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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Contango Holdings Plc | LSE:CGO | London | Ordinary Share | GB00BF0F5X78 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.05 | 4.17% | 1.25 | 1.10 | 1.40 | 1.25 | 1.25 | 1.25 | 65,724 | 08:00:08 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Business Consulting Svcs,nec | 0 | -6.71M | -0.0142 | -0.88 | 5.67M |
TIDMCGO
RNS Number : 8894Q
Contango Holdings PLC
24 February 2023
Hot Features
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Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural Resources
24 February 2023
Contango Holdings Plc
('Contango' or the 'Company')
Unaudited Interim Results for the six months to 30 November 2022
Contango Holdings Plc, the London listed natural resource development company,
announces its results for the six-month period ended 30 November 2022.
Highlights
* GBP7.5 million raised ("Fundraise") in October 2022
at 6p to support the Lubu Coal Project ("Lubu") to
first coking coal production from Q1 2023.
* GBP1.0 million Convertible Loan converted at 6p on 5
July 2022 for 16,666,667 ordinary shares
* First offtake signed with AtoZ Investments (Pty) Ltd
to purchase 10,000 tonnes per month of washed coking
coal produced at Lubu.
* Coking coal and coke tests undertaken through
installed 1 tonne per hour test plant confirmed the
excellent quality of coal from Lubu further
strengthening Contango's position to complete
additional offtake agreements.
* Expansion of production strategy to include both
thermal coal and coke development scenarios to
provide additional near-term high value revenues
streams.
* Contango's operating subsidiary declared the winner
of the 2022 Excellence in Community, Empowerment &
Social Impact Award recognising its work at Lubu.
Post period
* MOU signed with a leading Multi-National Company for
collaboration across coking coal and manufacture of
coke at Lubu.
* Award of Environmental Impact Assessment certificate
for Lubu recognising the highest environmental
standards imposed by Contango at the mine.
* Delivery of the Lubu wash plant in early February and
assembly ahead of commissioning in March 2023 -
capacity to produce 20,000 tonnes per month.
* Delivery of surface miner (Wirtgen 2200SM) which has
a cutting width of 2200mm, ideal for selective mining,
and can mine up to 500 tonnes per hour of hard rock
and up to 1,000 tonnes per hour of coking coal.
* Laboratory delivered to site in February representing
the last of the significant capital items ahead of
first production and sales at the end of Q1 2023.
Carl Esprey, Chief Executive Officer of Contango Holdings, said:
"We expect Contango to transition into cash flow towards the end of the
current quarter with first sales of coking coal. Lubu's advancement over
recent months has been facilitated by the successful GBP7.5 million fundraising
during the period, which has enabled investment in building mining and processing
operations. These development initiatives are now reaching their conclusion,
with the wash plant now at site and being assembled ahead of commissioning.
Once calibrated and operating efficiently the wash plant is expected to
be able to produce 20,000 tonnes of washed coking coal per month which will
satisfy its first offtake partner, AtoZ Investments (Pty) Ltd, and also
provide sufficient supply to secure further offtakes for our coking coal.
"I would like to thank our long-standing shareholders for their support,
and welcome the new entrants to our register, as I reiterate my excitement
and enthusiasm for what is in store for Contango over the coming weeks and
months and we transition into a fully-fledged and cash generative production
company."
For further information, please visit www.contango-holdings-plc.co.uk or
contact:
Contango Holdings plc E: contango@stbridespartners.co.uk
Chief Executive Officer
Carl Esprey
Tavira Financial Limited T: +44 (0)20 7100 5100
Financial Adviser & Broker
Jonathan Evans
St Brides Partners Ltd T: +44 (0)20 7236 1177
Financial PR & Investor
Relations
Susie Geliher
Chairman's Statement
Activity at the Lubu Coal Mine in Zimbabwe ("Lubu") is intensifying as the
technical team and our various consultants direct the final elements of
our mining and processing operations to deliver first coking coal production
and sales by the end of the current quarter. Activity levels on site are
now significant marking the culmination of substantial operational, commercial,
and corporate undertakings orchestrated by the team over the past two and
half years since Contango acquired the project.
