Natural resource development company Contango Holdings has signed a new offtake agreement with global commodity marketing firm TransOre International FZE for the sale of coal from the Lubu project in Binga.
Under the terms of the deal, Contango will supply TransOre with 20 000 tons of washed coal per month at US$120 per ton, in line with the current processing capacity at the project.
Offtake has the potential to be further expanded as the mine’s production capacity increases.
Carl Esprey, the chief executive of Contango, said the contract with TransOre doubles the firm’s existing offtake agreements and replaces an existing non-exclusive offtake deal with AtoZ Investments.
TransOre will be responsible for the logistics and transport costs of the coal through its affiliate African Rail Company as well as the export licence at the Dry Bulk Terminal at the Maputo Port in Mozambique.
Mr. Esprey added that TransOre’s strength in logistics operations is best aligned with the company’s objectives of expanding the production and supply of coal from the project to the global market.
“We expect to deliver further samples of our washed coal later this month as part of the final stages of due diligence on the coke qualities of our product,” said Mr. Esprey
Adding that, “We very much view this as the start of a long-term working relationship as well unlock the value of the coal project in a collaborative fashion. We are also excited to play a central role in a project that promises to bring such great benefit to the country of Zimbabwe and its people.”
The company has also completed the installation of a weighbridge at the mine, enabling trucks to collect coal from the mine and meet the necessary standards for sale and transportation in the country and beyond.
The weighbridge also helps to confirm the tonnages and subsequent sales totals of Contango’s coal.
Since officially opening the mine on August 1, Contango has built a sizeable stockpile from ongoing production.
The company owns 70 percent of the mine, while the balance is owned by Zimbabwean stakeholders. The coal project has a sizeable resource of more than 1,3-billion tonnes.
Meanwhile, Contango expects to announce first sales and revenues this month from minerals trader TransOre International of washed coking coal – Harare