RE: RNS19 Feb 2026 07:35
Please see the Company's responses below.
Kind regards
Investor Relations Team
1. Alternatives to Dilution: Given that the company's immediate debt was approximately £5 million and it is owed circa US$20 million in historical investment repayments, why was a 50% equity giveaway deemed the only viable path? Did the Board consider securing a bridge loan or a debt-for-equity swap that did not result in a loss of majority control?
It is not a 50% ‘equity giveaway’. £5M at 1.11p equates to 450,450,450 shares. There are currently 758M shares in issue, so this placing represents about 37% of the enlarged. The US$20M is not owed for some time and it is also paid pro rata with PGI alongside the $20M they have invested infrastructure at site. The shareholder loans are long past due, some by almost 2 years. The shareholder loan providers have been patient but made it clear they wanted these suitably addressed in the near term.
1. Rule 9 Waiver & Future Delisting:Crossing the 50% threshold gives the new strategic partners significant power over the company's future.
The shareholders have expressed a strong desire to maintain the listing as they expect to further enhance their returns. It should be noted a Special Resolution would be required for cancelling a listing and this requires a 75% majority of shareholders who vote.
1. Conflict of Interest: Since Pacific Goal Investments is the operator of the Muchesu mine, they are effectively both the payor and (now) the majority owner of the royalty receiver.
The royalty mechanism is very simple and aligns Contango shareholders with the development of the project. If PGI, as operator, want to unlock value they will need to produce coal. Contango gets a royalty from this production and will ensure monitoring of production. PGI/Huo Investments would also now benefit from 50% of these royalties, so it would be reasonable to believe they would be more inclined, rather than less, to boost production – noting also their historical investment has been specifically to enable for expanded production. The royalty scenario is different to a profit share etc, where factors such as cost of production / prevailing coal price come into play, and this was specifically why Contango structured this way.
1. Dividend Timeline: The announcement suggests this "debt-free" status allows for a significant dividend policy. Will the Board commit to a specific timeline or a minimum percentage of royalty income to be distributed as dividends to compensate for the massive dilution we are being asked to accept?
Whilst we cannot put a figure on it at this time, the board expects a material dividend policy and will update when appropriate.
1. Valuation of the 50.1% Stake: The shares were issued at 1.11p. Can the Board provide the independent valuation used to justify that this price—and the resulting 50.1% stake—accurately reflects the long-term value of the 2-billion-tonne Muchesu coal asset?
The shares of Contango have been t
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