Business
New Offtake Arrangement and Operational Update
New Offtake Arrangement and Operational Update.
About this update from Contango Holdings Plc
[{"type":"text","content":"\n\nContango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural Resources\n10 July 2023\nContango Holdings PLC\n(\"Contango\" or the \"Company\")\n \nNew Offtake Arrangement and Operational Update\n \nContango Holdings Plc, the London listed natural resource development company, is pleased to announce it has entered into a new offtake arrangement with TransOre International FZE (\"TransOre\") for the sale of up to 20,000 tonnes per month of washed coking coal (the \"TransOre Contract\") from its flagship Lubu Project in Zimbabwe, known as the Muchesu Project (\"Muchesu\") in country and will be referenced as such going forward.\n \nThe TransOre Contract has been calculated with reference to the existing washing capacity at Muchesu, however, in the event Contango is able to increase washing capacity further, TransOre has indicated its willingness to expand the size of the contract. The TransOre Contract is expected to replace the non-exclusive contract with AtoZ Investments (Pty) Ltd previously reported by Contango on 14 June 2022, and is intended to complement the expected offtake arrangements being finalised with the global multi-national company (\"MNC\"), which is expected to complete its due diligence shortly. The TransOre Contract is priced at the prevailing Minerals Marketing Corporation of Zimbabwe (\"MMCZ\") coking coal price, currently at US$120/tonne.\n \nTransOre will take the coal currently being produced from the upper seams at Muchesu at mine gate at the MMCZ price and handle all logistics and transport costs, through its affiliate African Rail International FZE (\"African Rail Company\"), which has rail access, locomotives and port access for export already in place. TransOre currently holds an allocation for exporting coal through the Dry Bulk Terminal at the Maputo Port, Mozambique. TransOre has also expressed its interest in taking any additional coal that becomes available, either in the event of mine expansion or if the expected contract with the MNC does not materialise.\n \nOnce steady state production is achieved in Q3 2023 the Company expects its operating costs to be approximately US$45 per tonne of washed coal, although the Company continues to explore additional options to reduce these operating costs further, whilst larger volumes are also expected to bring economies of s...