Good morning! I finally returned home to Hove last night, after literally a week sleeping on a friend's sofa in London, due to the air bed having a slow puncture. Never again! It was an interesting afternoon however, 3-hours of which was spent with a group of investors at the offices of Zanaga Iron Ore (LON:ZIOC). I'm not normally interested in resource sector stocks, however this one is particularly interesting because their project is a JV with one of the largest mining companies in the world, Glencore. A staggering $330m has been spent on a highly detailed feasibility study, and once in full scale production, this project will account for 2% of global iron ore production, at the bottom of the cost curve.

When you look at the economics of the project, which is in the smaller, more politically stable Congo, in West Africa, it's hard not to get excited about it. The only question is how the capex funding of $2.2bn will be structured, as that is likely to lead to significant dilution for ZIOC, although there are safeguards in place on that front.

It's definitely time for me to go on a diet, as for the second time recently, an overload alarm went off the moment I stepped into the lift as we were leaving! How embarrassing!! Hilarious though, especially as I had just jovially said, "Room for a small one?!" as I stepped into the lift, and one wag retorted, "There is, but there isn't room for you!!"

It's a long term project, and there is still a big uncertainty over project financing, but once in production Zanaga will be producing 2% of the entire world's iron ore, right at the bottom of the cost curve, and also crucially with very low impurities - extremely important where the largest producer of steel (China) is experiencing such terrible problems with pollution - a great deal of which is apparently created by steel and cement factories. So it's a speculative, but potentially very exciting share, in my opinion. The project has very strong economics, and is almost certainly going ahead, the only question mark is what percentage ZIOC will own of it once it's funded.

 

 

 

 

Staffline (LON:STAF)

This is a stand-out riser on my watch…

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