REG - Contango HoldingsPLC - Statement re Share Price Movement

Contango HoldingsAnnouncement

26/10/2023 07:00

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RNS Number : 3254R  Contango Holdings PLC  26 October 2023

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

26 October 2023

Contango Holdings PLC

("Contango" or the "Company")

 

Statement re Share Price Movement

 

 

Contango Holdings Plc, the producing London listed natural resource
development company, notes the share price movement and provides the following
update regarding corporate activity and an operational update.

 

Potential Asset Sale

The Company has received a non-binding proposal for the potential acquisition
of its assets which may results in the sale of its assets at the subsidiary
level (the "Proposal"). The Proposal is at an early stage with a number of
commercial points under discussion, therefore, there is no guarantee that
these discussions will lead to a formal offer. The Company is now in
discussions with its advisers with regard to the Proposal and the Board will
seek to maximise value for all its stakeholders before pursuing the disposal
of its principal assets.  For the avoidance of doubt, the Company which has
made the Proposal is different to the Multi-National undertaking the coking
coal trial as noted below and with whom the Company is discussing a long-term
offtake arrangement.

 

Operational Update

Last quarter the Company confirmed construction at site was completed to
enable the production and washing of Muchesu coal. At the end of August, the
Company received export approvals from the Minerals Marketing Corporation of
Zimbabwe ("MMCZ") to enable the Company to deliver sales under its existing
offtake with TransOre International FZE ("TransOre").

 

TransOre Update

In Q3 2023 TransOre entered into an agreement to acquire up to 20,000 tonnes
("Offtake Agreement") of washed coal per month. Following an initial sale,
Contango has been waiting for TransOre to purchase additional coal under the
Offtake Agreement. The Company has been advised by TransOre that it is
finalising the appropriate agreements and logistics and hopes to be able to
recommence the purchase of Muchesu coal in the near term.

 

Multi-National Coking Coal Trial & Potential Offtake

The Company is pleased to report that it has entered into an agreement with a
leading steel producer (the "Multi-National") to supply 1,000 tonnes of washed
coking coal for a formal industrial trial during November.

 

Discussions with the Multi-National have been ongoing for the past twelve
months, during which time several site visits have taken place and a detailed
due diligence process has been undertaken on Muchesu's coal products.

 

The Multi-National has expressed a desire to enter into an offtake with the
Company for an initial 80,000 tonnes per annum of washed coking coal from the
Muchesu Project, equating to approximately 6,700 tonnes per month, although
there is clear potential to expand on this figure as Contango's production
capacity increases.

 

The Multi-National has agreed to purchase the washed coking coal for the
industrial trial at mine gate, and revenue in excess of US$100K will be paid
in advance. The Multi-National will be responsible for transporting the washed
coking coal in its own fleet of trucks to its facilities in South Africa where
the trial will take place.

 

Other Potential Offtakes

Additional advanced offtake discussions for both coking coal and industrial
coal are also underway with other parties.  If successful, it is envisaged
that the industrial coal will be purchased at mine gate without the need for
washing, therefore increasing production and sales capacity without requiring
additional capital investment.

 

Financial Update

The Company also notes that it has raised £1 million from existing
stakeholders through an unsecured and non-convertible bridging loan for
working capital purposes, pending further sales under the TransOre offtake
arrangement and a potential new offtake arrangement should the
Multi-National's coking coal trial prove successful.

 

Carl Esprey, CEO of Contango Holdings commented:

"Muchesu is fully commissioned and ready to expand operations and we are
primed to deliver washed coking coal to the market

 

"We have now entered into a trial supply with one of the largest steel
producers globally following their extensive due diligence on the products. As
a new coal producer, our coal products are subject to stringent tests and
quality control before end users will commit to large volumes, and the
Multi-National's interest in our coal is both highly encouraging and reaffirms
its quality.

 

"In addition, we have now received a credible approach with respect to our
assets. Whilst there is no guarantee a firm offer will be made, we expect this
process to move fast and will update shareholders on the details of the
proposals as appropriate.

 

"Finally, I would like to express my gratitude to our stakeholders for their
continued support during this ramp up phase."

 

 

 

**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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