Contango subsidiary signs second LoI towards coal offtake agreement
London-listed Contango Holdings has signed a letter of intent (LoI) with CoalZim Marketing for a 2 000-t-a-month coal offtake agreement.
This is the second offtake LoI secured by Contango in August, demonstrating the strong demand for the high-quality coal products produced at the company’s Lubu coalfield project, in Zimbabwe.
The first LoI was signed with South Mining for 30 000 t of coal offtake a month.
The latest LoI establishes the framework for formal offtake documentation to be advanced between Contango subsidiary Monaf Investments and CoalZim, a coal sales and trading company based in Harare.
CoalZim has, in principle, agreed to buy 2 000 t of metallurgical coal a month from Monaf. The sales price will likely be between $100/t and $120/t.
This while Contango expects mining and processing costs to be $15/t and transport costs to Harare to be about $15/t.
Contango aims to finalise formal offtake agreements before the Lubu project is commissioned in the fourth quarter.
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