| 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 · £7.5 million raised ("Fundraise") in October 2022 at 6p to support the Lubu Coal Project ("Lubu") to first coking coal production from Q1 2023. · £1.0 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 £7.5 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:
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 leading 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 £7,500,000 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 £2,090,604 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 £3,314,359 (2021: £2,419,266). 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 161.5km2 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
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Condensed Consolidated Statements of Comprehensive Income
For the six months ended 30 November 2022
| | |
Unaudited Six Months ended 30 November 2022 |
Unaudited Six Months ended 30 November 2021 | Audited Year to 31 May 2022 |
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| | Notes | £ | £ | £ |
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| 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 | | - | - | - | |
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| | | | |
| Loss for the period |
| (1,786,947) | (636,398) | (2,944,656) |
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|
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| Loss attributable to owners of the parent company | | (1,632,379) | (591,350) | (2,805,563) |
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| Loss attributable to non-controlling interests | | (154,568) | (45,048) | (139,093) |
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| | (1,786,947) | (636,398) | (2,944,656) |
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| Basic and diluted loss per Ordinary Share | 4 | (0.55) | (0.27) | (1.00) |
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| |
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| Other comprehensive income | | 319,624 | (40,735) | 127,977 |
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| Total comprehensive loss for the period | | (1,467,323) | (677,133) | (2,816,679) |
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| Total comprehensive loss attributable to owners of Contango Holdings PLC
| | (1,403,389) | (618,569) | (2,700,477) |
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| Total comprehensive loss attributable to non-controlling interests
| | (63,934) | (58,564) | (116,202) |
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| Total comprehensive loss for the period
| | (1,467,323) | (677,133) | (2,816,679) |
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Condensed Consolidated Statements of Financial Position
For the six months ended 30 November 2022
| | Notes |
| Unaudited as at 30 November 2022 | Unaudited as at 30 November 2021 | Audited as at 31 May 2022 |
| | |
| £ | £ | £ |
| 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 |
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| | | | | |
| 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 |
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| 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 |
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| Equity | |
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| 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 ownersowners 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
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| Share capital | Share premium | Shares to be issued | Warrant reserve | Option reserve | Translation reserve | Retained earnings | Total Equity of Owners | Non-controlling interests | Total
|
| | £ | £ | £ | £ | £ | £ | £ | £ | £ | £ |
| 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) |
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| 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) |
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| 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
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| Notes | Unaudited Six Months ended 30 November 2022 | Unaudited Six Months ended 30 November 2021 | Audited Year ended 31 May 2022 |
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| £ | £ | £ |
| Operating activities |
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| Loss after tax | | (1,786,947) | (636,398) | (2,944,656) |
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| 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) |
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| 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 debt | | 1,331,750 | - | - |
| Proceeds from investor loans | | 1,349,493 | - | 500,000 |
| Net cash flows from financing activities | | 7,398,439 | 3,290,415 | 4,754,666 |
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| Increase/(decrease) in cash and short-term deposits | | 2,799,146 | 1,134,983 | 500,211 |
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| 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 |
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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 ("£").
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 after charging: |
Unaudited Six Months Ended 30 November 2022 |
Unaudited Six Months Ended 30 November 2021 | Audited Year Ended 31 May 2022 | |
| | £ | £ | £ |
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| 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 Six Months to 30 November 2022 | Unaudited Six Months to 30 November 2021 | Audited Year to 31 May 2022 |
|
| £ | £ | £ |
| 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 As at 30 November 2022 | Unaudited As at 30 November 2021 | Audited As at 31 May 2022 | ||
| | | | £ | £ | £ | ||
|
| | | | | | ||
| 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 £750,000 - being €400,000 (£346,517) in cash and 4,000,000 ordinary shares at £0.10 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 (£346,517) together with the £400,000 of shares to be issued are currently held on the parent company balance sheet until the transfer is completed.
6. Other receivables
| | | | Unaudited As at 30 November 2022 | Unaudited As at 30 November 2021 | Audited As at 31 May 2022 | |||
| | | | £ | £ | £ | |||
|
| | | | | | |||
| 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 As at 30 November 2022 | Unaudited As at 30 November 2021 | Audited As at 31 May 2022 | |||
| | | | £ | £ | £ | |||
|
| | | | | | |||
| 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 3rd 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 fully paid | Share Capital | Share Premium | Total Share Capital |
| | | £ | £ | £ |
| 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 £5,000,000 ordinary shares at £0.01 per share resulting in 500,000,000 ordinary shares.
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