Coal exploration and production company Contango Holdings will receive $2 million from investment firm Huo Investments for a share subscription agreement for the Muchesu coal project in Zimbabwe. An advance payment of $1 million has already been made.
Subject to the issuance and approval of a short form prospectus – which has been submitted to financial regulatory body the Financial Conduct Authority for review –, the investment will support the mine’s expansion.
“We are now seeing significant activity at Muchesu. A new wash plant is being delivered and constructed to materially increase production capacity, whilst other earth moving and processing equipment are expected to arrive on site in the forthcoming weeks. We are also integrating members of the existing operational team with the team assembled by [Huo Investments]. We believe the resultant outcome will leave Muchesu on a much firmer footing and poised for significant growth,” stated Carl Esprey, CEO of Contango Holdings.
The investment builds on an agreement between Contango Holdings and Huo Investments signed earlier in July whereby the investment firm will provide a debt finance of up to $20 million to expand operations at Muchesu. Capital equipment and operational items have been delivered to the project, with the remaining convoys poised for delivery before the end of this month.
Upon completion of the expansion project, Muchesu will have the capacity to produce 3,000 tons of coal per day.
