REG - Zanaga Iron Ore - US$21.5m Private Placement & Proposed Buyback

Zanaga Iron OreAnnouncement

03/03/2025 07:15

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RNS Number : 0430Z  Zanaga Iron Ore Company Ltd  03 March 2025

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

3 March 2025

 

Zanaga Iron Ore Company Limited

("ZIOC" or the "Company")

US$21.5m Private Placement, Proposed Buyback of Glencore Shares, Proposed
Board Changes and Offtake

 

Zanaga Iron Ore Company Limited (AIM: ZIOC) is pleased to announce an equity
fundraise (the "Fundraise") for gross proceeds of US$21.5 million, with
potential to upsize to US$23.0 million, conducted by way of subscriptions
("Subscriptions") to a group of investors with significant experience in the
mining industry, project and infrastructure development, and strong
relationships in Republic of Congo ("RoC").

The participation of highly experienced investor and advisory groups brings
world-class expertise in large-scale iron ore development, financing, and
project execution to ZIOC. Their involvement significantly de-risks the Zanaga
Iron Ore Project (the "Zanaga Project"), supporting the Company's path to a
final construction decision and ensuring a structured approach to funding and
development.

The Company also announces that it has entered into an agreement ("the Buyback
Agreement") with Glencore Projects Pty Limited ("Glencore") to repurchase
Glencore's equity shareholding in ZIOC (the "Glencore Buyback"), completion of
which will result in the cancellation of the existing Relationship Agreement
between the Company and Glencore (including the resignation of Glencore's
director appointee from the ZIOC Board), and the cancellation of the existing
Offtake Agreement between the Company, the Company's wholly owned subsidiary
MPD Congo ("MPD") and Glencore International AG over marketing rights to iron
ore products from the Zanaga Project. The Fundraise will complete in two
tranches, at the same price.

The Company also announces its intention to appoint Martin Knauth (CEO of
ZIOC) and Phil Mitchell to the Board of Directors of ZIOC in due course.

Use of the Proceeds of the Fundraise:

·              US$15 million of the gross proceeds will be used
to repurchase, and subsequently cancel, Glencore's entire current 43% equity
shareholding in ZIOC, resulting in the termination of Glencore's Offtake
Agreement and Relationship Agreement with the Company.

·              The additional proceeds will provide the Company
with more than 12 months of corporate and project level working capital
expenditure. This will enable the advancement of key project initiatives aimed
at further enhancing the Zanaga Project's robust economics and high quality
iron ore product, and commence a formal bid process aimed at establishing a
construction consortium for the Zanaga Project - a globally significant,
US$5.7bn NPV, 30Mtpa staged development iron ore project targeting high grade
production, at low operating costs, underpinned by a 6.9 billion tonne
resource and a 2.1 billion tonne reserve.

Key investors in the Fundraise:

The Company has entered into subscriptions with a number of new and existing
shareholders to subscribe for an aggregate of 416,860,475 Ordinary Shares at a
price of US$0.0516 per Ordinary Share (the "Issue Price"), approximately 4.10
pence per share including agreements with:

1)   Greymont Bay LLC ("Greymont Bay"), through two strategic investment
vehicles established by a consortium of mining investors, will be investing
US$10.85 million for a 26.2% post buy back transaction ownership in ZIOC.
Further, Greymont Bay will also have the right at its sole election to invest
an additional US$1.50 million in the second tranche at the Issue Price
("Additional Greymont Bay Subscription"). If Greymont Bay elects to make the
Additional Greymont Bay Subscription, the gross proceeds of the Fundraise
undertaken by the Company, including the subscriptions, would amount to
US$23.01 million and Greymont Bay would have a 28.8% post buy back transaction
ownership in ZIOC. Greymont Bay's investors and advisors include:

o  Mark Cutifani: Former CEO of Anglo American plc (2013-2023), a major iron
ore producer with large-scale operations in South Africa and Brazil, including
Minas Rio, which shares significant technical similarities with the Zanaga
Project in logistics infrastructure and product quality. Mark serves as
Chairman of Vale Base Metals and played a key role in negotiating Manara's
investment - backed by the Kingdom of Saudi Arabia - into Vale Base Metals.
Mark also sits on the Board of TotalEnergies, a supermajor oil company with
considerable presence and investment in RoC. Mark was also formerly CEO of
AngloGold Ashanti, and is a Co-Founder of Odin, a global independent advisory
firm.