As shareholders will be aware, we are now in our final phase of pre-production
at Lubu as we approach commissioning of the wash plant and we anticipate
first sales to our first offtake partner, AtoZ Investments (Pty) Ltd ("AtoZ"),
by the end of the current quarter. During this development phase, the Contango
team has also advanced other commercial negotiations and post period end,
Contango signed a Memorandum of Understanding with a l eading Multi-National
Company ("MNC"), which has the potential to support both a further expansion
of the Company's coking coal production capabilities and also its future
higher-margin coke production strategy. Final due diligence is underway,
and we will report on these findings in due course. Given the MOU's broader
focus than just coking coal offtake and subsequent potential to unlock significant
value, the Company has not elected to enter into any additional offtake
arrangements at this time, despite clear demand and interest from several
groups keen to acquire Lubu washed coking coal.
Alongside these technical and commercial deliverables, I was delighted to
learn that our vision for sustainable development was also recognised with
our operating company in Zimbabwe, Monaf Investments, being declared the
winner of the 2022 Excellence in Community, Empowerment & Social Impact
Award. Specifically, Monaf Investments was selected as the winner of this
prestigious award by Corporate Social Responsibility Network Zimbabwe (CSRNZ),
together with the Minister of Provincial Affairs and Devolution for Matabeleland
North Province, recognising our efforts in supporting issues of sustainability
in the Province of Matabeleland North, and developing and promoting the
Zimbabwean Government's Vision 2030 and Sustainable Development Goals. We
look forward to a long and harmonious partnership with the local communities
and authorities in Zimbabwe as we commit to upholding the sustainable and
responsible production philosophies that we have developed since commencing
work at Lubu.
Looking now to our Garalo-Ntiela Gold Project in Mali, our focus remains
on the strategic realisation of its full value. The team in Mali continue
to undertake low-cost exploration activities however the work to date has
pointed to the project's strong potential to host a resource of 1.8Moz-2Moz
gold, and the board has determined that comprehensive drill campaigns are
merited to fully delineate the wider resource potential of this asset. Our
primary focus is now on Lubu, particularly given the significant cashflows
expected from this asset in the near-term, and so discussions regarding
strategic investment to fund future exploration and development work at
Garalo-Ntiela is being prioritised. There remains healthy interest from
various parties and the Contango board are carefully considering numerous
opportunities to ensure the Company benefits appropriately from future development
upside.
Financial Review
In October 2022, the Company announced an oversubscribed placing of 125,000,000
new ordinary shares at 6 pence per share to raise gross proceeds of GBP7,500,000
from existing and new shareholders. The funds have, and will continue to
be, used to finalise mine development, complete the installation of the
wash plant, acquire further mining equipment, and expand operations at the
Lubu Project. The proceeds have also enabled the Company to finalise the
agreed relocation of additional households from the mine site, thereby providing
a larger footprint for the mine and operations to meet heightened demand.
As a pre-production Company, Contango did not generate revenue however was
able to source loans from supportive investors during the period to enable
the continued development of Lubu ahead of the Fundraise, which enabled
all Loans to be repaid. Additional one-off Administration costs and other
costs including commissions, professional fees and general transaction costs
relating to the publication of a prospectus in November 2022, as required
by the Prospectus Rules governed by the FCA, were also incurred.
The Company spent GBP2,090,604 on the exploration and fixed assets during
the period under review which relate to the development of the site and
operations at Lubu.
The Company is now fully funded to reach first cash flow from the sale of
coking coal from Lubu at the end of this quarter.
Revenue
The Company generated no revenue during the period under review but anticipates
making first coking coal sales by the end of Q1 2023.
Expenditure
The Company has applied its cash resources to the development of Lubu and
Garalo-Ntiela.
