REG - Zanaga Iron Ore - Feasibility Study Update

Zanaga Iron OreAnnouncement

30/04/2024 07:00

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RNS Number : 4919M  Zanaga Iron Ore Company Ltd  30 April 2024

30 April 2024

Feasibility Study update

Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (AIM: ZIOC), is
pleased to announce the results of the Company's 2024 Feasibility Study update
process ("2024 FS update").

Highlights

Positive results received from the 2024 FS cost update study further
underlines the robust economics of the Company's 30 Mtpa staged development
Zanaga Iron Ore Project:

·    12Mtpa Stage One

o  Capital investment of US$ 1.94 billlion

o  Operating cost of US$ 31.5 / dmt FOB

o  Net Present Value of US$ 3.68 billion

o  Internal Rate of Return of 26.2%

·    18Mtpa Stage Two optional expansion

o  Capital investment of US$ 1.87 billion

o  Operating cost of US$ 24.9 / dmt FOB

o  Total combined Net Present Value of US$ 7.36 billion

o  Internal Rate of Return of 28.2%

2024 FS update study results

In 2023 the Company partnered with a Chinese iron ore technical expert
engineering firm ("Chinese EPC Partner") as part of a process to update the
economic evaluation of the Zanaga 30 Mtpa staged development project.

Using the 2014 Feasibility Study's ("2014 FS") infrastructure designs,
flowsheets and material take off lists, direct and indirect cost estimates
were updated to current market pricing using Chinese major equipment and
contractor pricing for both phases of 12 Mtpa Stage One haematite ("Stage
One"), plus 18 Mtpa Stage Two magnetite expansion ("Stage Two") projects,
inclusive of buried concentrate pipeline and port infrastructure.

2024 FS update results

                                         Unit      Stage One  Stage Two

12Mtpa
+18Mtpa

                                                              (30Mtpa Total)
 Capital Cost                            US$ m     1,935      1,871
 Operating Cost (Average, Life of Mine)  US$ /dmt  31.5       24.9
 Net Present Value                       US$ m     3,681      7,357
 Internal Rate of Return                 %         26.2       28.2

Note: Iron ore prices based on AME Group's long term real iron ore price
forecast for 65% Fe IODEX. Operating costs exclude royalties payable.

These results compare favourably against the previous 2014 FS capital and
operating costs estimates, as outlined below;

                                         Unit      Stage One  Stage Two

12Mtpa
+18Mtpa

                                                              (30Mtpa Total)
 Capital Cost                            US$ m     2,219      2,489
 Operating Cost (Average, Life of Mine)  US$ /dmt  32.1       25.7

 

Since 2014, the Company has conducted a number of technical and economic
review exercises using third party western technical consulting firms, which
resulted in high level estimations of the costs to develop the project at that
time, but only to a Preliminary Economic Assessment (PEA) or Pre-Feasibility
Study (PFS) level of definition. Today's 2024 FS update has been concluded to
a higher degree (+/- 20% accuracy) full feasibility study level of definition.
In addition, the results provided by ZIOC's Chinese EPC Partner have been
independently reviewed and validated by a third-party technical consulting
firm.

The Company believes these positive results provide much greater confidence in
the Project's economic feasibility in today's market and cost environment, and
with this, provides a key catalyst for potential strategic investors to
consider funding of the next logical Project phase, being the front end
engineering and design (FEED) program to further define the Project's physical
elements and risk abatement strategies.

Other ongoing investigations into the establishment of hydro-electric power
assets and mineral port and their respective third-party investments are on
schedule and their results will be incorporated into the FEED program.

 

Marty Knauth, CEO commented:

"A large volume of work has been completed during the recent six months by
ZIOC, MPD Congo and our consulting Partners, which I am very satisfied with.
This detailed re-costing study further demonstrates that the Zanaga Project
provides extremely robust returns for investors and significant infrastructure
assets and positive legacies for the Government and people of the RoC. During
recent engagements with RoC Ministries, communities and potential strategic
investors, the burden of being the first mover in the region of high grade,
low impurity iron concentrates for green steel production, is strongly
supported and makes for an exciting future for Zanaga.

From this foundation, the upcoming FEED phase will not only seek to validate
and enhance our technical confidence but critically, develop Zanaga's
management plans around environment, community, training, health, water, mine
wastes and ultimate closure. We believe these are equally as important as safe
and reliable engineering, and financial viability."

 

Clifford Elphick, Chairman of ZIOC commented:

"I am delighted with the results of our 2024 Feasibility Study update,
demonstrating the attractive economics of the Zanaga Iron Ore Project in
today's market environment. It is exciting to have secured updated pricing for
the development costs of the project from experienced Chinese partners with
extensive experience in iron ore process plant and slurry pipeline design and
engineering.

We look forward to presenting these results to the various strategic partners
we have been engaging with and advancing our discussions further with them as
we look to progress towards front end engineering and design of the project"

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW
BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"), AND IS
DISCLOSED IN ACCORDANCE WITH THE COMPANY'S OBLIGATIONS UNDER ARTICLE 17 OF
MAR

 

The Zanaga Iron Ore Company Limited LEI number is 21380085XNXEX6NL6L23.

For further information, please contact:

Zanaga Iron Ore

Corporate Development and
Andrew Trahar

Investor Relations Manager
+44 20 7399 1105

Liberum Capital Limited

Nominated
Adviser
Scott Mathieson, John More

and Corporate Broker
                                      +44
20 3100 2000

Shard Capital Partners LLP

Corporate
Broker
Damon Heath

 
+44 207 186 9952

 

About us:

Zanaga Iron Ore Company Limited (AIM ticker: ZIOC) is an iron ore exploration
and development company, with the Company's flagship asset being its 100%
owned Zanaga Iron Ore Project located in the Republic of Congo, for which the
Government Mining Licence, Environmental Permit and Mining Convention are all
in place.

A major Project update has recently been concluded to freshen historical
studies in light of changes in the world's economy and growing demand for
low-carbon steel production, for which the Zanaga resource is highly suited,
with the potential to become one of the largest producers of high grade
premium pellet feed iron ore.

 

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