Contango : Unaudited Interim Results for the 6 months to 30 November 2021

Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural Resources

24 March 2022

Contango Holdings Plc

('Contango' or the 'Company')

Unaudited Interim Results for the 6 months to 30 November 2021

Contango Holdings Plc, the London listed natural resource development company, announces its results for the six-month period ended 30 November 2021.

Highlights

• Raised £3.5m to advance Lubu into production
• High-qualityof Lubu coking coal confirmed by independent testwork by Bureau Veritas laboratory, confirming viability for coke manufacture
• Increasing global and regional coking coal and coke prices further enhanced the attractive economics of Lubu
• Successful exploration activities undertaken at Garalo-Ntiela to prove up the targeted resource of 1.8Moz-2Moz gold
• Cash as at 31 November 2021 £2,419,266

Post period

• First production at Lubu expected by the end of Q1 2022
• Wash plant ordered and installation scheduled in Q2 2022
• Planning and development of coke batteries at Lubu underway with installation expected in Q4 2022
• Discussions underway with several interested parties to negotiate coking coal offtake contracts for mid-2022 and coke offtake contracts from Q4 2022.
• Enquiries from both regional and European customers about the coke product, whilst significant uplift in coke price has also led to increased viability for export to Asia.
• Approaches received from potential domestic and international investors to support the future development of Garalo-Ntiela and a site visit as part of the ongoing due diligence of the strategic parties is scheduled for April 2022

Carl Esprey, Chief Executive Officer of Contango Holdings, said:

"Contango is now at a real turning point as we make the final preparations on site at Lubu ahead of first production later this month, and as we continue our strategic negotiations with potential investors to support the development of Garalo- Ntiela. With our attention focussed firmly on commercialising these two significant assets, we are delivering on our overarching objective to deliver cash flow in a short timeframe to support the long-term expansion of the Company and its portfolio. 2022 is set to be a pivotal year and I look forward to delivering updates on our progress throughout the year."

For further information, please visit www.contango-holdings-plc.co.uk or contact:

Contango Holdings plc

E: [e-mail]

Chief Executive Officer

Carl Esprey

Tavira Securities Limited

T: [phone]

Financial Adviser & Broker

Jonathan Evans

St Brides Partners Ltd

T: [phone]

Financial PR & Investor Relations

Susie Geliher / Charlotte Page

Chairman's Statement

It gives me great pleasure to report on the activities and developments that the Contango team have achieved during the period and the months following. Our endeavours, and indeed our wider strategy, have been directed both by the evolving and increasing demand appetites for commodities and also by the deeper understanding of our own primary assets: the Lubu Coking Coal Project in Zimbabwe ('Lubu'), and the Garalo-Ntiela Gold Project in Mali ('Garalo-Ntiela'). As we move into our next phase of development at both assets, I believe Contango is in an extremely strong position to effectively maximise and crystallise the value of these projects.

Looking firstly at Lubu, our most advanced project, which is now entering its production phase. Our attention during the period focussed largely on sample analysis, which evaluated a variety of metrics and properties derived from 49 samples extracted from the 1A Lower and MSU metallurgical seams including ash, sulphur and phosphorous contents, as well as yield and calorific values. Whilst originally intended to provide potential off-takers with a better insight into the quality of our coal, our strategy developed to include the production of coal for our own operated coke batteries, which we intend to install before the end of 2022. Our internal modelling has confirmed that not only will Contango capture more of the value chain, and therefore much higher margins for our product, but we will also gain the opportunity of exporting our coke to an international market, where it can demand even greater premiums. This was a strategic decision for Contango and one which we believe lays the foundation for much more rapid growth in 2023 and thereafter. Furthermore, having the optionality of coke production at this early stage in our production journey at Lubu will support the onward expansion of the project over and above the initial 1A Lower and MSU seams, ensuring that Contango is in a much stronger position to realise the full potential of this project, which has a resource in excess of 1.3 billion tonnes, as identified under NI 43-101 standard.

Looking now to Garalo-Ntiela, our focus has also moved towards the strategic realisation of its full value. As shareholders will be aware, this asset has proved to be much larger than originally envisaged; potentially orders of magnitude larger. With this in mind, the project really merits greater exploration and development as it would be ill-advised to expedite production and risk the sterilisation of potentially highly productive areas for the sake of quick revenue, especially given the expected significant and heightened cashflows from Lubu. Accordingly, the Board has taken the prudent approach to refine its understanding of the wider resource potential of the project through the application of aero-magnetic studies, which have yielded multiple high-grade potential target zones, and the recently completed Induced Polarisation ('IP') survey. The results of these studies and surveys will serve to enable the Company to finalise its 2022 drill programme, intended to firm up the targeted resource of 1.8Moz-2Moz gold.

Financial Review

Funding

During the period, the Company was funded through a £1,000,000 Convertible Loan sourced from existing investors in June 2021 at the fixed conversion price of 6 pence per share, the funds of which were used for a pre-production work programme at Garalo-Ntiela, as well as the aforementioned studies on the Lubu. The Company also benefited from the exercise of warrants during the period, which were otherwise due for expiry on 1 November 2021, raising approximately £1,025,000.

A further £2,500,000 was raised through a Placing of 41,666,666 New Ordinary Shares of £0.01 each at a price of 6 pence per Placing Share in November 2021 in order to fund the fast tracking into production of the Lubu Coal Project. A further 41,666,666 warrants with an exercise price of 12 pence per share were issued to the placees. If exercised in full these warrants would provide a further £5,000,000 to the Company.

Revenue

The Company generated no revenue during the period under review as it was focusing on advancing its assets that Contango believes will generate revenue for the Company.