Liquidity, cash and cash equivalents
As of 30 November 2022, the Company held GBP3,314,359 (2021: GBP2,419,266).
The Company is fully funded to deliver first coking coal sales by the end
of Q1 2023.
Outlook
The coming weeks and months are clearly going to be a defining period for
Contango; one in which we establish ourselves as a production company and
begin to expand our horizons in order to fully realise the potential of
our +1 billion tonnes coal resource at Lubu. With the tailwinds of increasing
coal demand and prices supporting our various production strategies at Lubu,
I believe we are entering the coal market at an ideal time and will benefit
from the continuing demand and pricing dynamics many commentators are predicting.
I would like to take this opportunity to extend my thanks to our shareholders,
both new and old, and also my fellow board members and our operational team
for their tireless efforts to ensure our shared ambitions are realised.
Roy Pitchford
23 February 2023
CEO REPORT
Contango's primary objective during the period was to advance the Lubu Coal
Project in Zimbabwe through to commercial operations and sales, in tandem
with advancing strategic discussions to support the development of the Garalo-Ntiela
Project Area in Mali towards production.
Lubu Coal Project ('Lubu') - known as the Muchesu Coal Mine in Zimbabwe
Contango has a 70% interest in Lubu, with the remaining 30% held by local
partners.
Since acquisition in 2020, the Contango team have implemented a rapid development
plan with the objective of delivering first coking coal in as short a timeframe
as practicable.
The primary focus during the period under review was on the preparation
of the site for commercial mining and coking coal production, and also advancing
commercial discussions regarding coking coal offtake. Commercial discussions
were also undertaken regarding potential thermal coal and coke production,
and strategies for these additional products are now being advanced in tandem
with its coking coal activities.
Our focus now is on quickly getting to an initial production rate of 10,000
tonnes per month of washed coal, as covered by our existing offtake with
specialist coal trading company AtoZ Investments (Pty) Ltd ("AtoZ") out
of South Africa, whilst in tandem also identifying the optimal production
and processing route to maximise recoveries and minimise production costs.
The Company expects to then move to the headline production capacity of
the wash plant as either additional offtakes are signed or we successfully
conclude the existing MOU with a leading Multi-National Company. Given the
expected profitability of operations at Lubu, should demand for the Company's
suite of coal products continue as envisaged then the purchase of additional
wash plants and capital items to meet this demand are expected to be funded
via cashflow or non-equity finance. The coal mined to date has either been
washed using the installed 1 tonne per hour test plant located on site or
stockpiled in anticipation of the larger wash plant being commissioned by
the end of the current quarter.
Coal washed using the current test plant, which was supplied and supervised
by OneVision, the company that is currently installing the larger 100 tonne
per hour throughput wash plant, was used by Contango's technical team for
test work. This processing has confirmed that, after passing through the
wash plant, the coking coal product is of excellent quality and has been
an important mechanism in the Company's offtake discussions. An additional
test was undertaken on 15kg of washed coking coal from both the NUTTS and
PEAS sections. These were processed through a mini-coking test plant as
a first determinant of how the coking coal would react when processed into
coke. These coke results returned better than expected results and when
shared with potential coke offtake partners, we received very positive feedback
on this data and the characteristics of Lubu coking coal and coke products.
Post period end, in December, Contango signed a Memorandum of Understanding
with a leading Multi-National Company ("MNC"), which outlined a framework
for collaboration across not only coking coal, but also in the manufacture
of coke. 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 mine. The Company expects to be able to provide an update on these
negotiations in the coming weeks.
Garalo-Ntiela Project Area ('Garalo-Ntiela')
The Garalo-Ntiela Gold Project covers an area of 161.5km(2) in southern
Mali, and combines the Garalo Licence Area, acquired by Contango in October
2020, with the neighbouring Ntiela Licence Area, which was acquired in March
2021. Work programmes conducted by Contango on the Garalo-Ntiela Gold Project
have returned consistently positive results and the project area has demonstrated
its potential for a 1.8Moz-2Moz gold resource.
