Contango receives 5 million pound proposal to clear debt

CONTANGO Holdings PLC, the London-listed developer of the Muchesu coal project in Hwange District, has received a proposal from Pacific Goal Investments Private Limited (PGI) and Huo Investments to subscribe for approximately £5 million through the issuance of 450 450 451 new ordinary shares.

PGI is a Zimbabwe-focused investment vehicle jointly owned by Mr Wencai Huo, the principal of Huo Investments, and Mr Liu Jun. The two investors are long-term strategic partners with a stated interest in unlocking value from Zimbabwe’s mineral resources.

The share subscription proposal is expected to recapitalise the company and enable the repayment of all existing shareholder loans.

If approved, the transaction will leave Contango debt-free and better positioned to begin paying dividends as royalty income increases at its Muchesu operation.

The Muchesu coal project, which hosts a resource of more than two billion tonnes, is viewed as a potentially transformative asset for Matabeleland North, with anticipated benefits for employment, infrastructure development and downstream industries including power generation and mineral processing.

Under the terms of the proposal, PGI and Huo Investments intend to subscribe for 358 680 794 and 91 769 657 new ordinary shares respectively. This would give the Strategic Investors holdings of 29,7 percent and 20,4 percent in the enlarged share capital.

Huo Investments owns 154 750 000 ordinary shares, while PGI has no existing stake in Contango.
The subscription price represents a 39 percent premium to the mid-market closing price on February 12, 2026, signalling strong investor confidence in the company’s value and outlook.

The proposed subscription remains conditional on shareholder approval at a general meeting and the granting of a Waiver of Rule 9 of the Takeover Code.

The company and its advisers are in discussions with the Takeover Panel and will, in due course, publish a circular and convene the required meeting.

Contango chief executive officer Mr Danny dos Santos described the proposal as a major milestone for the business.

“I am delighted to announce this conditional Subscription at a healthy premium to current trading levels, which will recapitalise the company and enable us to repay all existing shareholder loans.

“This will leave the company debt-free and now in a position to pay dividends to shareholders as royalty income grows at Muchesu,” he said.

The capital raise is expected to strengthen Contango’s balance sheet and provide a firmer platform for expansion as the Muchesu project continues to scale up.

Mr dos Santos said Huo Investments’ participation signalled continued confidence in the company’s strategy.

“Huo Investments are already a major shareholder and I am pleased they have elected to maintain their percentage ownership in the Company through a pro rata investment of approximately £1 million. PGI have undertaken material capital investment at the site already and with their circa £4 million participation in the subscription, they will become our largest shareholder,” he said.

Combined, the long-term strategic investors will hold around 50 percent of the enlarged share capital, which management views as a strong alignment of interests.

“Combined, the long-term Strategic Investors will have an approximate 50 percent stake in the company and are heavily aligned with existing shareholders to deliver value within Contango for the benefit of all shareholders. I look forward to providing further updates as we position Contango for a period of growth and expansion,” added Mr dos Santos.

The recapitalisation is expected to enhance Contango’s financial flexibility, allowing it to focus on maximising operational efficiencies and scaling up royalty-generating activities at Muchesu.

In January, PGI was formally registered as the operator of the Muchesu coal project following approval from the Reserve Bank of Zimbabwe (RBZ).

This development represented a key step in restructuring one of Zimbabwe’s most strategically placed coal assets in Matabeleland North, a region increasingly central to the country’s mining-to-energy value chain.

Large-scale coal production in the province is expected to support Zimbabwe’s pursuit of energy security, reduce reliance on electricity imports and provide feedstock for thermal power generation, coal-to-energy initiatives and industrial processes.

The project also has potential to stimulate local supply chains, promote contractor development, facilitate skills transfer, boost provincial revenues and strengthen Zimbabwe’s export capacity.

The province is emerging as the core of the coal-to-energy value chain, with investments expected to unlock up to US$1 billion under the coal and hydrocarbon programme.