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 2021, the Company held £2,419,266 (2020: £1,145,301). The Company is fully funded to bring the Lubu Coking Coal Project into production by the end of Q1 2022.

Outlook

Over the past 12 months, Contango has made enormous progress towards monetising its assets and delivering both cashflow and value for investors. Much of this progress has been commercially sensitive, however I am confident that we are approaching the stage that this progress can be widely communicated and that the real tangible value of the work we have done will be reflected in our valuation. Indeed, as recently reported via RNS in February, the Company has advised that it has received approaches from potential domestic and international investors to support the future development of

Garalo-Ntiela and a site visit, hosted by CEO Carl Esprey, is scheduled for the investors in the coming weeks. The Board believes that Contango has demonstrated Garalo-Ntiela's potential to support a significant gold mining operation, and it would expect any transaction it enters into would need to reflect this. Further announcements regarding operational advances and strategic discussions will be made in due course, as will updates relating to the commencement of coal mining operations at Lubu over the coming weeks.

I look forward to what I believe will be an exceptionally busy period for Contango, both operationally and corporately, as we embark on the next phase of our growth as a production company.

Roy Pitchford

24 March 2022

CEO REPORT

Contango's primary objectives during the period under review were to advance both the Lubu Coal Project in Zimbabwe and the Garalo-Ntiela Project Area in Mali towards production.

Lubu Coal Project ('Lubu') - renamed Muchesu Coal post-period end

Contango has a 70% interest in Lubu, with the remaining 30% held by supportive local partners.

As previously reported, Lubu has benefitted from significant previous investment, with previous owners expending more than $20m on exploration and development, which has enabled a sizeable resource in excess of 1.3 billion tonnes to be identified to NI 43-101 standard. Contango will initially focus on producing coking coal from Block B2, where extensive work has also been undertaken to define the specific properties of the coal. The coal seams within Block B2 are from surface down to a maximum depth of 47m, ensuring operating costs are kept at very attractive levels.

Contango undertook analysis from samples extracted from the metallurgical seams at Lubu in October 2021, with a view to finalising off-take discussions with various commercial partners. These results exceeded the Company's expectations and confirmed the commercial characteristics and viability of the metallurgical coal in the production of coke. This was a significant development for the Company as it confirmed the attractive qualities of Contango's coal project in the context of both off-take opportunities and for the Company's own independent expansion strategy for Lubu.

The Company's strategy for Lubu, informed by the sample analysis and after extensive modelling of the demand fundamentals for coking coal and coke, will not be restricted to an immediate local off-take solution, but will also incorporate the installation of the Company's own coke batteries. It is intended that this path will deliver a far better margin for the end product, as well as create synergies with the longer-term expansion of Lubu. One example of this is the opportunity to generate power, capturing heat from the coke batteries and using it for power generation to support the rest of the operation.

The current fundamentals for all forms of coal remain highly attractive with demand rising significantly in the last year and prices expected to increase further given shortages of coke and coking coal. Now that production at Lubu is on the horizon,

discussions are currently underway with several interested parties with regards to coking coal offtake contracts and the coke product from the expected coal production. Post-period end, a wash plant has been ordered and is scheduled to be installed in Q2 2022 in order to allow the delivery of coking coal to our customers and therefore generate revenue. We are therefore extremely confident that Lubu is ideally positioned to take advantage of this market environment, particularly through the application of our coke battery development, to provide funding in some form for our future development plans and we look forward to providing further news as we target first coal production by the end of March.

Garalo-Ntiela Project Area ('Garalo-Ntiela')

In March 2021, the Company acquired the Ntiela licence, which neighbours the existing Garalo permit. The Ntiela licence was acquired for approximately £750,000, being €400,000 (£346,517) in cash and 4,000,000 ordinary shares. The share component will be paid once the formal transfer of the licence is completed, which is expected to be in mid-2022.

Since acquiring the Ntiela licence, the two permits have been consolidated to form the Garalo-Ntiela Project Area over which the Company has undertaken two drilling programmes during the period. Consistently encouraging results have been received from the development and activities undertaken, demonstrating its potential to be a major new mine in the region.

A work programme on the project returned positive results in June 2021, which was initially designed to assist in fast tracking it into production, alongside increasing the understanding of the wider prospectivity of the licences. The majority of the exploration activities were centred on the Garalo permit, which has demonstrated its potential for a 1.8Moz-2Moz gold resource. However, work on the then recently acquired Ntiela concessions continued to show encouraging results and two major structures were intersected during the programme.

Subsequent to this work programme, a short low-cost programme of aeromagnetics and airborne geophysics for the collection of magnetic and radiometric data began in July 2021 and was completed across both licences. Although the project area had been drilled extensively previously, the data from this programme was focused on properly assessing the upside potential of Garalo's gold resource and supporting its accelerated development into production. This programme also particularly focused on Ntiela following the encouraging results from earlier exploration work undertaken and targeted some untested areas.

The samples from this work programme were analysed in October 2021, building on the existing drill data. The results from the completed work programme reconfirmed the expected extensions of the G1 and G3 targets in the Ntiela licence, which are the main targets to support the aforementioned targeted resource. A short, targeted follow up drilling campaign on the two deposits has been planned for 2022 to test the interpretations to depth alongside infill drilling. In addition, the plans for a standalone 30,000oz per annum heap leach gold operation are being refined, which is expected to generate additional cashflow.

Post-period end, the results from the aeromagnetic studies have been received and have demonstrated multiple high-grade potential target zones whilst the Induced Polarisation ('IP') survey has been completed. These two sets of results, along with those from historic drilling, will finalise the 2022 drill programme which intends to confirm the targeted resource of 1.8Moz-2Moz gold.