With this large potential resource now identified, and significant exploration
upside possible with further drilling, the board of Contango has determined
that the optimum route for development would be through a large processing
hub, capable of supporting multiple open pit operations.
In order to realise the full potential of this asset whilst also protecting
investors from the dilution at the PLC level, the board is advancing discussions
with a number of potential investors in relation to Garalo-Ntiela. The board
believes Garalo-Ntiela represents an exceptional asset with large scale
commercial value, and this remains at the forefront of all ongoing discussions.
The Company will provide further updates on these negotiations at the proper
time, as appropriate.
Carl Esprey
23 February 2023
Condensed Consolidated Statements of Comprehensive Income
For the six months ended 30 November 2022
Audited
Unaudited Unaudited Year to
Six Months Six Months 31 May
ended ended 2022
30 November 30 November
2022 2021
Notes GBP GBP GBP
Administrative fees and
other expenses 3 (1,786,947) (636,398) (2,944,656)
-------------- -------------- ------------
Operating loss (1,786,947) (636,398) (2,944,656)
Finance revenue - - -
Finance expense - - -
-------------- -------------- ------------
Loss before tax (1,786,947) (636,398) (2,944,656)
Income tax - - -
Loss for the period (1,786,947) (636,398) (2,944,656)
-------------- -------------- ------------
Loss attributable to owners
of the parent company (1,632,379) (591,350) (2,805,563)
Loss attributable to non-controlling
interests (154,568) (45,048) (139,093)
-------------- -------------- ------------
(1,786,947) (636,398) (2,944,656)
-------------- -------------- ------------
Basic and diluted loss
per Ordinary Share 4 (0.55) (0.27) (1.00)
Other comprehensive income 319,624 (40,735) 127,977
-------------- -------------- ------------
Total comprehensive loss
for the period (1,467,323) (677,133) (2,816,679)
-------------- -------------- ------------
Total comprehensive loss
attributable to owners
of Contango Holdings PLC (1,403,389) (618,569) (2,700,477)
Total comprehensive loss
attributable to non-controlling
interests (63,934) (58,564) (116,202)
-------------- -------------- ------------
Total comprehensive loss
for the period (1,467,323) (677,133) (2,816,679)
-------------- -------------- ------------
Condensed Consolidated Statements of Financial Position
For the six months ended 30 November 2022
Unaudited Unaudited Audited
as at as at as at
30 November 30 November 31 May
Notes 2022 2021 2022
GBP GBP GBP
Non-current assets
Intangible assets 5 13,416,214 10,515,941 11,936,206
Investments 46,474 62,260 46,474
Property, plant and
equipment 1,095,911 256,641 737,727
------------- ------------- ------------
Total non-current
assets 14,558,599 10,834,842 12,720,407
Current assets
Other receivables 6 576,713 587,348 52,211
Cash and cash equivalents 3,314,359 2,419,266 610,546
Total current assets 3,891,072 3,006,614 662,757
Total assets 18,449,671 13,841,456 13,383,164
------------- ------------- ------------
Current liabilities
Trade and other payables 7 (310,148) (1,155,632) (503,732)
Convertible debt and
Investor loans (1,331,750)
------------- ------------- ------------
Total current liabilities (310,148) (1,155,632) (1,835,482)
Net assets/(liabilities) 18,139,523 12,685,824 11,547,682
------------- ------------- ------------
Equity
Share capital 8 4,580,246 2,687,760 2,949,679
Share premium 8 18,130,551 11,176,636 11,047,218
Shares to be issued 400,000 400,000 400,000
Warrant reserve 2,059,584 90,474 1,013,815
Option reserve - 1,700,505 1,700,505
Foreign exchange reserve 300,683 (6,174) 71,693
Retained earnings (8,590,889) (4,744,297) (6,958,510)
------------- ------------- ------------
Total equity attributable
to owners of owners
owners of Contango
Holdings owners of
Contango Holdings owners
of the parent company 16,880,175 11,304,904 10,224,400
Non-controlling interests 1,259,348 1,380,920 1,323,282
------------- ------------- ------------
Total equity 18,139,523 12,685,824 11,547,682
------------- ------------- ------------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 November 2022
Shares Total
Share Share to be Warrant Option Translation Retained Equity Non-controlling
capital premium issued reserve reserve reserve earnings of Owners interests Total
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance
