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Senior Business Writer

CONTANGO Holdings, which owns the Lubu Coal Project in Binga District, says it is fully focused on the successful ramp-up of production alongside the development of additional offtake negotiations, as it did not receive regular orders from TransOre under the offtake arrangement as envisaged.

TransOre is a United Arab Emirates (UAE) registered entity, managing a portfolio of global commodity supply chains and has pledged to play a central role in the Binga coal project for the benefit of Zimbabwe.

The TransOre contract was expected to replace the non-exclusive contract with AtoZ Investments (Pty) Ltd and is intended to complement the expected offtake arrangements being finalised with the global multi-national company, which is expected to complete its due diligence shortly.

The first offtake signed with AtoZ Investments (Pty) Ltd, was to purchase 10 000 tonnes per month of washed coking coal.

The firm now seeks to expand its network and deliver additional long-term offtakes.

The Muchesu deposit contains significant quantities of coking and thermal coal and has a huge resource base totalling over one billion tonnes.

In a statement accompanying unaudited interim results for the six months to November 30, 2023, chief executive officer, Mr Carl Esprey, said in June 2023 the firm entered into an agreement with TransOre, whereby TransOre agreed to acquire up to 20 000 tonnes of washed coal per month from Muchesu.

Unfortunately, he said, the company did not receive regular orders from TransOre under the offtake arrangement as envisaged.

“Accordingly, towards the end of the period and beyond, the Company has looked to expand its network and deliver additional long-term offtakes.”

Despite the setback, he noted that they are fully focused on the successful ramp-up of production alongside the development of additional offtake negotiations.

He said while undertaking the bulk sample for the multi-national company (MNC) the firm also extracted and washed additional tonnes above the 1 000-tonne bulk sample, some tonnes have already been supplied to additional potential customers following requests for products for their due diligence purposes, as part of the Company’s broader marketing.

“There remains a stockpile at the site, which can now be used in further offtake discussions. Lack of deliverable washed product to supply for testing had previously hindered the Company’s efforts to broaden its customer base.”

Mr Esprey said offtake discussions are also underway for industrial coal.

“Industrial coal seams sit both above and below the coking coal seam and accordingly while the sales price is likely to be lower than the coking coal price, the extraction cost would be considerably lower given Muchesu’s existing coking coal operations.

“Depending on the usage of the industrial coal, which would also be collected at the mine gate, there is the potential that washing would not be required, thereby increasing production capacity and decreasing operating costs, without requiring additional capital investment.”

Chairman, Mr Roy Pitchford stressed that the primary focus remains on securing suitable long-term offtake partners for coking coal and, potentially, industrial coal.

He said as they await a final decision from MNC, they will continue to market the product to additional potential customers, having mined and washed significant quantities of additional coking coal for future samples and testing.

“The longer-term aim of the Company is for Muchesu to become an integrated coke operation and capitalise on the additional margins from the sale of coke product in comparison to washed coking coal. Also, the sale of coke products would access the global markets.”

 During the six-month period to November 31, 2023, the company spent £912 354 on the exploration and fixed assets, which relate to the development of the site and operations at Muchesu.

About £1 305 000 was raised during the period from existing stakeholders through unsecured and non-convertible bridging loans. The funds raised, supported capital expenditure and working capital due to the delay of sales under existing offtake arrangements.

In terms of revenue, the company reported revenue of £2 730 from a bulk sample.