Member Info for Nicks1981

Morning,

Some good questions there.

I’m a long term holder. I will provide my view on things.

1) They said:
“ Contango will now focus on extracting bulk samples of the high value coking and metallurgical coals found in the 1A Lower and MSU seams…enabling the Company to focus specifically on the high value product of particular interest to the Potential Offtake Partner for its newly built coke batteries, expected to be commissioned later this month.


Given the increasing likelihood of a positive outcome with the Potential Offtake Partner, CONTANGO WILL SHORTLY APPROVE THE APPOINTMENT OF A MINING ENGINEER, WHO WILL BE CHARGED WITH IDENTIFYING THE BEST AREAS FOR UNDERGROUND MINING…In addition, liaising with Contango's technical team, the engineer will also help SELECT THE BEST EXCAVATION POSITION FOR A 4m x 4m SHAFT FROM WHICH THE BULK SAMPLE WILL BE TAKEN”

So my take on this is that CGO we’re doing work for themselves while also satisfying the requirements of the potential partner. The cost was shared. Furthermore it makes total sense to have an independent test bc CGO will need to have an idea of the quality of the coal in order to raise debt for finance mine expansion - they have already stated in RNS’ they want to use the off take deals for debt. Banks will want lab tests from recognised and trusted mineral / metal experts

2) When CGO acquired Garalo their plan was to buy a number of cheap small gold resources ie 250,000 to 500,000 oz resources. Essentially mines that larger co won’t be looking at. However, having acquired the licence and competed an updated review they realised their small operation became 1.8moz - much larger than anyone anticipated. Furthermore, the G1 & G3 seams extend in to Ntiela hence why they rushed to confirm purchase of that too. By the way - the warrants have pretty much covered the cash cost of this. £750k cost c £740k warrants. Having better understood the resource they completed a thorough assessment which is now being analysed. What was original a small scale operation processing 30,000oz PW, is now “identical to Kalana” (from CGO RNS) which is a 1.8moz mine bought by endeavour for $120m and they put a NPV5% value on it of $320mz. Aim to increase production to 150koz pa. Now note that’s the same as Garalo alone. Carl also says Ntiela is identical. So we could have anywhere between 2m and 5min across both which makes it a v big mine. So I forgive Carl for pushing back the production time - albeit I wouldn’t have been surprised if he changed the plan

3) warrants & Conv Loan are frustrating but also underpin the SP. Clearly those investors believe they are getting value. Similarly, that’s cash in the bank at a known price thereby protecting the co a bit from raising capital on bad terms

I suspect Q1 production is south mining as that was prepped pre Chinese

From memory, Chinese deal will require upgrading the mine to accommodate the supply

And I think they said off/take would be used to borrow money to do the development work

Just managing expectations in case I am right.

I think the Chinese deal will happen but production may be a little further on

So I’m expecting $1m to $2m EVITDA per month from existing off take deals

I don’t think the lab is in hwange. It says sent to hwange to be washed. Their lab could be anywhere

Bridgedogg1

If you go back through the RNS’, we were about to start mining before it was put on hold for Tsingshan

14th August 2020
“Contango Holdings Plc, the London listed natural resource development company, is pleased to announce that it has signed a Letter of Intent ('LOI') with South Mining (Pvt) Limited ('South Mining') relating to an offtake agreement for coal products produced at the Company's Lubu Coalfield Project in Zimbabwe ('Lubu')”

1st September 2020
“ Formal negotiations regarding the previously announced LOIs for 32,000 tonnes per month coal off-take agreements from Lubu are progressing well and are expected to be concluded in the current quarter”

29th Jan 2021
“Carl Esprey, Executive Director of Contango Holdings, said: "Our Lubu Project is advancing well ahead of the unveiling of the first open pit next month. I must commend the hard work and dedication of our on-site team in Zimbabwe who has persevered through pandemic adversity with relatively modest disruption to the planned development schedule.

