Recently known as the Lubu coal project, the Muchesu coal project was officially inaugurated at the end of July this year by Zimbabwe's President, Emmerson Mnangagwa, who hailed it as transformational for Binga District and Zimbabwe. Contango, which has a 70% stake in Muchesu, aims to produce high-quality coking coal for which there is a ready market.

Contango holds a vast land area of 19,236 hectares in the Karroo Mid Zambezi coal basin, with over 1.3 billion tonnes of coal identified to NI 43-101 standards. This resource can support not only coking coal but also thermal coal production for decades. The company's goal is to manufacture coke on-site, potentially increasing margins from around $80 per tonne to over $300 per tonne.

Contango has initiated the production of coke using a small-scale 1-tonne per hour coke battery on-site, with plans to expand this capacity. The company has already signed a Memorandum of Understanding with a potential off-taker.

The Muchesu coal project is located in an area considered environmentally safe, near the towns of Binga and Kamativi. The project is expected to significantly benefit the local community by creating jobs and providing quality housing for relocated families.

Contango is using a Wirtgen 2200 SM surface miner, the first of its kind in Zimbabwe, to extract coal from the mine. This machine's efficiency has reduced the need for blasting and minimized the number of people affected by mining operations. It can mine up to 500 tph of hard rock and up to 1,000 tph of coking coal.

The company plans to add additional coal washing capacity in the future, with the potential to install modular coke plants to increase production. Once steady-state production is achieved, Contango expects operating costs to be around $45 per tonne of washed coal.

Contango has entered into an offtake agreement with TransOre International FZE for the sale of up to 20,000 tonnes of washed coal per month. TransOre will handle logistics and exporting through its affiliate, African Rail International.

Overall, Contango aims to develop Muchesu into a significant mid-tier coal mine, producing multiple revenue streams from coking coal, thermal coal, and coke.