at 31 May
2021 2,279,338 8,294,643 400,000 160,074 1,700,505 (33,393) (4,152,947) 8,648,220 1,439,484 10,087,704
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Loss for
the year - - - - - - (2,805,563) (2,805,563) (139,093) (2,944,656)
Other
comprehensive
income
Translation
differences - - - - - 105,086 - 105,086 22,891 127,977
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Total
comprehensive
income for
the year - - - - - 105,086 (2,805,563) (2,700,477) (116,202) (2,816,679)
Transactions
with owners
Share issues
- cash
received
net 419,091 2,100,909 - - - - - 2,520,000 - 2,520,000
Share issues
- warrants
exercised 251,250 651,666 - (69,599) - - - 833,317 - 833,317
Warrants
issued - - - 923,340 - - - 923,340 - 923,340
Total
transactions
with owners 670,341 2,752,575 - 853,741 - - - 4,276,657 - 4,276,657
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Balance
at 31 May
2022 2,949,679 11,047,218 400,000 1,013,815 1,700,505 71,693 (6,958,510) 10,224,400 1,323,282 11,547,682
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Loss for
the period - - - - - - (1,632,379) (1,632,379) (154,568) (1,786,947)
Other
comprehensive
income
Translation
differences - - - - - 228,990 - 228,990 90,634 319,624
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Total
comprehensive
income for
the period - - - - - 228,990 (1,632,379) (1,403,389) (63,934) (1,467,323)
Transactions
with owners
Share issues
- cash
received
net 1,630,567 7,083,333 - - - - - 8,713,900 - 8,713,900
Share issues
- warrants
exercised - - - - - - - - - -
Shares to
be issued - - - - - - - - - -
Warrants
issued - - - 1,045,769 - - - 1,045,769 - 1,045,769
Options
exercised - - - - (1,700,505) - - (1,700,505) - (1,700,505)
Minority
interest
share of
intangible
asset
acquisitions - - - - - - - - - -
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Total
transactions
with owners 1,630,567 7,083,333 - 1,045,769 (1,700,505) - - 8,059,164 - 8,059,164
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Balance
at 30 Nov
2022 4,580,246 18,130,551 400,000 2,059,584 - 300,683 (8,590,889) 16,880,175 1,259,348 18,139,523
----------- ---------------- ----------- ---------- ---------------- ------------ ---------------- ----------------- ---------------- -----------------
Condensed Consolidated Statements of Cash Flows
For the six months ended 30 November 2022
Unaudited Unaudited Audited
Six Months Six Months Year
ended ended ended
30 November 30 November 31 May
Notes 2022 2021 2022
GBP GBP GBP
Operating activities
Loss after tax (1,786,947) (636,398) (2,944,656)
Adjustment for:
Depreciation 104,825 11,200 77,922
Share based transactions (108,480) (69,600) 853,741
Revaluation of intangible - -
asset -
Impairment of listed investment 15,786
Changes in working capital
(Increase)/decrease in trade
and other receivables (524,503) (451,650) 83,488
Increase in trade and other
payables (193,584) 873,968 222,068
------------- ------------- ------------
(Decrease) in Net cash from
operating activities (2,508,689) (272,480) (1,691,651)
------------- ------------- ------------
Investing activities
Purchase of exploration licences - - -
Spending on exploration licences (1,551,836) (372,143) (1,775,809)
Purchase of fixed assets (538,768) (221,846) (786,995)
Purchase of investment - - -
------------- ------------- ------------
(Decrease) in Net cash from
investing activities (2,090,604) (593,989) (2,562,804)
------------- ------------- ------------
Financing activities
Ordinary Shares issued (net
of issue costs) 5 4,717,196 3,290,415 3,422,916
Proceeds from convertible
debt - - 831,750
Conversion of convertible 1,331,750 -
debt -
Proceeds from investor loans 1,349,493 - 500,000
------------- ------------- ------------
Net cash flows from financing
activities 7,398,439 3,290,415 4,754,666
------------- ------------- ------------
Increase/(decrease) in cash
and short-term deposits 2,799,146 1,134,983 500,211
Cash and short-term deposits as
at the start of period 610,546 22,143 22,143
Effect of foreign exchange
changes (95,333) (26,823) 88,192
------------- ------------- ------------
Cash at the end of the period 3,314,359 2,419,266 610,546
------------- ------------- ------------
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 November 2022
1 General information
