits appropriately from future development upside.
Financial Review
In October 2022, the Company announced an oversubscribed placing of
125,000,000 new ordinary shares at 6 pence per share to raise gross proceeds
of £7,500,000 from existing and new shareholders. The funds have, and will
continue to be, used to finalise mine development, complete the installation
of the wash plant, acquire further mining equipment, and expand operations at
the Lubu Project. The proceeds have also enabled the Company to finalise the
agreed relocation of additional households from the mine site, thereby
providing a larger footprint for the mine and operations to meet heightened
demand.
As a pre-production Company, Contango did not generate revenue however was
able to source loans from supportive investors during the period to enable the
continued development of Lubu ahead of the Fundraise, which enabled all Loans
to be repaid. Additional one-off Administration costs and other costs
including commissions, professional fees and general transaction costs
relating to the publication of a prospectus in November 2022, as required by
the Prospectus Rules governed by the FCA, were also incurred.
The Company spent £2,090,604 on the exploration and fixed assets during the
period under review which relate to the development of the site and operations
at Lubu.
The Company is now fully funded to reach first cash flow from the sale of
coking coal from Lubu at the end of this quarter.
Revenue
The Company generated no revenue during the period under review but
anticipates making first coking coal sales by the end of Q1 2023.
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 2022, the Company held £3,314,359 (2021: £2,419,266). The
Company is fully funded to deliver first coking coal sales by the end of Q1
2023.
Outlook
The coming weeks and months are clearly going to be a defining period for
Contango; one in which we establish ourselves as a production company and
begin to expand our horizons in order to fully realise the potential of our +1
billion tonnes coal resource at Lubu. With the tailwinds of increasing coal
demand and prices supporting our various production strategies at Lubu, I
believe we are entering the coal market at an ideal time and will benefit from
the continuing demand and pricing dynamics many commentators are predicting.
I would like to take this opportunity to extend my thanks to our shareholders,
both new and old, and also my fellow board members and our operational team
for their tireless efforts to ensure our shared ambitions are realised.
Roy Pitchford
23 February 2023
CEO REPORT
Contango's primary objective during the period was to advance the Lubu Coal
Project in Zimbabwe through to commercial operations and sales, in tandem with
advancing strategic discussions to support the development of the
Garalo-Ntiela Project Area in Mali towards production.
Lubu Coal Project ('Lubu') - known as the Muchesu Coal Mine in Zimbabwe
Contango has a 70% interest in Lubu, with the remaining 30% held by local
partners.
Since acquisition in 2020, the Contango team have implemented a rapid
development plan with the objective of delivering first coking coal in as
short a timeframe as practicable.
The primary focus during the period under review was on the preparation of the
site for commercial mining and coking coal production, and also advancing
commercial discussions regarding coking coal offtake. Commercial discussions
were also undertaken regarding potential thermal coal and coke production, and
strategies for these additional products are now being advanced in tandem with
its coking coal activities.
Our focus now is on quickly getting to an initial production rate of 10,000
tonnes per month of washed coal, as covered by our existing offtake with
specialist coal trading company AtoZ Investments (Pty) Ltd ("AtoZ") out of
South Africa, whilst in tandem also identifying the optimal production and
processing route to maximise recoveries and minimise production costs. The
Company expects to then move to the headline production capacity of the wash
plant as either additional offtakes are signed or we successfully conclude the
existing MOU with a leading Multi-National Company. Given the expected
profitability of operations at Lubu, should demand for the Company's suite of
coal products continue as envisaged then the purchase of additional wash
plants and capital items to meet this demand are expected to be funded via
cashflow or non-equity finance. The coal mined to date has either been washed
using the installed 1 tonne per hour test plant located on site or stockpiled
in anticipation of the larger wash plant being commissioned by the end of the
current quarter.
Coal washed using the current test plant, which was supplied and supervised by
OneVision, the company that is currently installing the larger 100 tonne per
hour throughput wash plant, was used by Contango's technical team for test
work. This processing has confirmed that, after passing through the wash
plant, the coking coal product is of excellent quality and has been an
important mechanism in the Company's offtake discussions. An additional test
was undertaken on 15kg of washed coking coal from both the NUTTS and PEAS
sections. These were processed through a mini-coking test plant as a first
determinant of how the coking coal would react when processed into coke. These
coke results returned better than expected results and when shared with
potential coke offtake partners, we received very positive feedback on this
data and the characteristics of Lubu coking coal and coke products.