"Our offtake negotiations continue to progress well and the opening of the pit in the next few weeks will allow these discussions to be finalised. Conversion of the existing signed LOIs into formal offtake contracts is expected to generate +US$1M of EBIT per month. Clearly any additional contracts, either for coking coal or coke, would further boost this figure”

26th March 2021
“Contango, the London listed natural resource development company, is pleased to advise that it is currently in discussions regarding a potential long-term offtake for coking coal produced at Contango's Lubu Coking Coal Project with the Zimbabwean subsidiary of a major Chinese industrial company and one the world's largest stainless steel producers (the 'Potential Offtake Partner')”

Currently CGO has two assets - Mali Gold, Zim coal.

Gold plans were well-telegraphed. Buy up a number of small 300k oz to 500k oz assets (normally too small for larger miners) and mine from each. However upon the first deal they ended up hitting 1.8moz and two seams extending in to Ntiela (which they had an option over and committed to it as soon as they they realised what had been found at Garalo)

Ntiela is deemed identical. But unproven as yet.
However two seams of the three in Garalo extend in to Ntiela

So they are currently completing an aero magnetic and geo physical assessment to:
- Assess how far and wide 3 known seams extend in Garalo
- Assess / look for new mineralisations in Garalo
- Assess how far 2 seams extend in to Ntiela
- assess whether there are any other potential mineralisations in Ntiela

Now Garalo alone is deemed identical to Kalana which has 1.8m oz and was acquired by endeavour for $122m. They put a NAV5% value of $330m and intend to boost production to 150,000oz pa with a mine life of c.11 years minimum

https://s21.q4cdn.com/954147562/files/doc_presentations/presentations/Kalana-Project-v1.pdf

So I wouldn’t be surprised to see Garalo/Ntiela develop in to a much larger 3-5m oz asset

Irrespective of the above, they also have an agreement to mine up to 30,000oz pa with an implied EBITDA of $12mpa (£9m pa and c.£54m on a conservative 6 x multiple)
So I believe the gold deal alone is worth a lot more than the current market cap

Re Lubu - they already have an off take deal in place (I think for thermal coal (not coking coal)) worth $12mpa EBITDA

That deal was put on hold for the purpose of closing the site to mine the lower coking coal, and then test it.

This testing is for the purpose of establishing an off take deal with Afrochine a subsidiary of Tsingshan (1 major steel producers.

However, in a more recent RNS, they said they are in discussions with two major steel producers - so Afrochine (Taingshan) + another (unknown)

To clarify - when they reference a major, that is Tsingshan (but the deal will be with Afrochine)

Like every AIM stock, investors focus on the big prize and ignore the fact that this is vastly undervalued (in principal) relative to the original off take deals for gold & Coal.

Increasing gold reserves further is a cherry on the cake

Any Chinese off take deal is a second cherry on the cake

If this deal doesn’t happen, Contango is still worth SIGNIFICANTLY more than Mcap

$24mpa EBITDA x 6 is $154m or £114m

Evening all,

CGH / Sable had a deal with CITIC to supply a coal fired power plant. CITIC didn’t follow through with that plant

https://www.gem.wiki/Lubu_power_station

CITIC Group either did t fulfil the construction or delayed it.

In the mean time, despite proving up the resources further, Groves got entangled in a Liberian bribe issue and Sable was taken off AIM.

As soon as Emmerson Mnangagwa became president, it seems Groves did the deal with Contango to buy the asset and in return give CGH shares in Contango - CGH won’t be tradeable. But CGH will still benefit from the value of CGO shares when the rise in value

I’m not sure what the “issue” is with regards to not having access to CGH shares- that’s a non-listed co so the shares can’t be traded

Upthecoast

Not quite sure how I was ramping

Basically proven almost 100% accurate on the average price they have received c$59 and all I did was take the median PoO from Low & High each month

I also used the 100popd within their RNS’

