Contango Holdings PLC Statement re Share Price Movement (3254R)
October 26 2023 - 2:00AM
UK Regulatory
TIDMCGO
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 GBP1 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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END
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