Post period end, in December, Contango signed a Memorandum of Understanding
with a leading Multi-National Company ("MNC"), which outlined a framework for
collaboration across not only coking coal, but also in the manufacture of
coke. The intention is to undertake a stage-gated due diligence exercise which
will look at all aspects that would underpin either a coking-coal offtake
agreement, or the possibility of establishing a coking plant adjacent to the
mine. The Company expects to be able to provide an update on these
negotiations in the coming weeks.
Garalo-Ntiela Project Area ('Garalo-Ntiela')
The Garalo-Ntiela Gold Project covers an area of 161.5km(2) in southern Mali,
and combines the Garalo Licence Area, acquired by Contango in October 2020,
with the neighbouring Ntiela Licence Area, which was acquired in March 2021.
Work programmes conducted by Contango on the Garalo-Ntiela Gold Project have
returned consistently positive results and the project area has demonstrated
its potential for a 1.8Moz-2Moz gold resource.
With this large potential resource now identified, and significant exploration
upside possible with further drilling, the board of Contango has determined
that the optimum route for development would be through a large processing
hub, capable of supporting multiple open pit operations.
In order to realise the full potential of this asset whilst also protecting
investors from the dilution at the PLC level, the board is advancing
discussions with a number of potential investors in relation to Garalo-Ntiela.
The board believes Garalo-Ntiela represents an exceptional asset with large
scale commercial value, and this remains at the forefront of all ongoing
discussions. The Company will provide further updates on these negotiations at
the proper time, as appropriate.
Carl Esprey
23 February 2023
Chairman's Statement
Activity at the Lubu Coal Mine in Zimbabwe ("Lubu") is intensifying as the
technical team and our various consultants direct the final elements of our
mining and processing operations to deliver first coking coal production and
sales by the end of the current quarter. Activity levels on site are now
significant marking the culmination of substantial operational, commercial,
and corporate undertakings orchestrated by the team over the past two and half
years since Contango acquired the project.
As shareholders will be aware, we are now in our final phase of pre-production
at Lubu as we approach commissioning of the wash plant and we anticipate first
sales to our first offtake partner, AtoZ Investments (Pty) Ltd ("AtoZ"), by
the end of the current quarter. During this development phase, the Contango
team has also advanced other commercial negotiations and post period end,
Contango signed a Memorandum of Understanding with a leading Multi-National
Company ("MNC"), which has the potential to support both a further expansion
of the Company's coking coal production capabilities and also its future
higher-margin coke production strategy. Final due diligence is underway, and
we will report on these findings in due course. Given the MOU's broader focus
than just coking coal offtake and subsequent potential to unlock significant
value, the Company has not elected to enter into any additional offtake
arrangements at this time, despite clear demand and interest from several
groups keen to acquire Lubu washed coking coal.
Alongside these technical and commercial deliverables, I was delighted to
learn that our vision for sustainable development was also recognised with our
operating company in Zimbabwe, Monaf Investments, being declared the winner of
the 2022 Excellence in Community, Empowerment & Social Impact Award.
Specifically, Monaf Investments was selected as the winner of this prestigious
award by Corporate Social Responsibility Network Zimbabwe (CSRNZ), together
with the Minister of Provincial Affairs and Devolution for Matabeleland North
Province, recognising our efforts in supporting issues of sustainability in
the Province of Matabeleland North, and developing and promoting the
Zimbabwean Government's Vision 2030 and Sustainable Development Goals. We look
forward to a long and harmonious partnership with the local communities and
authorities in Zimbabwe as we commit to upholding the sustainable and
responsible production philosophies that we have developed since commencing
work at Lubu.
Looking now to our Garalo-Ntiela Gold Project in Mali, our focus remains on
the strategic realisation of its full value. The team in Mali continue to
undertake low-cost exploration activities however the work to date has pointed
to the project's strong potential to host a resource of 1.8Moz-2Moz gold, and
the board has determined that comprehensive drill campaigns are merited to
fully delineate the wider resource potential of this asset. Our primary focus
is now on Lubu, particularly given the significant cashflows expected from
this asset in the near-term, and so discussions regarding strategic investment
to fund future exploration and development work at Garalo-Ntiela is being
prioritised. There remains healthy interest from various parties and the
Contango board are carefully considering numerous opportunities to ensure the
Company benefits appropriately from future development upside.