Not quite sure how that is a “ramp”, it was reasonable estimates

Even better, net reserves up 27%

Increased debt facility so no dilution

In my opinion I think what I said was reasonable and suggests NTOG is undervalued

Pine Mills - found 37’ of Oil & in production with 100bopd (limited) & no decline. Costs <$10pb

Cypress - doubled in size & 2nd well planned. Remaining average owned 100% by NTOG

Permian - near term prod’n. 15 existing wells. 3 planned redemptions. 6 addl wells

So @ 100bopd net base on monthly median price:
Jan $148,800
Feb $159,600
Mar $193,700
Apr $184,500
May $199,950
June $212,700
July $220,100
Aug $210,025
Sep $213,000
Total $1,742,375

If you assume ave of median monthly price for rest of year (being c.$63.75pb)

Oct $197,625
Nov $191,250
Dec $197,625
Total $586,500

Total annual $2,328,875
Assume $10 lifting =

Prod’n 36,500 bo x $10 = $365,000
Total profit $1,963,875

And so much more to come

Market Cap c£3m

Conservative 6 x $1.9m is $11.4 or >£8m (SP 1.16p)

Even if net profit was $1m

Conservative 6x multiple is $6m or c£4.3m (SP 0.65p)

Excluding NEW WELLS, PERMIAN & TUNISIA

This is referring to Chinese plants.

China reduce their CO2 by off-shoring their dirty / polluting operations to another country - mostly another continent. It doesn’t mean they won’t want the supply, it just means they are not operating in China

*currently 12.25p

Interesting it was ticking up through Friday too

My gut feel is we could see news this week

TMS tweet feels like a hint

Massively undervalued due to bored investors - this should be trading nearer 50p towards production, currently 11p

Craig said in podcast that the government officials were fast tracking zoom meetings etc - that’s positive as most government officials sit on their hands

Production 2022

*19th Jan 21

*19th Jan

Worth noting EIA is for the prospecting licence on the new land only

Re Zeb EIA, this is to turn the licence in to a Mining RIGHT and they confirmed it was received in 29th Jan 22. So should have feedback on this EIA & mining licence soon

“ The Company submitted an application to convert its existing Prospecting Rights to a Mining Right to the South African Department of Mineral Resources (DMRE) as announced on the 30 August 2019. As part of the application, the Company is required to conduct an environmental impact assessment to understand the impact of an open pit operation to mine the nickel resource. The environmental impact assessment consists of various specialist studies which are currently underway”

I have been in for a year and well researched. I found a semi recent pack for Kalana licence owned by Endeavour which Carl referenced in an RNS. Note:

- 1.8moz
- Endeavour paid $120m v CGO $1.8m
- Cgo also have possibly the same again with Ntiela
- Production 150,000oz pa
- Kalana opex is $901poz
- So profit $900oz
- NPV5% $330m
- Low emissions

It is not inconceivable that:
a) aeromagnetic & geophysical analysis upgrade Garalo further
b) Ntiela ends up being another 2m oz given there are two veins which extend in to Ntiela

I’m hoping for 3-5moz between the two

https://twitter.com/apathnottaken/status/1438961191964000259?s=21

https://twitter.com/apathnottaken/status/1386758063634280450?s=21

I put together a research note pinned on the telegram group if anyone is interested

Early Bird

Even better I think. $100 - $30 costs = $70 profit generating $12mpa EBITDA.

Coal $170 = $140m profit per tonne, c$24mpa EBITDA.

That’s on current deals which are on hold

Even if Chinese deal happens & other deals disappear, should still be similar or better - so $24mpa

Add in gold, $12mpa EBITDA

THATS $36mpa

$360m on 10 x multiple

And this is conservative imo

I think that’s an error as they owned 16.9% before today. Strange

Those results were reported sept 2017, followed by assay results.

I’m referring to 12 drills reported in Aug 2020 “ A 12-hole drill programme is expected to commence in October 2020, and is expected to be completed in March 2021”

Which then got pushed back while the asset transfer & listing happened