London-listed Contango Holdings has entered into a nonbinding memorandum of understanding (MoU) with a multinational company (MNC) with respect to its Muchesu coal project, the in-country name of the Lubu coal project, in Zimbabwe.
This MoU outlines a framework for collaboration across coking coal, and in the manufacture of coke, and follows several site visits and a preliminary analysis of a 50 kg sample of Muchesu washed coking coal.
The intention is to undertake a stage-gated due diligence exercise which will look at all aspects that would underpin either a coking coal offtake agreement, or the possibility of establishing a coking plant adjacent to the Muchesu mine.
Based on current timelines, Contango is hoping to conclude the first phase of the due diligence exercise in the first quarter, after which a decision will be made if, and how best, to proceed to the subsequent phases.
“The signing of this MoU is hugely material for Contango. The MNC is active in Zimbabwe and is a world leader in its field. I believe their interest in the Muchesu coal project is testament to its highly attractive characteristics, both in terms of scale and coal quality.
“The due diligence process is under way, and one of the first steps has been to deliver a 1 t coking coal sample to the MNC for further testing. The ongoing discussions are focussed on the viability of a long-term offtake and the potential of a joint venture partnership in establishing coke batteries and developing an underground mine,” comments Contango CEO Carl Esprey.
“Given that Muchesu has a two-billion-tonne [plus] resource, there is plenty of scope for multiple offtakes across our whole suite of coal products – the MoU does not focus on thermal coal for instance,” he adds.