Modern Mining July 2020

COKING COAL

Contango finds quick route to production Following the 70% acquisition of the Lubu Coalfield Project in the Binga area of Zimbabwe, said to be one of the big- gest deposits of its nature in southern Africa with a total resource of 2-billion tonnes of coal, LSE-listed Contango Holdings will initially prioritise mining a small area dubbed the B2 Block. With the deposit starting at surface up to a depth of 47 m, B2 Block offers a quick and cost-effective route to production, allowing the company to produce 1-million tonnes a year over the next 10 years. CEO Carl Esprey tells Munesu Shoko that Contango anticipates first production and sales before the end of 2020, depending on the conclusion of offtake agreements.

F ollowing the completion of the acquisition by way of a reverse takeover of Consolidated Growth Holdings’ interest in the Lubu Coalfield Project in Binga, Zimbabwe, some 220 km from the famed Hwange Colliery Project, Contango Holdings Plc expects to start production during the second half of this year. The acquisition gives Contango – which started trading on the London Stock Exchange on 18 June 2020 following the conclusion of the deal – a 70% stake in the Lubu Project. Contango acquired the stake for an implied value of £6,4-million, through the issue of shares in Contango at 5p. In

addition, Contango has acquired receivables of US$6,7‑million, previously held by the vendor, which is expected to enable greater economic returns from initial production than its equity interest in the proj- ect. The remaining 30% in the project is held by local partners. CEO Carl Esprey tells Modern Mining that it has taken the company almost two years to complete the transaction. One of the reasons for the delay was that when Contango first looked at the project, the seller only had an exploration licence. “We advised them to get a mining licence first before we could acquire the project, which took about nine months

Lubu is a derisked development with total historical spend in excess of US$20-million and over 100 holes and 12 000 m of drilling completed.

12  MODERN MINING  July 2020