Financial Review
In October 2022, the Company announced an oversubscribed placing of
125,000,000 new ordinary shares at 6 pence per share to raise gross proceeds
of £7,500,000 from existing and new shareholders. The funds have, and will
continue to be, used to finalise mine development, complete the installation
of the wash plant, acquire further mining equipment, and expand operations at
the Lubu Project. The proceeds have also enabled the Company to finalise the
agreed relocation of additional households from the mine site, thereby
providing a larger footprint for the mine and operations to meet heightened
demand.
As a pre-production Company, Contango did not generate revenue however was
able to source loans from supportive investors during the period to enable the
continued development of Lubu ahead of the Fundraise, which enabled all Loans
to be repaid. Additional one-off Administration costs and other costs
including commissions, professional fees and general transaction costs
relating to the publication of a prospectus in November 2022, as required by
the Prospectus Rules governed by the FCA, were also incurred.
The Company spent £2,090,604 on the exploration and fixed assets during the
period under review which relate to the development of the site and operations
at Lubu.
The Company is now fully funded to reach first cash flow from the sale of
coking coal from Lubu at the end of this quarter.
Revenue
The Company generated no revenue during the period under review but
anticipates making first coking coal sales by the end of Q1 2023.
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 2022, the Company held £3,314,359 (2021: £2,419,266). The
Company is fully funded to deliver first coking coal sales by the end of Q1
2023.
Outlook
The coming weeks and months are clearly going to be a defining period for
Contango; one in which we establish ourselves as a production company and
begin to expand our horizons in order to fully realise the potential of our +1
billion tonnes coal resource at Lubu. With the tailwinds of increasing coal
demand and prices supporting our various production strategies at Lubu, I
believe we are entering the coal market at an ideal time and will benefit from
the continuing demand and pricing dynamics many commentators are predicting.
I would like to take this opportunity to extend my thanks to our shareholders,
both new and old, and also my fellow board members and our operational team
for their tireless efforts to ensure our shared ambitions are realised.
Roy Pitchford
23 February 2023
CEO REPORT
Contango's primary objective during the period was to advance the Lubu Coal
Project in Zimbabwe through to commercial operations and sales, in tandem with
advancing strategic discussions to support the development of the
Garalo-Ntiela Project Area in Mali towards production.
Lubu Coal Project ('Lubu') - known as the Muchesu Coal Mine in Zimbabwe
Contango has a 70% interest in Lubu, with the remaining 30% held by local
partners.
Since acquisition in 2020, the Contango team have implemented a rapid
development plan with the objective of delivering first coking coal in as
short a timeframe as practicable.
The primary focus during the period under review was on the preparation of the
site for commercial mining and coking coal production, and also advancing
commercial discussions regarding coking coal offtake. Commercial discussions
were also undertaken regarding potential thermal coal and coke production, and
strategies for these additional products are now being advanced in tandem with
its coking coal activities.
Our focus now is on quickly getting to an initial production rate of 10,000
tonnes per month of washed coal, as covered by our existing offtake with
specialist coal trading company AtoZ Investments (Pty) Ltd ("AtoZ") out of
South Africa, whilst in tandem also identifying the optimal production and
processing route to maximise recoveries and minimise production costs. The
Company expects to then move to the headline production capacity of the wash
plant as either additional offtakes are signed or we successfully conclude the
existing MOU with a leading Multi-National Company. Given the expected
profitability of operations at Lubu, should demand for the Company's suite of
coal products continue as envisaged then the purchase of additional wash
plants and capital items to meet this demand are expected to be funded via
cashflow or non-equity finance. The coal mined to date has either been washed
using the installed 1 tonne per hour test plant located on site or stockpiled
in anticipation of the larger wash plant being commissioned by the end of the
current quarter.
Coal washed using the current test plant, which was supplied and supervised by
OneVision, the company that is currently installing the larger 100 tonne per
hour throughput wash plant, was used by Contango's technical team for test
work. This processing has confirmed that, after passing through the wash
plant, the coking coal product is of excellent quality and has been an
important mechanism in the Company's offtake discussions. An additional test
was undertaken on 15kg of washed coking coal from both the NUTTS and PEAS
sections. These were processed through a mini-coking test plant as a first
determinant of how the coking coal would react when processed into coke. These
coke results returned better than expected results and when shared with
potential coke offtake partners, we received very positive feedback on this
data and the characteristics of Lubu coking coal and coke products.