o  Tony Trahar: Former CEO of Anglo American plc (2000-2007). Tony is
credited with developing and implementing a strategy for the major expansion
of Anglo American through organic growth and acquisitions, with the market
capitalisation of the company growing to US$90 billion by the end of his
tenure. He spearheaded Anglo American's acquisition of Kumba Iron Ore Ltd in
South Africa, which reached over 47Mtpa production at its peak, and remains
one of the world's largest producers of high-quality iron ore. He also serves
as a Strategic Advisor to Vision Blue Resources, a mining investment fund.

o  Tony O'Neill: Served as Group Director - Technical at Anglo American plc
from 2013 to 2022, where he played a key role in improving productivity and
cost efficiencies across the company's operations. With over 37 years of
experience spanning iron ore, copper, nickel, and gold, he has led major
restructuring efforts and technical innovations within complex mining
businesses. Tony is a Fellow of the Royal Academy of Engineering, and is a
Co-Founder of Odin, a global independent advisory firm.

o  Phil Mitchell: Formerly of Rio Tinto, where he played a pivotal role in
transforming its iron ore division into the company's flagship business unit,
with over 300 million tonnes of iron ore production. He later served as Rio
Tinto's Head of Business Development, overseeing strategy, M&A, and
strategic business change. Phil also serves as CFO of I-Pulse Group, where he
previously served as Chairman of I-Pulse's I-ROX business and Société des
Mines de Fer de Guinée (SMFG). Phil is also Chairman of the Board at
Aura Energy Ltd.

o  Heeney Capital Resource Partners: A private capital firm headquartered in
New York, focused on acquiring significant interests in private companies and
individual assets. The firm specialises in development-stage mining assets,
leveraging deep sector expertise to unlock value in high-impact, strategically
significant projects. Its portfolio is complemented by opportunistic
investments across critical resource sectors, with a strong track record of
partnering with industry leaders to drive long-term asset growth and value
realisation.

2)   Gagan Gupta, Founder and CEO of Arise, is investing US$4.0 million
through an investment vehicle for a post buy back transaction ownership of
9.7% (before any additional Greymont Bay Subscription).

o  Arise is developing the Special Economic Zone ("SEZ") and its related
infrastructures facilities in Pointe-Noire, RoC.

o  Arise is a highly regarded operator and developer of industrial
ecosystems, designing, creating, financing and developing interconnected
infrastructure. The Arise portfolio consists of three existing port assets in
West Africa, as well as the development of the SEZ in Pointe-Noire.

o  Strategic Partnership: On December 11, 2024, Zanaga Iron Ore Company and
its wholly owned subsidiary, MPD, signed a Memorandum of Understanding ("MoU")
with Arise. This collaboration aims to advance the development of the Zanaga
Project's onshore and offshore port infrastructure within the SEZ, leveraging
Arise's extensive experience in infrastructure development to enhance and
de-risk the project's logistics and export capabilities.

3)   Sir Mick Davis, a highly successful mining executive accredited with
listing, leading and building Xstrata into one of the largest diversified
mining companies globally prior to its acquisition by Glencore in 2013. Sir
Mick grew Xstrata over a twelve-year period from a market value of US$500
million to over US$70 billion. Sir Mick has over 40 years of experience in
mining, industrials and natural resources, and is the Founder and Managing
Partner of Vision Blue, a strategic metal and mineral resources private equity
organisation, a Director of Vision Blue Resources, and Chair of a number of
its portfolio companies, including Sinova Global, Serra Verde, NextSource
Materials and Ferro-Alloy Resources. Sir Mick brings deep expertise in leading
international and emerging market businesses, with extensive engagement at
both governmental and operational levels.

4)   Other investors include:

o  The Founder of a Saudi Arabian investment fund focused on developing
downstream processing plants in the Kingdom of Saudi Arabia.

o  Significant investment from ZIOC's management team, namely Martin Knauth,
the Company's CEO, and Andrew Trahar, Corporate Development and Investor
Relations Manager.

 

Strategic Offtake Partner

As part of the transaction and as a condition of Greymont Bay's cornerstone
subscription, marketing rights over 20% of the iron ore products from the
Zanaga Project will be allocated to Gulf Iron and Steel (GIS), a consortium of
strategic industry entities seeking to develop integrated steel facilities
supplied by high-grade pellet feed iron ore to the Americas and the Middle
East ("GIS Offtake Agreement"). The GIS Offtake Agreement enhances market
access and offtake security, further de-risking Zanaga's commercialisation
strategy and supporting its path to financing and construction. The terms of
the GIS Offtake Agreement are in line with Group's current marketing agreement
with Glencore, as announced on 23 November 2022, but now provides ZIOC with
the flexibility to offer marketing or offtake rights over 80% of the Zanaga
Project's iron ore production to other strategic funding partners and
operators. The GIS Offtake Agreement is conditional upon the completion of the
Glencore Buyback and termination of Glencore's Offtake Agreement.

