Contango starts washed coal production at Lubu

Zim Now Writer

London-listed Contango Holdings this Tuesday started production of washed coking coal at its Lubu project in south-western Zimbabwe.

“This is a landmark moment for Contango. It is no small feat to bring a mine into production and something most junior mining companies never achieve,” Contango Holdings CEO Carl Esprey said in his statement announcing the development. He said Contango expects to announce the first sales of washed coking coal in June 2023.

Esprey said while the process has taken longer than expected, Lubu renamed Muchesu- is now producing a high-quality coking coal product and very soon will be a revenue-generating company.

https://zimbabwenow.co.zw/articles/2680/lubu-coal-project-nears-commissioning

“We have achieved this during turbulent markets and without significant dilution at the plc level, which is testament to the team assembled in the country and the attractiveness of the Lubu Project” said Esprey.

Contango is supplying AtoZ Investments with which it has an offtake agreement to purchase 10 000 tonnes per month of washed coking coal produced at Lubu.

The company said all coking coal produced, including coal dispatched as samples, will be sold at factory gate, with the current MMCZ price still set at US$120 per tonne.

Esprey said that stockpiles of coking coal have already been established by the Wirtgen Surface Miner, which can mine at a rate of up to 1,000 tonnes per hour and the focus is now on expansion of operations, leveraging off on producer status.

“We have advised previously that we intend on manufacturing coke at Lubu, which is expected to increase our margins from US$80/tonne to over US$300/tonne at current pricing. We have continued to pursue this avenue in discussions with potential strategic partners.

“The sheer scale of Lubu opens up significant potential across a variety of revenue streams and we intend to focus on unlocking the potential of Lubu from this very solid foundation,” Esprey said.

The company’s main focus is supplying its low-sulphur coking coal to the southern African ferro alloy and industrial markets, but it has found current prices of thermal coal – used in electricity generation – attractive.

Contango has previously indicated that it has interest from the export market.

https://zimbabwenow.co.zw/articles/1432/contango-to-export-coal-to-europe-in-2023

“Samples will also be sent to several parties who have indicated they would look to enter into long-term offtake contracts. This includes the company’s potential strategic partner under a Memorandum of Understanding and complements Contango’s existing offtake for 10,000 tonnes a month of washed coal.

https://zimbabwenow.co.zw/articles/1508/contango-signs-mou-with-multi-national-for-possible-collaboration-at-muchesu

“I am told that many youths have been employed at the mine and that will change the lives of the community,” Matabeleland North Provincial Affairs and Devolution Minister Richard Moyo said.

The Lubu Coal Project covers 19 236 hectares of the highly prospective Karroo mid-Zambezi coal basin, located in the established Hwange-Binga mining area in north-western Zimbabwe.

Studies have defined an estimated 96-million tonnes of coking coal within Block 2, which forms part of the broader Lubu complex, where an estimated 1.25-billion-tonne indicatedand inferred resource has been identified to National Instrument 43-101 levels.