Post period end, in December, Contango signed a Memorandum of Understanding
with a leading Multi-National Company ("MNC"), which outlined a framework for
collaboration across not only coking coal, but also in the manufacture of
coke. The intention is to undertake a stage-gated due diligence exercise which
will look at all aspects that would underpin either a coking-coal offtake
agreement, or the possibility of establishing a coking plant adjacent to the
mine. The Company expects to be able to provide an update on these
negotiations in the coming weeks.
Garalo-Ntiela Project Area ('Garalo-Ntiela')
The Garalo-Ntiela Gold Project covers an area of 161.5km(2) in southern Mali,
and combines the Garalo Licence Area, acquired by Contango in October 2020,
with the neighbouring Ntiela Licence Area, which was acquired in March 2021.
Work programmes conducted by Contango on the Garalo-Ntiela Gold Project have
returned consistently positive results and the project area has demonstrated
its potential for a 1.8Moz-2Moz gold resource.
With this large potential resource now identified, and significant exploration
upside possible with further drilling, the board of Contango has determined
that the optimum route for development would be through a large processing
hub, capable of supporting multiple open pit operations.
In order to realise the full potential of this asset whilst also protecting
investors from the dilution at the PLC level, the board is advancing
discussions with a number of potential investors in relation to Garalo-Ntiela.
The board believes Garalo-Ntiela represents an exceptional asset with large
scale commercial value, and this remains at the forefront of all ongoing
discussions. The Company will provide further updates on these negotiations at
the proper time, as appropriate.
Carl Esprey
23 February 2023
Condensed Consolidated Statements of Comprehensive Income
For the six months ended 30 November 2022
Audited Year to
Unaudited Six Months ended Unaudited Six Months ended 31 May 2022
30 November 2022 30 November 2021
Notes £ £ £
Administrative fees and other expenses 3 (1,786,947) (636,398) (2,944,656)
Operating loss (1,786,947) (636,398) (2,944,656)
Finance revenue - - -
Finance expense - - -
Loss before tax (1,786,947) (636,398) (2,944,656)
Income tax - - -
Loss for the period (1,786,947) (636,398) (2,944,656)
Loss attributable to owners of the parent company (1,632,379) (591,350) (2,805,563)
Loss attributable to non-controlling interests (154,568) (45,048) (139,093)
(1,786,947) (636,398) (2,944,656)
Basic and diluted loss per Ordinary Share 4 (0.55) (0.27) (1.00)
Other comprehensive income 319,624 (40,735) 127,977
Total comprehensive loss for the period (1,467,323) (677,133) (2,816,679)
Total comprehensive loss attributable to owners of Contango Holdings PLC (1,403,389) (618,569) (2,700,477)
Total comprehensive loss attributable to non-controlling interests (63,934) (58,564) (116,202)
Total comprehensive loss for the period (1,467,323) (677,133) (2,816,679)
Condensed Consolidated Statements of Financial Position
For the six months ended 30 November 2022
Notes Unaudited as at Unaudited as at Audited as at
30 November 2022 30 November 2021 31 May 2022
£ £ £
Non-current assets
Intangible assets 5 13,416,214 10,515,941 11,936,206
Investments 46,474 62,260 46,474
Property, plant and equipment 1,095,911 256,641 737,727
Total non-current assets 14,558,599 10,834,842 12,720,407
Current assets
Other receivables 6 576,713 587,348 52,211
Cash and cash equivalents 3,314,359 2,419,266 610,546
Total current assets 3,891,072 3,006,614 662,757
Total assets 18,449,671 13,841,456 13,383,164
Current liabilities
Trade and other payables 7 (310,148) (1,155,632) (503,732)
Convertible debt and Investor loans (1,331,750)
Total current liabilities (310,148) (1,155,632) (1,835,482)
Net assets/(liabilities) 18,139,523 12,685,824 11,547,682
Equity
Share capital 8 4,580,246 2,687,760 2,949,679
Share premium 8 18,130,551 11,176,636 11,047,218
Shares to be issued 400,000 400,000 400,000
Warrant reserve 2,059,584 90,474 1,013,815
Option reserve - 1,700,505 1,700,505
Foreign exchange reserve 300,683 (6,174) 71,693
Retained earnings (8,590,889) (4,744,297) (6,958,510)