Clifford Elphick, Chairman of ZIOC, commented:

"Today's transaction is a transformational milestone for Zanaga, securing
investment and leadership from industry-leading mining luminaries with a
strong track record of developing some of the highest quality mining assets
globally."

"The fundraise allows us to buy back Glencore's shareholding and fund more
than a year of key workstreams that will accelerate the Zanaga Project. This
enhances our strategic flexibility, strengthens our financial position, and
re-positions the project to prepare for an execution phase."

"The iron ore industry has experienced a recent resurgence in M&A
transactions, aimed entirely at securing iron ore mines capable of producing
high grade iron ore. This transaction enables us to capitalise on our
preparatory discussions with strategic partners and assemble a construction
consortium for the Zanaga Project, aimed at unlocking the full potential of
what we believe is the world's most compelling undeveloped iron ore asset
globally."

"I am particularly excited about our new strategic partnerships with Middle
Eastern and International groups, with industry expertise but also the
commercial relationships needed to support financing and offtake agreements,
adding notable value for all our stakeholders, including the Republic of
Congo."

"I would like to thank Martin Knauth and Andrew Trahar for envisioning and
structuring this entire process, driving the transaction and raising the
capital."

Mark Cutifani, speaking on behalf of Greymont Bay, commented:

"Zanaga represents one of the most compelling undeveloped iron ore
opportunities globally, combining scale, high-grade production, and a clear,
cost-effective development path. Its low operating costs and integrated slurry
pipeline logistics mirror the efficiency and infrastructure-driven advantages
seen in assets like Anglo American's Minas Rio, which successfully scaled into
a leading global supplier."

"Zanaga's high-purity iron ore pellet feed product, grading up to 68.5% Fe, is
expected to be highly sought after in the shift toward low-carbon steel
production, providing a distinct premium market opportunity. The
straightforward phased development model and fully permitted status further
de-risk execution, allowing the project to move rapidly toward construction,
once financing is in place."

Gagan Gupta, CEO of Arise, commented:

"I'm pleased that ZIOC and its management share our confidence in the Republic
of Congo as an attractive investment destination and emerging mineral resource
producer. Our investment in Zanaga is not only a strategic entry into a
world-class iron ore project but also highly synergistic with our ambitions to
become the leading port operator on the coast of West Africa."

"As Arise develops the Special Economic Zone and key port infrastructure in
Pointe-Noire, our partnership with ZIOC and MPD creates a natural alignment
between high-quality iron ore production and efficient export logistics. By
leveraging our expertise in unlocking development capital and infrastructure
execution, we aim to accelerate the path to construction and long-term value
creation for the Zanaga Project and its associated ecosystem."

Martin Knauth, CEO of ZIOC, commented:

"I would like to thank Glencore for their many years of valuable support for
the Zanaga Project and positive engagement around this transaction."

"By securing the support of highly credible investors, we are now able to
drive forward toward a construction decision, with a world-class team, aligned
stakeholders, and a clear roadmap to delivering a high-grade, low-cost iron
ore mining operation. We will now launch a formal process aimed at assembling
a project funding and execution consortium."

"I look forward to joining the Board shortly and providing our stakeholders
with further updates regarding our corporate and operational progress in the
months ahead."

Fundraise overview

The Company has entered into Subscriptions totalling US$21.51 million of gross
proceeds for the issue of 416,860,475 ordinary shares of no par value in the
Company ("Ordinary Shares") at a price of US$0.0516 (approximately 4.10 pence)
per Ordinary Share. The Subscriptions will be completed in two tranches. The
first tranche will consist of the issue of 337,790,707 Ordinary Shares (the
"First Tranche Subscription Shares") for gross proceeds of US$17.43 million
and will be conditional on the admission of the First Tranche Subscription
Shares to trading on AIM on 7 March 2025 ("First Admission"). The second
tranche will consist of the issue of 79,069,768 Ordinary Shares (the "Second
Tranche Subscription Shares") for gross process of US$4.08 million and will be
conditional on the admission of the Second Tranche Subscription Shares to
trading on AIM on or around 26 March 2025 ("Second Admission").