The Company was incorporated in England under the Laws of England and Wales with registered number 10186111 on 18 May 2016. All of the Company's Ordinary Shares were admitted to the London Stock Exchange's Main Market and commenced trading on 1 November 2017. The company was re-registered as a public company under Companies Act 2006 on 1 June 2017, by the name Contango Holdings plc.
The Company is listed on the Standard Market of London Stock Exchange plc.
The unaudited interim consolidated financial statements for the six months ended 30 November 2022 were approved for issue by the board on 23 February 2023.
The figures for the six months ended 30 November 2022 and 30 November 2021 are unaudited and do not constitute full accounts. The comparative figures for the period ended 31 May 2022 are extracts from the annual report and do not constitute statutory accounts.
2 Basis of Preparation and Risk Factors
The Company Financial Information has been prepared in accordance with and comply with IFRS as adopted by the European Union, International Financial Reporting Interpretations Committee interpretations and the Companies Act 2006. The financial statements have been prepared under the historical cost convention as modified for financial assets carried at fair value.
The financial information of the company is presented in British Pound Sterling ("GBP").
The accounting policies and methods of calculation adopted are consistent with those of the financial statements for the year ended 31 May 2022.
The business and operations of the Company are subject to a number of risk factors which may be sub-divided into the following categories:
Exploration and development risks, including but not limited to:
o Mineral exploration is speculative and uncertain
o Verification of historical washability analysis
o Independent verification of internal resource estimation at Garalo-Ntiela
o Mining is inherently dangerous and subject to conditions or events beyond the Company's control, which could have a material adverse effect on the Company's business
o The volume and quality of coal recovered may not conform to current expectations
o The extend and grade of gold mineralisation at Garalo-Ntiela may not conform to current expectations
-- Permitting and title risks, including but not limited to:
o Licence and permits
o The Company will be subject to a variety of risks associated with current and any potential future joint ventures, which could result in a material adverse effect on its future growth, results of operations and financial position
-- Political risks, including but not limited to:
o Political stability
o Enforcement of foreign judgements
o Potential legal proceedings or disputes may have a material adverse effect on the Company's financial performance, cash flow and results of operations
-- Financial risks, including but not limited to:
o Foreign exchange effects
o Valuation of intangible assets
o The Company may not be able to obtain additional external financing on commercially acceptable terms, or at all, to fund the development of its projects
o The Company will be subject to taxation in several different jurisdictions, and adverse changes to the taxation laws of such jurisdictions could have a material adverse effect on its profitability
o The Company's insurance may not cover all potential losses, liabilities and damage related to its business and certain risks are uninsured and uninsurable
-- Commodity prices, including but not limited to:
o The price of coal may affect the economic viability of ultimate production at Lubu
o The revenues and financial performance are dependent on the price of coal
o The price of gold may affect the economic viability of ultimate production at Garalo-Ntiela
-- Operational risks, including but not limited to:
o Availability of local facilities
o Adverse seasonal weather
o The Company's operational performance will depend on key management and qualified operating personnel which the Company may not be able to attract and retain in the future
o The Company's directors may have interests that conflict with its interests
o Risk relating to Controlling Shareholders
The Company's comments and mitigating actions against the above risk categories are as follows:
Exploration and development risks
There can be no assurance that the Company's development activities will be successful however significant exploratory work has been conducted to date at Lubu and Garalo-Ntiela which supports the Board's confidence that a profitable mining operation can be developed.
