Contango Holdings, a company listed on the London Stock Exchange, has raised £940,000 to develop their Muchesu coal project in Zimbabwe.
Contango owns 70% of the project and has begun coking and thermal coal production. The company is securing offtake agreements (deals to buy the coal) and discussing potential partnerships for the mine.
In a press release on May 2, 2024, Contage clarified the ownership structure of the Muchesu project. The company holds the majority stake (70%) with local partners owning the remaining 30%.
The Muchesu Coal Mine covers 19,236 hectares of the highly prospective Karoo Mid Zambezi coal basin, located in the established Hwange mining district in northwestern Zimbabwe.
Contango has commenced small-scale production of coking and industrial coal, generating interest from potential buyers. They have already produced 120 tonnes and have two interested parties collecting samples this week. Discussions are ongoing with multiple potential customers, with total demand potentially reaching over 50,000 tonnes of coal per month. This initial production and strong interest are positive signs for the project’s future.
Negotiations with potential buyers suggest a combined demand exceeding 50,000 tonnes of coal every month. Contango acknowledges that not all discussions will be successful, but they are confident of securing several contracts in the coming months (by June 2024) with these interested parties.
Contango has recently extracted another 250 tonnes of thermal coal. This batch is going to a potential buyer who will perform a “burn test” to assess its quality. If the test goes well, Contage is optimistic about securing a large, long-term contract to sell this type of coal to the same buyer.
Alongside the progress on mining operations, the company is still in talks with several groups interested in either partnering with them (joint venture) or buying the entire mine.