Greymont Bay will be immediately working with the Company's management team,
via a newly established Zanaga Technical Committee, to assess the opportunity
to accelerate key Project workstreams and targeted milestones. Greymont Bay
has been provided a right, following conclusion of this exercise, to increase
the size of its Tranche 2 investment further, up to an additional US$1.50
million at the same price per share, which would ultimately take Greymont
Bay's investment to a total US$12.35 million. The Company believes that the
provision of this additional funding would secure its ability to progress a
number of key metallurgical testwork initiatives with the potential to provide
significant upside value, as well as accelerating its ability to secure key
technical personnel required for the pre-construction engineering phase
(FEED).

Glencore Buyback overview

The Company has agreed with Glencore that it will repurchase 290,843,718
Ordinary Shares currently owned by Glencore ("Buyback Agreement"). The Buyback
Agreement includes customary warranties and sets out the mechanics for the
repurchase.

Pursuant to the Buyback Agreement, the Company will purchase all the shares
held by Glencore on or around 12 March at US$0.0516 per share (approximately
4.10 pence per share) ("Buyback Price") for an aggregate purchase price of
US$15 million.

Upon all of Glencore's current 290,843,718 Ordinary Shares being repurchased,
the Relationship Agreement between Glencore and the Company dated 16 December
2022 will terminate and the Glencore Offtake Agreement between MPD, the
Company and Glencore International AG dated 22 November 2022, pursuant to
which Glencore International AG has the rights to market iron ore produced by
the Zanaga Project, will also be terminated. All Ordinary Shares repurchased
from Glencore will be cancelled.

Net effect of the Fundraise and the Glencore Buyback

The net effect of the Fundraise and the Glencore Buyback, when both are
completed, will be that the Company will have issued 416,860,475 new Ordinary
Shares in aggregate (before the Greymont Bay Additional Subscription, if
exercised) and will have repurchased and cancelled 290,843,718 Ordinary Shares
from Glencore, all at a price of US$0.0516 per share. The resulting net
increase in the issued share capital of the Company will be 126,016,757
Ordinary Shares representing 18.6% of the currently issued share capital and
the Company will have secured approximately US$6.51 million of working capital
(being $2.43 million at First Admission and $4.08 million at Second
Admission), providing more than 12 months to the Company to execute on its key
initiatives, including progressing towards a construction decision and
bringing together the project funding and execution consortium. This working
capital quantum will be increased to US$8.01 million at Second Admission if
the Greymont Bay Additional Subscription is exercised. In addition, the
Glencore Offtake Agreement over 100% of production from the Project will have
been cancelled and replaced with the GIS Offtake Agreement over only 20% of
production, resulting in the Company securing rights to 80% of future
production from the Zanaga Project.

Board Changes

Upon completion of the Glencore Buyback, Peter Hill will stand down as a
Director of the Company. The Board would like to thank Mr Hill for his
valuable service and consistent support for the Company and the long-term
objectives of the Zanaga Project.

In light of the proposed execution of the Company's strategies, it is proposed
that the Company's CEO Martin Knauth will join the Board of Directors as soon
as the necessary regulatory checks have been completed. Mr Knauth's duties as
CEO will remain unchanged.

In addition, Greymont Bay has requested and the Company has agreed to give
Greymont Bay the right to appoint a Director to the Board. Subject to
completing the relevant regulatory checks, it is intended that Phil Mitchell
will be appointed to the Board as Greymont Bay's representative. The Company
and Greymont Bay have proposed entering into a relationship agreement amongst
other things to formally grant the right to make an appointment to Greymont
Bay.

Further announcements will be made in due course as and when the relevant
appointments become effective.

Lock-In and Orderly Market agreement with Guava

The Company and Guava Minerals Limited ("Guava") have entered into an
agreement (the "Guava Lock-in Agreement") pursuant to which, subject to
certain exceptions, Guava and its connected persons has undertaken with the
Company not to, and to procure that its connected persons do not, dispose of
any interest in any ordinary shares held by it or subsequently acquired after
the date of the Guava Lock-In Agreement, for 6 months following First
Admission. After the period of 6 months from First Admission, Guava has agreed
to only dispose of ordinary shares held by it in accordance with certain
orderly market provisions for a further period of 6 months. In the event that
First Admission does not occur by 14 March 2025, the Guava Lock-in Agreement
shall lapse and have no effect.

Upcoming Investor Day

The management team looks forward to updating shareholders at the upcoming
Investor Day on 18 March 2025, where they will provide further clarity on the
ongoing strategic review process, financing pathway, and key operational
updates and initiatives.

