Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural Resources

26 October 2023

Contango Holdings PLC

("Contango" or the "Company")

Statement re Share Price Movement

Contango Holdings Plc, the producing London listed natural resource development company, notes the share price movement and provides the following update regarding corporate activity and an operational update.

Potential Asset Sale

The Company has received a non-binding proposal for the potential acquisition of its assets which may results in the sale of its assets at the subsidiary level (the "Proposal"). The Proposal is at an early stage with a number of commercial points under discussion, therefore, there is no guarantee that these discussions will lead to a formal offer. The Company is now in discussions with its advisers with regard to the Proposal and the Board will seek to maximise value for all its stakeholders before pursuing the disposal of its principal assets.  For the avoidance of doubt, the Company which has made the Proposal is different to the Multi-National undertaking the coking coal trial as noted below and with whom the Company is discussing a long-term offtake arrangement.

Operational Update

Last quarter the Company confirmed construction at site was completed to enable the production and washing of Muchesu coal. At the end of August, the Company received export approvals from the Minerals Marketing Corporation of Zimbabwe ("MMCZ") to enable the Company to deliver sales under its existing offtake with TransOre International FZE ("TransOre").

TransOre Update

In Q3 2023 TransOre entered into an agreement to acquire up to 20,000 tonnes ("Offtake Agreement") of washed coal per month. Following an initial sale, Contango has been waiting for TransOre to purchase additional coal under the Offtake Agreement. The Company has been advised by TransOre that it is finalising the appropriate agreements and logistics and hopes to be able to recommence the purchase of Muchesu coal in the near term.

Multi-National Coking Coal Trial & Potential Offtake

The Company is pleased to report that it has entered into an agreement with a leading steel producer (the "Multi-National") to supply 1,000 tonnes of washed coking coal for a formal industrial trial during November.

Discussions with the Multi-National have been ongoing for the past twelve months, during which time several site visits have taken place and a detailed due diligence process has been undertaken on Muchesu's coal products.

The Multi-National has expressed a desire to enter into an offtake with the Company for an initial 80,000 tonnes per annum of washed coking coal from the Muchesu Project, equating to approximately 6,700 tonnes per month, although there is clear potential to expand on this figure as Contango's production capacity increases.

The Multi-National has agreed to purchase the washed coking coal for the industrial trial at mine gate, and revenue in excess of US$100K will be paid in advance. The Multi-National will be responsible for transporting the washed coking coal in its own fleet of trucks to its facilities in South Africa where the trial will take place.

Other Potential Offtakes

Additional advanced offtake discussions for both coking coal and industrial coal are also underway with other parties.  If successful, it is envisaged that the industrial coal will be purchased at mine gate without the need for washing, therefore increasing production and sales capacity without requiring additional capital investment.

Financial Update

The Company also notes that it has raised £1 million from existing stakeholders through an unsecured and non-convertible bridging loan for working capital purposes, pending further sales under the TransOre offtake arrangement and a potential new offtake arrangement should the Multi-National's coking coal trial prove successful.

Carl Esprey, CEO of Contango Holdings commented:

"Muchesu is fully commissioned and ready to expand operations and we are primed to deliver washed coking coal to the market

"We have now entered into a trial supply with one of the largest steel producers globally following their extensive due diligence on the products. As a new coal producer, our coal products are subject to stringent tests and quality control before end users will commit to large volumes, and the Multi-National's interest in our coal is both highly encouraging and reaffirms its quality.

"In addition, we have now received a credible approach with respect to our assets. Whilst there is no guarantee a firm offer will be made, we expect this process to move fast and will update shareholders on the details of the proposals as appropriate.

"Finally, I would like to express my gratitude to our stakeholders for their continued support during this ramp up phase."

**ENDS**