LONDON: Contango Holdings Plc has entered into a Share Purchase Agreement to acquire the Lubu Coalfield from Consolidated Growth Holdings Limited (CGH) against a consideration of £6.45.

Contango Holdings will satisfy the acquisition consideration of £6.45 million by issuing 128,849,961 ordinary shares to CGH at a price of £0.05 each.

 The Lubu Coalfield is a potential thermal and coking coal project. Following completion of the acquisition, the company initially intends to commence trial mining and carry out bulk samples to determine the viability of full-scale production.

Lubu Coalfield is permitted for trial mining. Existing cash resources and new funds to be raised by way of a placing by the Company of new ordinary shares will be applied to site preparation and refurbishment to facilitate modest production levels and early cash flow. The Company intends to sell the coal product generated in this phase to regional power companies in Zimbabwe and other industrial users.

Contango Holdings has entered into a conditional share purchase agreement with Someden Investments (Private) Limited, Monaf Investments (Private) Limited (both Someden and Monaf being subsidiaries of CGH) and CGH to implement the sale and purchase of 70% of the issued share capital of Monaf, the novation of certain debts owing to CGH by Monaf and the transfer of certain mining data owned by CGH.

The consideration payable for the Sale Shares, CGH-Monaf Loans and Mining Data is £6.45 million. This will be satisfied by the Company issuing the Consideration Shares to CGH.

The SPA sets out a number of conditions precedent, which must be satisfied in order to effect the transaction, such conditions being typical in a transaction of this nature. The SPA also contains commercial warranties, which are to be given by Someden and CGH, and a tax covenant, which is to be met by Someden.[the_ad id=”31605″]