To register for the Investor Event please follow the below link below:

Registration link: Zanaga Iron Ore Company Investor Day, Tue, Mar 18, 2025 at
5:00 PM
(https://www.eventbrite.co.uk/e/corporate-update-from-zanaga-iron-ore-company-limited-tickets-1248047747409?aff=oddtdtcreator)

Admission and Total Voting Rights

Pursuant to the Subscriptions, an application will be made for the First
Tranche Subscription Shares to be admitted to trading on AIM and as such First
Admission is expected to occur on 7 March 2025.

All of the shares issued as a result of the Fundraise will rank pari passu
with each other and with the Company's existing Ordinary Shares from their
date of issue. The Company does not hold any shares in treasury. Following
First Admission, but prior to the buyback and cancellation of the Glencore
shares, the total number of Ordinary Shares and voting rights in the Company
will be 1,013,584,178 and this figure may be used by shareholders as the
denominator for the calculations by which they will determine if they are
required to notify their interest in, or a change to their interest in, the
Company under the FCA's Disclosure Guidance and Transparency Rules.

Further announcements will be made in due course and as required as Second
Admission and the Glencore Buyback are completed, confirming the dates each
event becomes effective and the resultant Total Voting Rights position of the
Company.

Related Party Transactions

As Glencore is a Substantial Shareholder (as defined in the AIM Rules for
Companies) of the Company, the Buyback Agreement (encompassing the Glencore
Buyback, cancellation of existing Relationship Agreement and Offtake
Agreement) constitute a related party transaction for the purposes of the AIM
Rules for Companies. Accordingly, Mr Clifford Elphick, Mr Clinton Dines and
Mr Johnny Velloza, each Non-Executive Directors consider, acting in their
capacities as Independent Directors for the purposes of the related party
transaction, consider, having consulted with Panmure Liberum Limited, the
Company's Nominated Adviser, the terms of the Buyback Agreement to be fair and
reasonable insofar as the Company's shareholders are concerned.

 

ENDS

About ZIOC:

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.

The Zanaga Iron Ore Project is a world-class asset with a 6.9 billion tonne
resource and 2.1 billion tonne reserve, designed for 30Mtpa production of
high-grade (66-68.5% Fe) pellet feed with very low levels of impurities. A
2024 Feasibility Study reaffirmed its robust economics. When fully ramped,
Phase 1 and Phase 2 combined could make Zanaga one of the largest iron ore
mines globally. With all key permits in place, Zanaga is positioned to
capitalise on growing demand for high-quality, low-impurity iron ore,
leveraging low operating costs and a cost-efficient slurry pipeline to the
port.

In light of the changes in the world's economy, and the growing demand for
low-carbon steel production, the Zanaga Project is well-placed to become one
of the largest producers of high grade premium pellet feed iron ore.

 

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

 

For further information, please contact:

 

 

 Zanaga Iron Ore Company Limited                             Andrew Trahar

 Corporate Development and Investor Relations Manager        +44 20 3916 5021

 Panmure Liberum Limited                                     Scott Mathieson / John More / Josh Borlant

 Nominated Adviser, Financial Adviser and Corporate Broker   +44 20 3100 2000

 Shard Capital Partners LLP                                  Damon Heath

 Corporate Broker                                            +44 20 7186 9952

 BlytheRay                                                   Tim Blythe / Megan Ray / Will Jones

 Public Relations                                            +44 20 7138 3204

 

 

 Details of the person discharging managerial responsibilities/person closely
 associated
 a)  Name                                                                         Martin Knauth
 2   Reason for the notification
 a)  Position/status                                                              CEO and PDMR
 b)  Initial notification/Amendment                                               Initial notification
 3   Details of the issuer, UK emission allowance market participant, auction
     platform or auctioneer
 a)  Name                                                                         Zanaga Iron Ore Company Limited
 b)  LEI                                                                          21380085XNXEX6NL6L23
 4   Details of the transaction(s): section to be repeated for (i) each type of
     instrument; (ii) each type of transaction; (iii) each date; and (iv) each
     place where transactions have been conducted
 a)  Description of the financial instrument, type of instrument                  Ordinary Shares of no par value

     Identification code

                                                                                  ISIN: VGG9888M1023
 b)  Nature of the transaction                                                    Subscription for shares
 c)  Price(s) and volume(s)                                                       Price(s)
                                                                                                                 Volume(s)
     US$0.0516                             7,751,938
 d)  Aggregated information                                                       N/A (single transaction)

     · Aggregated volume

     · Price
 e)  Date of the transaction                                                      28 February 2025
 f)  Place of the transaction                                                     Outside a trading venue

 

 

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