REG - Zanaga Iron Ore - Completion of Project Workstreams

Zanaga Iron OreAnnouncement

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RNS Number : 7174N  Zanaga Iron Ore Company Ltd  06 January 2026

 

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

 

6 January 2026

Zanaga Iron Ore Company Limited

("ZIOC" or the "Company")

Completion of Project Value Enhancement Workstreams

Zanaga Iron Ore Company Limited (AIM: ZIOC) is pleased to announce the
completion of its project value enhancement initiative, first announced on 18
March 2025. The workstreams have delivered significant value enhancement and
strategic benefits across multiple areas of the Zanaga Iron Ore Project (the
"Zanaga Project" or the "Project").

Highlights:

Positive results from completion of four key workstreams:

1.   Revenue improvement: US$11,325 million of potential revenue upside
over the initial 30-year life of the asset ("LoA") due to product grade
improvement which was separately announced in June 2025.

2.   Total combined capital expenditure savings potential: US$352 million,
comprising:

a.   Pipeline configuration option: the option to construct a single 30
million tonnes per annum ("Mtpa") capacity pipeline would increase upfront
Stage One (12Mtpa) capital expenditure by US$349 million, but would
eliminate US$706 million of Stage Two pipeline capital expenditure.

b.   Tailings facility design: a minor increase of US$5 million in capital
expenditure associated with thickened and dry tailings technologies.

3.   Total combined cash cost savings: US$2,235 million over the initial
30-year LoA.

4.   Updated project economics: a combined, updated assessment of Project
economics will be released in February 2026 (see below).

·      Conclusion: the four workstreams have delivered numerous
positive outcomes with the DRI-grade product test results delivering the most
significant economic benefit. The other initiatives are not currently expected
to deliver material incremental economic upside, however, provide strategic
benefits and further opportunities to de-risk the Project.

Next milestones expected in Q1 2026, as previously announced on 30 December
2025:

·      Project development strategy update (announcement planned for
February 2026)

o  Process plant Front End Engineering & Design ("FEED") results,
including updated capital and operating cost estimates based on a DRI
flowsheet developed through 2025.

o  Fully integrated Project development plan, including the economics of all
Project enhancements assessed to date.

o  Update on logistics and infrastructure solutions required to support
development of the Zanaga Project.

·      Strategic Partner process (Q1 2026)

o  ZIOC is pleased with the progress being made in engaging a number of
strategic investors interested in developing the Zanaga Project.

o  ZIOC intends to secure initial offers from investors during Q1 2026 and is
targeting the announcement of transaction terms with a selected strategic
investor during Q1 2026.

Martin Knauth, CEO of ZIOC, commented:

"The outcomes of these value enhancement workstreams are significant for the
Zanaga Project, as each has delivered meaningful improvements to the risk and
engineering basis, environmental performance and Project economics.

"Importantly, we are now in a strong position to advance through the FEED
phase with the confidence that our development pathway is optimised for both
value creation and sustainability, benefitting the Company and its
stakeholders.

"Zanaga is uniquely positioned to supply premium DRI-grade pellet feed into a
rapidly decarbonising steel sector, and these enhancements reinforce the
Project's status as a world-class iron ore asset."

 

Overview of project value enhancement workstreams

Throughout 2025, alongside other Project development activities, the Company
completed a number of workstreams intended to improve construction,
operations, strategic optionality and overall economics for the Zanaga
Project.

Detailed design and costing assessments were completed with industry experts
across the following workstreams:

1)   Product quality enhancements - Direct Reduced Iron ("DRI") test work
(positive results announced on 25 June 2025)

2)   Pellet plant feasibility study

3)   Single 30Mtpa capacity pipeline feasibility study

4)   Thickened and dry tailings facility study

The completion of these workstreams has not only improved the economic
potential of the Zanaga Project but has also established a robust engineering
and design foundation as the Company progresses the Project.

Key Overall Economic Highlights 1 :

         Area                                    Outcome    Potential impact over 30-year LoA  % Change
 1.      Revenue Potential 2                     Increases  US$11,325 million                  16%
 2.      Total Capital Expenditure               Reduces    US$352 million                     (9)%
 3.      Total Cash Cost                         Reduces    US$2,235 million                   (10)%
         a. Sustaining Capital Expenditure       Reduces    US$1,505 million                   (39)%
         b.        Operating Expenditure         Reduces    US$731 million                     (4)%

·    LoA: 30 years of premium DRI grade pellet feed >68.5% Fe grade.

·     Increased price premium expected due to higher iron content with
low impurities.

 

1)   Product Quality Enhancements - DRI test work (previously announced)

During Q2 2025, the Company commissioned and completed a metallurgical
laboratory test work programme to determine the Zanaga Project's ability to
produce DRI-grade pellet feed concentrate across its full planned 30Mtpa
production scale, including both Stage One (12Mtpa) and Stage Two (18Mtpa
expansion).

Samples of the Zanaga Project resource were assembled from both hematite and
magnetite zones, which are required for the Stage One and Stage Two phases of
the Zanaga Project, respectively.

The primary test work, conducted in China, included laboratory analyses,
magnetic separation and flotation. The 2014 Feasibility Study flowsheet was
adjusted to optimise process steps and replace certain equipment.

Outcomes

·    The test work confirmed the potential to produce DRI-grade pellet
feed products from the Zanaga Project, as summarised below:

 

 Product                %Fe   %Si(2)O(3)  %Al(2)O(3)  %P
 Hematite concentrate   68.5  1.05        0.47        0.034
 Magnetite concentrate  69.1  1.96        0.40        0.028

 

·    Following updates to the Project flowsheet and expert consultation,
ZIOC received indicative quotes for capital and operating costs to support
engineering and financial modelling. These costs will be confirmed during FEED
following equipment sizing, with results expected in Q1 2026.