Total equity attributable to owners of ownersowners of Contango Holdings 16,880,175 11,304,904 10,224,400
owners of Contango Holdings owners of the parent company
Non-controlling interests 1,259,348 1,380,920 1,323,282
Total equity 18,139,523 12,685,824 11,547,682
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 November 2022
Share capital Share premium Shares to be issued Warrant Option reserve Translation reserve Retained earnings Total Equity of Owners Non-controlling interests Total
reserve
£ £ £ £ £ £ £ £ £ £
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 year - - - - - - (2,805,563) (2,805,563) (139,093) (2,944,656)
Other comprehensive income
Translation differences - - - - - 105,086 - 105,086 22,891 127,977
Total comprehensive income for the year - - - - - 105,086 (2,805,563) (2,700,477) (116,202) (2,816,679)
Transactions with owners 419,091 2,100,909 - - - - - 2,520,000 - 2,520,000
Share issues - cash received net
Share issues - warrants exercised 251,250 651,666 - (69,599) - - - 833,317 - 833,317
Warrants issued - - - 923,340 - - - 923,340 - 923,340
Total transactions with owners 670,341 2,752,575 - 853,741 - - - 4,276,657 - 4,276,657
Balance at 31 May 2022 2,949,679 11,047,218 400,000 1,013,815 1,700,505 71,693 (6,958,510) 10,224,400 1,323,282 11,547,682
Loss for the period - - - - - - (1,632,379) (1,632,379) (154,568) (1,786,947)
Other comprehensive income
Translation differences - - - - - 228,990 - 228,990 90,634 319,624
Total comprehensive income for the period - - - - - 228,990 (1,632,379) (1,403,389) (63,934) (1,467,323)
Transactions with owners 1,630,567 7,083,333 - - - - - 8,713,900 - 8,713,900
Share issues - cash received net
Share issues - warrants exercised - - - - - - - - - -
Shares to be issued - - - - - - - - - -
Warrants issued - - - 1,045,769 - - - 1,045,769 - 1,045,769
Options exercised - - - - (1,700,505) - - (1,700,505) - (1,700,505)
Minority interest share of intangible asset acquisitions - - - - - - - - - -
Total transactions with owners 1,630,567 7,083,333 - 1,045,769 (1,700,505) - - 8,059,164 - 8,059,164
Balance at 30 Nov 2022 4,580,246 18,130,551 400,000 2,059,584 - 300,683 (8,590,889) 16,880,175 1,259,348 18,139,523
Condensed Consolidated Statements of Cash Flows
For the six months ended 30 November 2022
Notes Unaudited Six Months Unaudited Six Months Audited Year
ended ended ended
30 November 2022 30 November 2021 31 May 2022
£ £ £
Operating activities
Loss after tax (1,786,947) (636,398) (2,944,656)
Adjustment for:
Depreciation 104,825 11,200 77,922
Share based transactions (108,480) (69,600) 853,741
Revaluation of intangible asset - - -
Impairment of listed investment 15,786
Changes in working capital
(Increase)/decrease in trade and other receivables (524,503) (451,650) 83,488
Increase in trade and other payables (193,584) 873,968 222,068
(Decrease) in Net cash from operating activities (2,508,689) (272,480) (1,691,651)
Investing activities
Purchase of exploration licences - - -
Spending on exploration licences (1,551,836) (372,143) (1,775,809)
Purchase of fixed assets (538,768) (221,846) (786,995)
Purchase of investment - - -
(Decrease) in Net cash from investing activities (2,090,604) (593,989) (2,562,804)
Financing activities
Ordinary Shares issued (net of issue costs) 5 4,717,196 3,290,415 3,422,916
Proceeds from convertible debt - - 831,750
Conversion of convertible debt 1,331,750 - -
Proceeds from investor loans 1,349,493 - 500,000
Net cash flows from financing activities 7,398,439 3,290,415 4,754,666
Increase/(decrease) in cash and short-term deposits 2,799,146 1,134,983 500,211
Cash and short-term deposits as at the start of period 610,546 22,143 22,143
Effect of foreign exchange changes (95,333) (26,823) 88,192
Cash at the end of the period 3,314,359 2,419,266 610,546
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 November 2022
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 2022 were approved for issue by the board on 23 February
2023.
The figures for the six months ended 30 November 2022 and 30 November 2021 are
unaudited and do not constitute full accounts. The comparative figures for the
period ended 31 May 2022 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 2022.
