By ETimes
Contango Holdings, the London listed natural resource company, announced its audited results for the year ended 31 May 2022.
The company said it is now fast approaching the landmark transition into becoming a cash generative mining company, and importantly, is fully funded to deliver its first two profit centres from coking coal and thermal coal.
Its operation at Lubu is nearing its final stages of maiden coking coal production and sales, with first sales now expected to occur in Q1 2023.
However, the firm’s shares fell after the company said it now expects first sales from its Lubu coal project in Zimbabwe to take place in the first quarter of 2023, rather than by the end of 2022.
The miner’s shares were down 0.65 pence, or 10%, at 5.75 pence.
The London-listed natural resources company said Lubu is nearing the final stages of maiden coking coal production and sales, and while it had expected to reach the milestone first sales by the end of the year, delays in import clearance for certain key capital items had slightly extended the timetable.
The company said it continues to make good progress at the site in expectation of delivery of the wash plant and surface miner, and that it is fully capitalized and well-funded.
“Given the demand for Contango’s products the company will now also set about expanding the planned footprint of the pit to enable increased production capacity. This positive development is to be funded out of existing cash resources following our 7.5 million-pound [US$9 million] capital raise earlier this quarter,” Chief Executive Carl Esprey said.
The chief executive said that looking at Phase 2, they remain focussed on being able to capture the full value for their product by manufacturing coke for use in the steel and ferro-alloy industries.
Coke is an upgraded product derived from coking coal and commands a significant price premium to coking coal. The Contango management team are still engaging in active discussions with a number of potential off-takers for our proposed coke product, including the existing coking coal off-take partner, AtoZ, in addition to existing coke producers in Zimbabwe and international commodity trading houses.
“Guided by the conversations that we have had with potential offtake partners, we anticipate that any future offtake agreement for coke is likely to be accompanied by the requisite funding to finance the associated infrastructure, principally the installation of coke batteries.
“With this in mind, and whilst also recognising that Contango expects to be cash generative by the end of the calendar year through our coking coal sales to AtoZ, we believe that we are in a strong position to advance these discussions during Q4,” Esprey said.
The company also retains the option of funding the coke batteries through project level debt, or self-funding from internal cash flow – Harare
