TIDMCGO
RNS Number : 2986Q
Contango Holdings PLC
18 June 2020
Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural
Resources
18 June 2020
Contango Holdings Plc
('Contango' or the 'Company')
Admission To Trading & First Day of Dealings
Further to the announcement of 17 June 2020, the board of
Contango Holdings Plc ('Contango' or the 'Company') is pleased to
announce the admission of its entire share capital, being
203,133,278 ordinary shares of GBP0.01 each ("Ordinary Shares") to
the Official List (by way of a Standard Listing under Chapter 14 of
the Listing Rules) and to trading on the London Stock Exchange's
Main Market for listed securities (the "Admission"). The Company's
Admission follows the completion of the acquisition by way of a
reverse takeover of Consolidated Growth Holdings' interest in the
Lubu Coalfield Project in Zimbabwe.
Dealings will commence at 8.00 a.m. today under the TIDM "CGO"
with ISIN number GB00BF0F5X78.
Overview
-- Admission to the Official List following the acquisition, by
way of a reverse takeover, of a 70% interest in the Lubu Coalfield
Project ("Lubu" or the "Project"):
o Lubu is a derisked development with total historical spend in
excess $20 million and over 100 holes and 12,000m of drilling
completed and Total resource in excess of 1 billion tonnes of
coal
o Contango has acquired the asset for an implied value of
GBP6.4M
o In June 2019, Contango begun advancing funds to commence a new
work programme including a 9 hole drill campaign designed to enable
full washability test work, detmination of product range, SG and
grade to determine product types for the purposes of offtake
discussions. In total, over $750,000 spent on the project in the
recent 12 months
o Focus initially on small area of B2 Block in Lubu with deposit
starting at surface down to a maximum depth of 47m
o Targeting production and sale of semi-soft coking coal for
export to Southern African countries and additional potential for
sales of thermal coal to domestic power companies
o Targeting an initial 1Mtpa of coal product sales - in
discussions with a number of offtake groups
o Site preparation and box cut for mining to commence
immediately and first production and sales anticipated before end
of 2020
-- Raised GBP1.4m with new and existing investors and now fully funded to first cash flow
-- Appointment of Carl Esprey (Executive Director) and Roy
Pitchford (Non-Executive Chairman) to the Board providing proven
natural resources operational expertise and specialist natural
resources financing experience
-- Board fully aligned with shareholders given its material
equity holding and remuneration of less than GBP96,000 per annum
for the entire board combined
-- Immediate focus on early cashflows from Lubu to underpin the
Company's financial position and support a dividend policy
Carl Esprey, Executive Director of Contango Holdings, said: "I
am delighted to have successfully brought this asset to market and
I am confident that the work conducted on Lubu in recent years will
translate to material value for shareholders in the near
future.
"The remaining months of 2020 are set to be punctuated with high
impact news flow as we look to deliver first production and
revenues from Lubu by the end of Q4. Our strategy is centred on
providing early cashflows from this, our first asset, and then
expanding our production schedules to realise the full value of
this +1 billion tonne coal project. I believe this is a message
which will resonate with investors as we look to underpin the
Company's financial performance with the objective of supporting a
dividend policy.
"I look forward to providing further updates in the coming weeks
and months as we begin our initial activities readying the site for
production, specifically the refurbishment and development of
supporting facilities, ground clearance and removal of overburden
of the 20-acre area that comprises the initial mining zone within
Block B2 of Lubu."
Oliver Stansfield, Non-Executive Director of Contango Holdings,
said: "On behalf of the shareholders of Contango I am delighted to
welcome Carl and Roy to the Board. The acquisition of Lubu has
taken longer than expected but I am confident that this transaction
and our entry into Zimbabwe will prove worth the wait. Accessing an
asset of this size, quality and stage of development is highly
advantageous and Lubu certainly meets all of the investment
criteria that we set out with when originally identifying suitable
targets. It is with considerable optimism that I look forward to
the rest of 2020 and beyond.
"I would also like to thank Brian and Neal for their service to
Contango during their tenure on the board and for helping to
deliver this milestone transaction."
Further Information
Background to the Acquisition
On 22 December 2017, the Company announced that it had signed a
memorandum of understanding to acquire Monaf Investments (Private)
Limited's ("Monaf") interest in a mining asset in Zimbabwe (namely,
the Lubu Coalfield), the "Acquisition".
The Acquisition constituted a Reverse Takeover under the Listing
Rules and trading in the Existing Ordinary Shares was suspended
with effect from 22 December 2017 pending the publication of a
prospectus.
The consideration for the Acquisition was GBP6,834,829.05, to be
satisfied by the Company issuing 128,849,961 Ordinary Shares in the
capital of the Company to Consolidated Growth Holdings Limited
("CGH"), being the parent company of Monaf, at an equivalent price
of 5 pence per share and an additional cash investment of
GBP392,331 ($487,500) from existing cash resources that was
advanced by the Company in instalments since June 2019 to fund the
development of the Project.
