We combined optical spectroscopy and first principles electronic structure calculations to reveal the charge gap in the polar magnet Fe$_2$Mo$_3$O$_8$. Iron occupation on the octahedral site draws the gap strongly downward compared to the Zn parent compound, and subsequent occupation of the tetrahedral site creates a narrow resonance near the Fermi energy that draws the gap downward even further. This resonance is a many-body effect that emanates from a flat valence band in a Mott-like state due to screening of the local moment - similar to expectations for a Zhang-Rice singlet, except that here, it appears in a semi-conductor. We discuss the unusual hybridization in terms of orbital occupation and character as well as the structure-property relationships that can be unveiled in various metal-substituted systems (Ni, Mn, Co, Zn).
