REG - Contango HoldingsPLC - Investor Loans Update

Contango HoldingsAnnouncement

03/12/2024 14:00

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RNS Number : 6475O  Contango Holdings PLC  03 December 2024

Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural Resources

 

3 December 2024

 

Contango Holdings PLC

("Contango" or the "Company")

 

Investor Loans Update

 

Contango Holdings Plc, a company focused on unlocking value from the +2
billion tonne Muchesu coal project in Zimbabwe ("Muchesu"), reported in its
recent audited financial statements for the year ended 31 May 2024 ("FY 2024")
that investor loans amounting to £4,184,740 ("Investor Loans") were due for
repayment by 30 November 2024.

 

The Company is pleased to advise the providers of the Investor Loans, many of
whom are also long-standing shareholders of the Company, have reiterated their
ongoing support of the Company and its intention to repay these debts from
both the proceeds of the subscription with the new strategic investor, Huo
Investments (Pvt) Limited (the "Investor"), (pending publication of the
prospectus to be approved by the FCA) ("Subscription") and forthcoming royalty
income, which consists of both minimum payments and further payments linked to
the production of coal at Muchesu.

 

The providers of the Investor Loans have not entered into formal agreements to
defer loan repayments and may still exercise their right to be repaid
immediately on demand, however the Company does not believe this to be a
likely scenario, with repayment instead taking place once the Company has
improved its working capital position.

 

The Company's working capital position will be improved in the near future
from the receipt of the balance of US$1m from the Subscription and an
additional US$1m from the minimum royalty payment by the end of this month.
 Also, the Company expects to receive a further minimum royalty payment of
US$1m around the end of Q1 2025. These funds amounting to a total of $3m
(£2.4m) will principally be used to repay Investor Loans.

 

In addition, the Board expects to receive additional regular royalty income
following the commencement of coal production at Muchesu with operations on
site now active and the new plant now in the process of being ramped up. The
Dense Media Plant ("DMS") has a processing capability of 3,000 tonnes per day
of coking coal, with a royalty of US$8/t owed to Contango on processed coking
coal.  The Company has also recently been advised by the strategic investor
that an additional DMS Plant has been ordered and is due for delivery in Q1
2025.

 

The Company has agreed with the holders of the Investor Loans that any
additional income will initially be applied to the repayment of 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.

 

The Company notes that the working capital position of the Company is reliant
on the receipt of the subscription funds and royalty income.  If the Company
failed to realise revenue from the receipt of royalty income it would be
required to raise further capital or reach a settlement with the holders of
the Investor Loans.  Following the closing of the Subscription, the Investor
will be largest shareholder of the Company and aligned with existing
shareholders of the Company.

 

 

**ENDS**

 

 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

 

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