mbulelo smpofu
Nqobile Bhebhe, nqobile.bhebhe@chronicle.co.zw
CONTANGO Holdings Plc, a London-listed natural resource development firm, has received its first royalty payment of US$200 000 from its Muchesu coal project, marking a significant milestone for the company.
The payment is part of a Mineral Royalty Agreement (MRA) with its new investor, Huo Investments (Pvt) Limited, and signals growing confidence in the project’s potential.
An additional US$800 000 royalty payment is expected this month, bringing the total to US$1 million.
In 2024, Contango sold a 51 percent stake in the Muchesu colliery project to Zimbabwe-based Chinese investor Mr Wencai Huo.
The agreement includes a commitment by Mr Wencai to invest US$20 million into the 2,6 billion-tonne coal project.
Contango retains a 24 percent stake in the colliery, with plans to increase its shareholding in Monaf Investments (Pvt) Limited, the project’s controlling entity, to 74,75 percent.
Under the MRA, Contango is guaranteed a minimum royalty payment of US$2 million annually, with additional payments tied to coal production levels. Another US$1 million payment is anticipated by the end of Q1 2025.
Commenting on the milestone, Contango’s chief executive officer, Mr Carl Esprey, expressed optimism about the project’s future.
“This milestone marks a significant step forward in unlocking the immense value of the Muchesu coal project. 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,” he said.
He added that the operational foundations are now firmly in place, paving the way for continued progress and growth opportunities.
The Muchesu coal project is initially focused on the production and sale of coking coal, which attracts a royalty of US$8 per tonne.
The project’s 3 000-tonne-per-day Dense Media Separation Plant is now operational, having undergone testing and calibration.
Coal remains Zimbabwe’s dominant energy mineral, with vast reserves concentrated in the north-west and southern regions.
The Muchesu project is poised to play a pivotal role in harnessing this resource for economic growth.
Siphakeme .Mnindwa
