Chinese company Pacific Goal Investments (PGI) has secured 51% ownership of Monaf Investments (Monaf), which wholly owns Muchesu Coal Mine (Muchesu) in western Zimbabwe.
Contango Holdings (LON: CGO), which held 75% of Monaf, announced in a release on January 28 that following the completion of registration with the Reserve Bank of Zimbabwe for the transfer of the stake, PGI has become the operator of the project, which has the potential to produce 2bn tonnes of coal.
With PGI now owning 51% of Monaf, Contango’s interest has dropped to 24%. Lilyone Investments still owns 6.5%, and local minority shareholders hold 18.5% of Monaf.
PGI is part of the Pacific Goal Group, a Hong Kong-based industrial group with extensive mining and energy operations in Zimbabwe, including a major mine-to-energy industrial park, incorporating two power stations, a graphite processing plant and a nickel smelter.
Contango has a life-of-mine mineral royalty agreement with Monaf that entails payment of $2 per tonne on thermal coal, $4 per tonne on industrial coal and $8 per tonne on coking coal production. A provision within the agreement also ensures a minimum payment of $2mn yearly to Contango.
Daniel Dos Santos, CEO of Contango, commented:
'I am pleased to confirm the registration of PGI as a 51% shareholder in Monaf and operator of the project. In addition, we have also received $1mn as settlement of the outstanding liability from PGI as part of the variation of terms.'
Muchesu covers 19,236 hectares of the highly prospective Karroo Mid Zambezi coal basin, located in the established Hwange mining district west of the southern African nation.
Previous owners of the asset have spent more than $20mn on the mine, which has enabled a sizeable resource in excess of 2bn tonnes to be identified under NI 43-101 standard. Contango has spent an additional $10mn on mine construction and development to bring Muchesu into production.
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