(Alliance News) - Contango Holdings PLC on Friday said it has no plans for an equity raise, as the firm noted the recent sharp drop in its share price.

The London-listed natural resource development company, which focuses on mining projects in Sub-Saharan Africa, responded to the drop in its share price over the past week.

"The board is not aware of any changes since its last update of 26 October 2023 that would warrant this price action, nor of any material change in circumstances that would require disclosures," Contango said.

Contango's shares were down 8.3% on Friday in London at 3.02 pence each, having fallen around 20% since last Friday.

Contango also said it had no plans to raise funds through an equity placement, noting "speculation" about the matter. The company claimed that it has not sought an equity raise since the last raise of GBP7.5 million at 6p per share in the fourth quarter of 2022.

Instead, the group has sourced loans from existing shareholders to provide working capital ahead of consistent sales.

Regarding operations, the company's current focus is on delivering 1,000 tonnes of washed coking coal to an unnamed multinational company, or MNC, later this month. Contango will be paid in advance and expects to be able to deliver the tonnage to the South African facilities within the next two weeks.

Given testing previously undertaken by the MNC, Contango expects to enter into a long-term offtake contract with the tier one consumer. The MNC has expressed a minimum need of 6,700 tonnes per month of washed coal from the Muchesu mine in Zimbabwe, Contango's primary value driver in which it holds a 70% interest.

However, the MNC has the capacity to increase the contract's tonnage, depending on the results of the 1,000 tonne bulk sample and production capacity at Muchesu.

Contango also received a non-binding proposal for acquisition of its assets in October from a separate unnamed company. According to Contango, "the company making the proposal has subsequently drilled three holes at site, at its own cost, as part of its due diligence process and is reviewing the results". Further updates on this proposal will be made "as appropriate".

By Hugh Cameron, Alliance News reporter

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