Development Strategy for Lubu
Contango will undertake a phased development of the Lubu
Coalfield by initially embarking in a period of small scale mining
from the open pit of predominantly coking coal. This phased
development seeks to expedite initial production, whilst also
enabling the Company to look at further expansion scenarios given
the scale of the resource. The Company, alongside CGH, commenced a
comprehensive work programme in June 2019 designed to provide
specific potential customers of their coking coals with further
information on the coal specifications through coking and caking
tests. It is envisaged that as a result of this work, Contango
should be in a position to enter into its first offtake arrangement
in the near term.
Site preparation for Open Pit Production
The Company will undertake a programme of work to make the site
suitable for mining and re-establish a work camp at the Lubu
Coalfield. This will require a refurbishment of the existing
facilities.
Simultaneous with the refurbishment, the Company will carry out
ground clearance of vegetation and overburden of the 20-acre area
that comprises the initial focus of the Company being a mining zone
within Block B2 of Lubu. Based upon their collective experience,
the Directors and Proposed Directors estimate that the ground
clearance work will take 2 months from Readmission to complete at a
total cost of GBP250,000 to be spent on excavation machinery,
labour and fuel necessary to complete the ground clearance and
prepare the box cut for open pit mining at Block B2.
Once the site preparation is complete and upon entering int an
offtake contract, the Company will commence production and sales of
predominantly coking coal from the open pit in the Southern Africa
region to industrial customers. The Company may in the future sell
thermal coal to the domestic power stations subject to burns tests
to be performed by power generation companies when the Company can
provide sufficient sized samples from the open pit.
Board & Management
Following Admission, the Board composition has changed with the
appointment of Carl Esprey and Executive Director and Roy Pitchford
and Non-Executive Chairman. As previously announced, Brian McMaster
and Neal Griffiths have retired.
Carl, who qualified as a Chartered Accountant and Chartered
Financial Analyst, has built a career in the natural resource
investment and development sector. After beginning his career at
Deloitte in Johannesburg in 2001, Carl joined BHP Billiton in 2004
as an analyst focussed on mergers and acquisitions. After four
years at BHP Billiton, Carl used his expertise in the resources
industry to move into equity investment and joined GLG Partners in
London in 2008, where he focussed on natural resources investments.
In 2014 Carl joined the board of Atlas Development & Support
Services Limited and guided the company through its dual listing on
the Growth Enterprise Market Segment of the Nairobi Securities
Exchange, whilst also managing operations across Kenya, Ethiopia
and Tanzania. Carl has separately founded Elatio Tech Limited, a
southern-African revenue generating gaming business and Waraba Gold
Limited, a west-African gold exploration company.
Roy is a Zimbabwean national and qualified as a Chartered
Accountant in Zimbabwe. He has a long history in the country's
mining sector and was the President of the Chamber of Mines in
Zimbabwe. He was the chief executive officer at Cluff Resources,
where he led the redevelopment of Freda Rebecca mine, the largest
gold mine in the country, as well as several smaller mines in the
portfolio. Also, he was chief executive officer at Zimplats, where
he oversaw the development of the Ngezi Opencast Platinum Mine into
production, the re-commission of the Selous Metallurgical Complex
in 2002 and created a company with a platinum-group metals resource
base in excess of 300 million ounces. More recently, he was chief
executive officer at Vast Resources until December 2017, a company
that has mines in both Romania and Zimbabwe.
The directors provide Contango with a combination of proven
natural resources operational and in country expertise and
specialist natural resources financing experience. The Company will
also continue to utilise its experience in the future in assessing
additional and value accretive transactions.
The Company also has a highly experienced in-country management
team to drive development at Lubu. Richard Rice (Technical Manager)
is a geology graduate of the University of the Witwatersrand and
has 40 years of professional experience leading multi-disciplinary
teams in finding orebodies and establishing mines in developing
countries around the world, particularly in Zimbabwe and Africa.
Richard is registered with the SACNASP council as a professional
geologist and first became involved in the Lubu Project in 2010 and
is currently responsible for overseeing the ongoing exploration
programme. Richard has headed up the technical departments for two
AIM listed mining companies and was a Senior VP for Sun Mining, a
private equity mining company with assets in Russia, Kazakhstan,
Canada and South Africa. Richard has also managed successful
exploration programmes all over the world, and specialises in the
application of computer modelling in the evaluation of mining
opportunities
Jacques Cormack (Country Manager) is based in Zimbabwe and is
the Country Manager for the Lubu Coal Project. Having spent a
significant amount of time in Zimbabwe, Jacques has been
responsible for dealing with a wide variety of operational
activities and logistics. He has also developed good relationships
with the authorities, including at the Ministerial level, and is
fluent in Shona.
For further information, please visit
www.contango-holdings-plc.co.uk or contact:
Contango Holdings plc E: info@contango-holdings-plc.co.uk
Chief Executive Officer
Carl Esprey
Brandon Hill Capital Limited T: +44 (0)20 3463 5000
Financial Adviser & Broker
Jonathan Evans
St Brides Partners Ltd T: +44 (0)20 7236 1177
Financial PR & Investor Relations
Susie Geliher / Cosima Akerman
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END
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