Contango Holdings PLC Coal Product Offtake -- Letter of Intent Signed (1144W)
August 14 2020 - 2:00AM
UK Regulatory
TIDMCGO
RNS Number : 1144W
Contango Holdings PLC
14 August 2020
Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural
Resources
14 August 2020
Contango Holdings Plc
('Contango' or the 'Company')
Coal Product Offtake - Letter of Intent Signed
Contango Holdings Plc, the London listed natural resource
development company, is pleased to announce that it has signed a
Letter of Intent ('LOI') with South Mining (Pvt) Limited ('South
Mining') relating to an offtake agreement for coal products
produced at the Company's Lubu Coalfield Project in Zimbabwe
('Lubu').
Overview
-- The LOI establishes the framework for formal offtake
documentation to be advanced between Monaf Investments (Private)
Limited ('Monaf'), Contango's subsidiary company, and South Mining,
a Zimbabwean coke producer
-- South Mining is a prominent coke producer in Zimbabwe and is
committed to producing 420,000 tonnes of coke from its new battery
oven located in the Hwange district
-- Subject to contract and appropriate standard and quality coal
testing, South Mining has in principle agreed to purchase an
anticipated minimum of 30,000 metric tonnes of raw coal per month
from Monaf
-- Pricing of the offtake remains subject to contract,
negotiation and prevailing market conditions however on present
assumptions a sale price of between US$45 and US$55 per metric
tonne of raw coal, and between US$70 and US$80 per metric tonne of
washed coal, is anticipated
-- As previously outlined, upon entering a formal offtake
contract, Contango expects to enter into a contract mining
arrangement to minimize CAPEX - based on discussions the Company
envisages the proposed offtake with South Mining would provide
significant cashflow to Contango
-- The Company expects to enter into a formal offtake agreement
ahead of the anticipated commissioning of Lubu in Q4 2020
Carl Esprey, Executive Director of Contango Holdings, said:
"This LOI with South Mining is highly encouraging and an important
demonstration of the significant demand for high quality coking
coal in Southern Africa.
"This LOI has been entered into despite a period of lockdown in
Zimbabwe due to the COVID-19 pandemic and follows work undertaken
by Contango in 2019 and 2020 to clearly identify the
characteristics of Lubu coal. I am confident that we are well
positioned to finalise commercial negotiations with South Mining
and commence mine construction in earnest as travel and work
restrictions ease across the country over the coming weeks.
Moreover, the Company continues to receive additional interest in
its suite of coal products and we remain optimistic of further
offtakes in due course to further boost profitability."
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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