REG - Contango HoldingsPLC - Production Commences: Lubu Coking Coal Project

Contango HoldingsAnnouncement

30/03/2022 07:00

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RNS Number : 4469G  Contango Holdings PLC  30 March 2022

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

 

30 March 2022

Contango Holdings Plc

('Contango' or the 'Company')

 

Production Commences at the Lubu Coking Coal Project

 

Contango Holdings Plc, the London listed natural resource development company
developing the Lubu Coking Coal Project in Zimbabwe ('Lubu') and the
Garalo-Ntiela Gold Project in Mali ('Garalo-Ntiela'), is pleased to confirm
that production commenced at the Lubu site on 29 March 2022.

 

Production is underway on Block 2, which was selected given the high-quality
coking coal found at that location and its proximity to surface. Studies have
defined an estimated 96Mt of coking coal within Block 2, which forms part of
the broader Lubu complex, where an estimated 1.25 billion tonne Indicated and
Inferred resource has been identified to NI 43-101 levels.

 

The Company is targeting an initial stabilised mining rate of 5,000 tonnes per
month. As previously reported, Contango will stockpile production during Q2
2022 pending the installation of the wash plant in the same period, thereby
providing sufficient feedstock to ensure continuity of supply. Work continues
to prepare the site for the installation of the crushing unit, wash plant and
associated infrastructure. Following the installation of the wash plant the
Company expects to sell washed coking coal to regional buyers as well as
exporting to South Africa, where the Company has held recent discussions with
interested parties.

 

Later in 2022 Contango expects to be able to capture the full value for its
product by subsequently manufacturing coke at site for use in the steel and
ferro-alloy industries. An initial smaller scale coke battery of 36,000 tonnes
per annum has been sourced and a larger coke battery of 150,000 tonnes per
annum is expected to be installed towards year end. Whilst sales prices are
subject to offtake and future global pricing, the Company is confident that
margins in excess of US$300/tonne should be achievable based on ongoing
discussions with potential off-takers.

 

Carl Esprey, CEO of Contango, commented:

 

"Bringing our first asset into production is a milestone event for Contango. I
would like to thank our in-country team for their efforts in helping us
accomplish this important achievement. The resource at Lubu is significant and
we are now finally in a position to start to receive the economic benefits.
Coking coal and coke have suffered from significant under-investment and mine
closures in recent years and this, coupled with global infrastructure projects
and transition towards green energy, have led to a significant uptick in the
commodity prices of both coking call and coke. Accordingly, Lubu has come into
production at a time of substantial demand for our products and limited
supply.

 

"I have spent much of the second half of this month in South Africa and
Zimbabwe and been able to meet potential off-takers. The demand is clear and
with production start-up risk now drastically reduced I would anticipate being
in a position to enter offtake contracts in the near term. As previously
reported, we believe there is a good possibility any offtake contracts entered
into for coking coal or coke would come with some form of funding, to be
utilised in the roll out of the Lubu development."

 

**ENDS**

 

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

 

 

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