Additionally, the phased development route which will be employed at Lubu seeks to mitigate risks along the development life cycle of the project.
Permitting and title risks
The Company complies with existing laws and regulations and ensures that regulatory reporting and compliance in respect of each permit is achieved. Applications for the award of a permit may be unsuccessful. Applications for the renewal or extension of any permit may not result in the renewal or extension taking effect prior to the expiry of the previous permit. There can be no assurance as to the nature of the terms of any award, renewal or extension of any permit.
The Company regularly monitors the good standing of its permits.
Political risks
The Company maintains an active focus on all regulatory developments applicable to the Company, in particular in relation to the local mining codes.
In recent years the political and security situations in Zimbabwe and Mali have been particularly volatile.
Financial risks
The board regularly reviews expenditures on projects. This includes updating working capital models, reviewing actual costs against budgeted costs, and assessing potential impacts on future funding requirements and performance targets.
Commodity prices
As projects move towards commercial mining the Company will increasingly review changes in commodity prices so as to ensure projects remain both technically and economically viable.
Operational risks
Continual and careful planning, both long-term and short-term, at all stages of activity is vital so as to ensure that work programmes and costings remain both realistic and achievable.
COVID-19 outbreak
In addition to the foregoing comments and mitigating actions against the above risk categories the Company has implemented various protocols in relation to the current COVID-19 outbreak. Contango places the health and safety of its employees and contractors as its highest priority. Accordingly, a business continuity programme has been put in place to protect employees whilst ensuring the safe operation of the Company.
Having spoken with, amongst others, local government, staff and contractors, strict protocols have been implemented to reduce the risk of transmission of COVID-19 at all the Company's operations.
The situation in respect of COVID-19 is an evolving one and the Board will continue to review its potential impact on its staff and the business.
3 Loss before taxation
Loss before income tax
is stated Unaudited Unaudited
after charging: Six Months Six Months
Ended 30 Ended 30 Audited Year
November November Ended 31
2022 2021 May 2022
GBP GBP GBP
Directors' remuneration 43,500 50,400 95,900
Ongoing listing costs 117,585 151,177 302,419
Finance costs 513,000 -
Share-based finance costs 457,356 - 160,000
Salaries 421,697 217,184 536,842
Consultancy fees 500 - 182,829
Legal and accountancy
fees 33,775 4,869 19,317
Travel 301,549 174,673 364,444
Office costs 147,620 66,742 170,817
Share performance options (1,486,605) - -
Net warrant issue costs 1,045,769 (69,600) 853,741
Impairment of listed investment - - 15,786
Depreciation 104,825 11,200 77,922
Other 86,376 29,753 -
Group audit fee
- -
Fee payable to the Company's
auditor in respect of
all other non-audit services - - 35,000
Fees paid to auditors - - -
for non-audit work services
4 Loss per Ordinary Share
The calculation of the basic and diluted loss per Ordinary Share is based on the following data:
Unaudited Unaudited Audited
Six Months Six Months Year
to to to
30 November 30 November 31 May
2022 2021 2022
GBP GBP GBP
Earnings
Loss from continuing operations
for the period attributable
to the equity holders of the
Company (1,632,379) (591,350) (2,805,563)
Number of Ordinary Shares
Weighted average number of
Ordinary Shares for the purpose
of basic and diluted earnings
per Ordinary Share (number) 296,565,032 222,711,321 280,455,370
------------- ------------- ------------
Basic and diluted loss per
Ordinary Share (pence) (0.55) (0.27) (1.00)
------------- ------------- ------------
There are no potentially dilutive Ordinary Shares in issue.
