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Covid-19 hits Contango

London Stock Exchange-listed resources firm, Contango Holdings says potential off-taker partners have delayed their scheduled site visits to its Lubu Coal mine in Matabeleland North due to stringent Covid-19 induced lockdown measures.

Governments across the globe have imposed lockdown measures to curb the spread of the devastating virus, which has ravaged world economies.

Contango, which controls 70% stake in the Lubu Coal project with the remainder held by local partners, has been in discussion with several potential off-take partners from across the world for coking coal produced at Lubu.

It has also been in discussion with Afrochine, a Zimbabwean subsidiary of China’s second biggest stainless steel manufacturer, Tsingshan Group, for a long-term off-take agreement for coking coal.

Afrochine has a sizable footprint in Zimbabwe and is planning to construct a US$1bn carbon steel plant in Zimbabwe, with capacity of 2m tonnes of steel per annum.

But, because of restrictions on movements, the scheduled site visits have been delayed.

“Covid-19 restrictions internationally have frustratingly delayed scheduled site visits by prospective off-take partners from a number of countries. However, the team in Zimbabwe has ensured that Lubu is ready to commence commercial production following the finalisation of formal off-take negotiations,” chief executive officer, Roy Pitchford said.

The site visits have now been slated for mid-April.

Pitchford said Contango intends to open a trial pit and a bulk sample which will be sent to the potential off-take partner so that it can conduct a burn test.

Contango acquired Lubu Coal Project in Zimbabwe in November last year.

The completion of this acquisition and the company’s subsequent readmission to trading on standard segment of the official list and the LSE on  June 18, 2020, were the catalysts for a period of rapid growth and corporate development as Contango simultaneously advanced Lubu towards commercial production and expanded its portfolio of resource interests.

The company’s board said the Lubu project exhibited the most important characteristics of a favourable investment as it has low capital expenditures and low operating expenses with potential for near term production.

Currently, over 100 holes and 12,000m of drilling have been completed. BusinessTimes

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