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(Alliance News) - Contango Holdings PLC on Monday said it has signed a new off-take agreement with TransOre International FZE.
The natural resource development company with operations in Africa said the deal is for the sale of 20,000 tonnes of washed coking coal per month from its Lubu project in Zimbabwe.
The firm said the agreement has been calculated according to its existing washing capacity of the project. If it can increase its washing capacity, Contango said TransOre has indicated its willingness to expand the contract size.
Contango added that the new contract is expected to replace the non-exclusive contract with AtoZ Investments Ltd which was reported in June.
Contango said the deal is priced at USD120 per tonne, the current coking coal price of the Minerals Marketing Corporation of Zimbabwe.
The firm said the deal is expected to complement its expected deal with an unnamed multinational corporation, which is currently undergoing due diligence. Should the deal not materialise, TransOre will take the additional coal that becomes available.
Contango noted that it expects to report the first sales from the off-take agreement in August. The firm has raised GGBP1.5 million from stakeholders in order to finance its larger operation.
Chief Executive Carl Esprey said: "We are delighted to enter into this offtake contract with TransOre, doubling our existing offtake and replacing our non-exclusive offtake with AtoZ. We have been in discussion with TransOre for some time and have been impressed by their operations and network. They bring a sizeable logistics operation, which we believe is more aligned with Contango's objectives moving forward as we develop our world class Muchesu project.
"This new contract is in addition to the ongoing discussions under the previously reported MoU with a global multi-national company. These discussions are centred around a larger coke operation at Muchesu. We expect to deliver further samples of our washed coal to the MNC later this month as part of the final stages of due diligence on the coke qualities of our product."
Contango shares rose 0.5% to 3.97 pence each on Monday morning in London.
By Harvey Dorset, Alliance News reporter
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