REG - Contango HoldingsPLC - Receipt of First Royalty Payment

Contango HoldingsAnnouncement

02/01/2025 07:00

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RNS Number : 8864R  Contango Holdings PLC  02 January 2025

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

 

2 January 2025

 

Contango Holdings PLC

("Contango" or the "Company")

 

Receipt of First Royalty Payment

 

Contango Holdings Plc, a company focused on unlocking value from the +2
billion tonne Muchesu coal project in Zimbabwe ("Muchesu"), is pleased to
confirm it has now received its first royalty payment of US$200,000 and
expects to receive a further US$800,000 this month. Combined these will bring
total royalty receipts to US$1,000,000 as envisaged and previously reported
under the Mineral Royalty Agreement ("MRA") with Huo Investments (Pvt) Limited
(the "Investor").

 

Under the MRA the Company will be paid a minimum of US$2,000,000 per annum,
with additional amounts to be paid based on amount of coal production. A
further minimum US$1,000,000 royalty payment is expected around the end of Q1
2025. Thereafter additional royalty payments to the Company will be in line
with operational productivity at Muchesu. The initial focus of the Investor
remains on the production and sale of coking coal, which carries a royalty of
US$8/tonne to the Company. The now operational 3,000 tonne per day Dense Media
Separation Plant has been tested and calibrated accordingly.

 

As reported during 2024, the Company is entering into a series of agreements
with the Investor, including the MRA, a Revolving Facility Agreement of
US$20,000,000 ("RFA"), as well as entering into a change of ownership of Monaf
Investments (Private) Limited, the subsidiary that holds the Muchesu Project
(collectively the "Definitive Agreements"). The Company intends to sign the
final Definitive Agreements this month, although as previously noted the
Investor commenced material investment under the RFA during the second half of
2024 (see RNS of 31 October and 29 November 2024), and has also now commenced
payments under the MRA.

 

The Company also expects to issue a Short Form Prospectus ("SFP"), subject to
the approval of the FCA, this month, which will enable the Company to complete
the previously reported US$2,000,000 Subscription thus making the Investor the
largest shareholder of the Company, further aligning the Investor's interests
with the Company.

 

Carl Esprey, CEO Of Contango, commented:

 

"This milestone marks a significant step forward in unlocking the immense
value of the Muchesu coal project. The receipt of our first royalty payment
not only underscores the confidence our partners have in the project's
potential but also reinforces our commitment to delivering consistent value
for our shareholders. With the operational foundations now firmly in place, we
are excited about the continued progress and growth opportunities ahead."

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No. 596/2014, as it forms part of UK Domestic
Law by virtue of the European Union (Withdrawal) Act 2018. Upon the
publication of this announcement, this inside information is now considered to
be in the public domain.

 

 

**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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