5. Intangible Asset
Unaudited Unaudited Audited As
As at As at at
30 November 30 November 31 May
2022 2021 2022
GBP GBP GBP
At start of period 11,936,206 10,118,098 10,118,098
Additions - during
year 1,392,836 397,843 1,775,809
Foreign exchange movements 87,172 - 42,299
Amortisation - - -
-------------- -------------- ------------
Total 13,416,214 10,515,941 11,936,206
-------------- -------------- ------------
Mining rights Zimbabwe 11,314,113 8,495,807 9,849,069
Mining rights Mali
(Garalo) 1,272,650 1,273,617 1,260,686
Mining rights Mali
(Ntiela) 829,451 746,517 826,451
13,416,214 10,515,941 11,936,206
-------------- -------------- ------------
The intangible asset represents the mining rights and technical information acquired when the Group acquired its 70% shareholding in Monaf Investments (Pty) Ltd on 18 June 2020; its 75% share in the Garalo gold licence in Mali bought for $1 million on 22 October 2020; and its 100% share in the Ntiela gold licence (adjacent to Garalo) in Mali. The Ntiela licence was acquired for approximately GBP750,000 - being EUR400,000 (GBP346,517) in cash and 4,000,000 ordinary shares at GBP0.10 to be issued during 2023.
The Ntiela gold licence is still under the name of Samagold Resources SARL (a subsidiary of the vendor - African Mineral Exploration Resources Mali SARL) whilst the formal transfer is processed by the Mali Ministry of Mining. The cash element paid (GBP346,517) together with the GBP400,000 of shares to be issued are currently held on the parent company balance sheet until the transfer is completed.
6. Other receivables
Unaudited Unaudited Audited As
As at As at at
30 November 30 November 31 May
2022 2021 2022
GBP GBP GBP
Prepayments 17,970 16,332 17,895
Other debtors 558,743 571,016 34,316
576,713 587,348 52,211
-------------- -------------- ------------
7. Trade and other payables
Unaudited Unaudited Audited As
As at As at at
30 November 30 November 31 May
2022 2021 2022
GBP GBP GBP
Trade payables 245,481 221,919 175,316
Accruals and other
payables 64,667 101,963 328,416
Convertible debt - 831,750 831,750
Investor loans - - 500,000
310,148 1,155,632 1,835,482
-------------- -------------- ------------------
The convertible loan note was announced on 3(rd) June 2021
and had a fixed conversion price of 6 pence per share, with
a mandatory conversion to take place on 4 January 2022.
Due to a lack of headroom to issue new shares in January
all note holders unanimously agreed to extend the life of
the instruments by a further six months with no additional
charges or penalties. The instruments were duly converted
and the new shares admitted for trading on 12 July 2022.
The term of the attaching one warrant for every two ordinary
shares, with an exercise price of 8p, remained unchanged.
8 Share capital
Number of
Ordinary Shares
issued and Total Share
fully paid Share Capital Share Premium Capital
GBP GBP GBP
----------------- -------------- -------------- ------------
As at 01 June 2022 309,667,356 2,949,679 11,047,218 13,996,897
----------------- -------------- -------------- ------------
Loan conversion 16,666,667 166,667 833,333 1,000,000
Placement November
2022 125,000,000 1,250,000 6,250,000 7,500,000
Performance shares 21,390,000 213,900 - 213,900
As at 30 November
2022 472,724,023 4,580,246 18,130,551 22,710,797
----------------- -------------- -------------- ------------
The Ordinary Shares issued by the Parent Company have par value of 1p each and each Ordinary Share carries one vote on a poll vote. The Authorised share capital of the Parent Company is GBP5,000,000 ordinary shares at GBP0.01 per share resulting in 500,000,000 ordinary shares.
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END
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