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Contango Holdings PLC - metallurgical coal producer focused on its 70%-owned Muchesu coal project in Zimbabwe - Responds to share price movement. Confirms that discussions with the investor, outlined in June, has progressed to final documentation.
In June, Contango said a new investor, Wencai Huo, had bought a majority stake in its Muchesu coal project in Zimbabwe. Huo, is ‘a prominent Zimbabwe-based Chinese national with extensive mining and business investments in Zimbabwe and the southern African region,’ the company noted.
Huo will buy a 51% stake in the Muchesu mine. Contango currently holds a 70% interest via its Monaf Investments (Pvt) Ltd subsidiary. This is interest is expected to rise to 74.75% in the near term, so Huo’s acquisition will leave Contango with a 23.75% stake.
Huo will make a cash investment in Contango at the recent average market price to take a 20% stake. The investor also will spend at least $20 million to develop Muchesu, matching what Contango has already invested in the project.
Current stock price: 1.70 pence, up 21% in London on Tuesday morning
12-month change: down 56%
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