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:
o Mineral exploration is speculative and uncertain
o Verification of historical washability analysis
o Independent verification of internal resource estimation at Garalo-Ntiela
o 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
o The volume and quality of coal recovered may not conform to current
expectations
o The extend and grade of gold mineralisation at Garalo-Ntiela may not
conform to current expectations
· Permitting and title risks, including but not limited to:
o Licence and permits
o 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:
o Political stability
o Enforcement of foreign judgements
o 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:
o Foreign exchange effects
o Valuation of intangible assets
o 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
o 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
o 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:
o The price of coal may affect the economic viability of ultimate production
at Lubu
o The revenues and financial performance are dependent on the price of coal
o The price of gold may affect the economic viability of ultimate production
at Garalo-Ntiela
· Operational risks, including but not limited to:
o Availability of local facilities
o Adverse seasonal weather
o 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
o The Company's directors may have interests that conflict with its
interests
o 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-Ntiela 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 Audited Year Ended 31 May 2022
after charging: Unaudited Six Months Ended 30 November 2022 Unaudited Six Months Ended 30 November 2021
£ £ £
Directors' remuneration 43,500 50,400 95,900
Ongoing listing costs 117,585 151,177 302,419
Finance costs 513,000 -
Share-based finance costs 457,356 - 160,000
Salaries 421,697 217,184 536,842
Consultancy fees 500 - 182,829
Legal and accountancy fees 33,775 4,869 19,317
Travel 301,549 174,673 364,444
Office costs 147,620 66,742 170,817
Share performance options (1,486,605) - -
Net warrant issue costs 1,045,769 (69,600) 853,741
Impairment of listed investment - - 15,786
Depreciation 104,825 11,200 77,922
Other 86,376 29,753 -
Group audit fee - - 35,000
Fee payable to the Company's auditor in respect of all other non-audit
services
- -
Fees paid to auditors for non-audit work services - - -
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
2022 2021 31 May
2022
£ £ £
Earnings
Loss from continuing operations for the period attributable to the equity (1,632,379) (591,350) (2,805,563)
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)
296,565,032 222,711,321 280,455,370
Basic and diluted loss per Ordinary Share (pence) (0.55) (0.27) (1.00)
There are no potentially dilutive Ordinary Shares in issue.
5. Intangible Asset
Unaudited As at Unaudited As at Audited As at
30 November 30 November 31 May
2022 2021 2022
£ £ £
At start of period 11,936,206 10,118,098 10,118,098
Additions - during year 1,392,836 397,843 1,775,809
Foreign exchange movements 87,172 - 42,299
Amortisation - - -
Total 13,416,214 10,515,941 11,936,206
Mining rights Zimbabwe 11,314,113 8,495,807 9,849,069
Mining rights Mali (Garalo) 1,272,650 1,273,617 1,260,686
Mining rights Mali (Ntiela) 829,451 746,517 826,451
13,416,214 10,515,941 11,936,206
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 Ntiela
gold licence (adjacent to Garalo) in Mali. The Ntiela licence was acquired for
approximately £750,000 - being €400,000 (£346,517) in cash and 4,000,000
ordinary shares at £0.10 to be issued during 2023.
The Ntiela gold licence is still under the name
of Samagold Resources SARL (a subsidiary of the vendor - African Mineral
Exploration Resources Mali SARL) whilst the formal transfer is processed by
the Mali Ministry of Mining. The cash element paid (£346,517) together with
the £400,000 of shares to be issued are currently held on the parent company
balance sheet until the transfer is completed.
6. Other receivables
Unaudited As at Unaudited As at Audited As at
30 November 30 November 31 May
2022 2021 2022
£ £ £
Prepayments 17,970 16,332 17,895
Other debtors 558,743 571,016 34,316
576,713 587,348 52,211
7. Trade and other payables
Unaudited As at Unaudited As at Audited As at
30 November 30 November 31 May
2022 2021 2022
£ £ £
Trade payables 245,481 221,919 175,316
Accruals and other payables 64,667 101,963 328,416
Convertible debt - 831,750 831,750
Investor loans - - 500,000
310,148 1,155,632 1,835,482
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 instruments were duly converted and the new shares admitted for trading on
12 July 2022. The term of the attaching one warrant for every two ordinary
shares, with an exercise price of 8p, remained unchanged.
8 Share capital
Number of Ordinary Shares issued and fully paid Share Capital Share Premium Total Share Capital
£ £ £
As at 01 June 2022 309,667,356 2,949,679 11,047,218 13,996,897
Loan conversion 16,666,667 166,667 833,333 1,000,000
Placement November 2022 125,000,000 1,250,000 6,250,000 7,500,000
Performance shares 21,390,000 213,900 - 213,900
As at 30 November 2022 472,724,023 4,580,246 18,130,551 22,710,797
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 £5,000,000 ordinary shares at £0.01 per
share resulting in 500,000,000 ordinary shares.
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