UK firm Contango receives first royalty payment, expects US$2m annually
London Stock Exchange listed Contango Holdings PLC, a company focused on developing the Muchesu coal project in Zimbabwe, has announced that it has received its first royalty payment of US$200,000.
The company expects to receive an additional US$800,000 this month, bringing the total royalty receipts to US$1 million.
Under the Mineral Royalty Agreement (MRA) with Huo Investments (Pvt) Limited, Contango will receive a minimum of US$2 million per annum, with additional amounts to be paid based on coal production.
A further minimum payment of US$1 million is expected by the end of the first quarter of 2025.
The company has also announced that it expects to sign the final definitive agreements with the investor this month, which will enable the completion of the US$2 million subscription and make the investor the largest shareholder of the company.
Carl Esprey, CEO of Contango, commented on the milestone, stating that the receipt of the first royalty payment marks a significant step forward in unlocking the value of the Muchesu coal project.
“This milestone marks a significant step forward in unlocking the immense value of the Muchesu coal project,” Esprey said.
“The receipt of our first royalty payment not only underscores the confidence our partners have in the project’s potential but also reinforces our commitment to delivering consistent value for our shareholders.
“With the operational foundations now firmly in place, we are excited about the continued progress and growth opportunities ahead.”
The Muchesu coal project is expected to produce coking coal, which carries a royalty of US$8 per tonne to the company. The operational 3,000 tonne per day Dense Media Separation Plant has been tested and calibrated accordingly.
Last month, Contango Holdings announced that its shares had been restored to trading on the main market of the London Stock Exchange.
The restoration of trading followed the publication of the company’s Annual Report for the year ending May 31, 2024, and an application by the company to lift the suspension.
Esprey expressed pleasure in confirming the resumption of trading, which coincided with positive developments at the Muchesu project.
“I was pleased to confirm the recommencement of trading, which also coincided with a number of positive developments at Muchesu, including the commencement of operations through the recently installed 3,000 tonne per day Dense Media Separation plant and the expectation of our first royalty payment that month,” Esprey said.
The company provided an operational, financial, and corporate update on November 29, 2024, which contained a detailed overview of current developments.
Contango released an update on its operational, financial, and corporate activities in November. The company announced that it had finalised definitive agreements with Huo Investments (Pvt) Limited, which saw the investor become the largest shareholder in Contango.
