Contango Holdings, the London listed miner announced that it has entered into a non-binding Memorandum of Understanding (MOU) with a leading Multi-National Company (MNC) with respect to its Lubu Coal Project.
The Lubu Coal Project, is known as Muchesu Coal Project locally in Zimbabwe.
The MOU outlines a framework for collaboration across not only coking coal, but also in the manufacture of coke and follows several site visits and a preliminary analysis of a 50kg sample of Muchesu washed coking-coal.
Contango Chief Executive, Carl Esprey said, “The signing of this MOU is hugely material for Contango. The MNC is active in Zimbabwe and is a world leader in its field. I believe their interest in the Muchesu Coal Project is testament to its highly attractive characteristics, both in terms of scale and coal quality.”
The intention is to undertake a stage-gated due diligence exercise which will look at all aspects that would underpin either a coking-coal offtake agreement, or the possibility of establishing a coking plant adjacent to the Muchesu Mine.
“The due diligence process is underway, and one of the first steps has been to deliver a 1t coking-coal sample to the MNC for further testing. The ongoing discussions are focussed on the viability of a long-term offtake and the potential of a joint venture partnership in establishing coke batteries and developing an underground mine,” Esprey added.
Based on current timelines, the Company would aim to conclude the first phase (concept /pre-feasibility) of the due diligence exercise in First Quarter 2023 after which a decision will be made if, and how best, to proceed to the subsequent phases.
Esprey said, “Given that Muchesu has a 2 billion tonne plus resource there is plenty of scope for multiple offtakes across our whole suite of coal products – the MOU does not focus on thermal coal for instance.”
The chief executive said he looks forward to updating the market on further progress – Harare