UK-based mining company Contango has started production of washed coking coal at its flagship Lubu project in Zimbabwe.
The production start follows recent dry and wet runs of the wash plant, as well as integration of the screen with broader processing facilities, the company noted.
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Previously Contango stated that coking coal had been stockpiled using a Wirtgen surface miner with a capacity of up to 1,000 tonnes per hour.
The surface miner machine continues to extract coking coal and is increasing wash plant stockpiles further.
Further studies will be undertaken on washed coal production for increased optimisation.
Samples will be sent to several parties that are likely to enter long-term offtake contracts.
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By GlobalDataThis includes the company’s potential strategic partner under a memorandum of understanding and complements its existing offtake agreements for 10,000 tonnes (t) per month of washed coal.
Contango plans to sell all of the coking coal, including the sample sent, at the factory gate for a set price of $120/t.
First sales of washed coking coal are expected to be announced next month.
Contango Holdings CEO Carl Esprey said: “This is a landmark moment for Contango. It is no small feat to bring a mine into production and something most junior mining companies never achieve.
“I appreciate this process has taken longer than expected, but we are now producing a high-quality coking coal product and very soon will be a revenue-generating company. We have achieved this during turbulent markets and without significant dilution at the plc level, which is a testament to the team assembled in the country and the attractiveness of the Lubu Project.
“The focus for the company is now how to best expand operations at Lubu, leveraging off our producer status. We have advised previously we intend on manufacturing coke at Lubu, which is expected to increase our margins from $80/t to over $300/t at current pricing. We have continued to pursue this avenue in discussions with potential strategic partners.”
Contango owns a 70% stake in the Lubu coal project with the remaining 30% held by local partners.
The mine project is located in the highly prospective Karroo Mid Zambezi coal basin in the Hwange mining district. Previous owners of the mine have identified that the mine hosts more than 1.3 billion tonnes of coal.
The company is presently focused on Block B2 at the mine where the coal is present at a maximum depth of 47m.
