14th May 2021 10:58
(Alliance News) - Contango Holdings PLC is nearing an agreement with a potential long-term offtake partner for coking coal produced at its Lubu project in Zimbabwe, it said on Friday.
Shares in the London-based natural resource development company were up 8.4% to 6.77 pence in London on Friday morning after the announcement.
The unnamed partner in the agreement is a Zimbabwean subsidiary of a Chinese industrial company and one of the world's largest stainless-steel producers, Contango said.
As part of the agreement, Contango will focus on extracting bulk samples of the high value coking and metallurgical coals found at Lubu before they are sent to the offtake partner in Hwange for washing.
Contango Chief Executive commeneted: "Discussions with the potential offtake partner continue to progress well, and I am pleased we have now reached a clear path to enable formal offtake agreements to be entered into.
"Our potential partner is one of the largest companies in Zimbabwe and its parent company is one of the largest steel producers in the world. The synergies between us are evident and I have every belief that upon completion of this brief and low-cost test work we will be able to enter a mutual and highly beneficial arrangement."
Contango is confident the two parties will be able to finalise the long-term formal offtake agreement in the near future, it said.
By Will Paige; [email protected]
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