·    Confirmation of DRI-grade pellet feed has increased the Project's
revenue potential to US$11,325 million(1)(,)(2) over the LoA.

 

2)   Pellet Plant Feasibility Study

The Electric Arc Furnace ("EAF") share of global steel production is expected
to increase from approximately 30% in 2025 to 50% by 2050 (equivalent to
approximately 866Mtpa of additional output 3 ). This shift in steel production
towards EAF, driven by lower operating costs, greater efficiency, reduced
emissions and global net-zero commitments, is expected to increase demand for
DRI pellets for EAF-based steelmaking.

Following completion of laboratory-scale DRI testing and development of a
revised flowsheet at concept level, the Company evaluated the potential
addition of pelletising plants, including traditional induration (hot
pelletising) and newer cold-pressing technologies.

Iron ore pellets are generally preferred over fines due to their physical and
chemical properties, which can improve efficiency, productivity and
environmental performance in steelmaking. These attributes support a pellet
price premium. Accordingly, adding pelletising to the Zanaga value chain (mine
→ process → pipeline → filtering → pelletising) could potentially
increase revenues by approximately US$38-48 per tonne 4 , while also reducing
environmental, handling and shipping risks.

A leading industry expert was appointed to leverage their direct experience in
the pellet industry and complete this feasibility study, which assessed:

·    A 2.5Mtpa pellet plant located in the Republic of Congo.

·    Flowsheets and major equipment for hot and cold pelletising.

·    Estimated direct and indirect capital expenditure, and operating
costs, for each technology.

Outcomes

·    The study verified the likely costs to construct and operate both hot
and cold pellet plants.

·    Marketing analysis indicates that premiums for DRI pellets are
materially higher than those for standard pellets.

·    While the Republic of Congo would be a suitable location, current
domestic market conditions are less competitive than certain other
jurisdictions.

·    Regions closer to steel producers and offering lower-cost long-term
gas and power tariffs may present improved investment opportunities and will
be evaluated further.

·    Potential partnerships with iron and steel producers will also be
considered, which may reduce capital requirements and support a long-term
customer base.

 

3)   Single 30Mtpa Capacity Pipeline Feasibility Study

The Zanaga Project base case development plan included two separate pipelines
to transport concentrate from the mine site to port:

·  Stage One: 12Mtpa capacity pipeline

·  Stage Two: additional 18Mtpa capacity pipeline

A feasibility study was commissioned in Q2 2025 to evaluate construction of a
buried 30Mtpa pipeline as part of Stage One. The study covered design,
hydraulics, electrical systems, construction schedule and costs, with
benchmarking against comparable international projects.

Outcomes

·    A single 30Mtpa pipeline system is environmentally, technically and
economically feasible. A larger diameter would reduce friction losses.

·    A single 30Mtpa pipeline provides significant strategic value,
avoiding the need for construction of a second magnetite pipeline, reducing
permitting complexity and environmental and community impacts.

·    The single pipeline approach also removes brownfield expansion
complexity (mechanical/electrical tie-ins), simplifying operations to a single
instrumentation and asset management solution.

·    Under the 2014 Feasibility Study (and re-costed in the 2024
Feasibility Study update), Stage One pipeline capex was estimated at US$637
million and Stage Two pipeline capex at US$706 million, totalling US$1,343
million across both stages.

·    Following completion of the single 30Mtpa pipeline feasibility study,
total upfront pipeline capex is estimated at US$986 million, implying an
increase in Stage One capex of US$349 million, but a reduction in total capex
of US$357 million compared to the two-stage approach.

·    In addition, a single 30Mtpa pipeline would allow removal of the
booster station and its associated fuel consumption, supporting a potential
reduction in total operating costs of US$950 million over the life of mine.

·    While the incremental NPV impact is expected to be limited (as higher
Stage One cash investment offsets the time value of Stage Two savings), the
Company considers the strategic value of a single pipeline configuration to be
significantly positive.

 

4)   Thickened and Dry Tailings Study

Prior to 2025, a large wet tailings storage facility ("TSF") was planned for
the Zanaga Project. Thickened or filtered tailings can reduce moisture
content, lower long-term costs, enable a smaller and easier-to-operate TSF,
and support progressive rehabilitation.

A study was initiated in Q2 2025 to revise the 2014 Feasibility Study TSF
design to align with international best practice, including the Global
Industry Standard on Tailings Management ("GISTM") and the Australian National
Committee on Large Dams ("ANCOLD"). The study examined tailings discharge
options, construction and operational plans, financial factors and synergies
between mine infrastructure assets.

Outcomes

·    Thickened tailings technologies offer more stable and efficient
alternatives to conventional wet tailings by reducing water content before
deposition, improving geotechnical performance, reducing environmental risks
and increasing water recovery.

·    Thickened and dry tailings facilities compliant with GISTM and other
global standards have the potential to reduce cash expenditure by US$1,280
million over the life of asset, comprising:

a)   a minor increase in capital expenditure of US$5 million.

b)   a reduction in total cash cost of US$1,285 million, comprising:

i)    a decrease in sustaining capital expenditure of US$1,505 million;
and

ii)    an increase in operating costs of US$219 million.

 

ENDS

 

            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

 Nominated Adviser, Financial Adviser and Joint Broker   +44 20 3100 2000
 Tamesis Partners LLP                                    Richard Greenfield/ Charles Bendon

 Joint Broker                                            +44 203 882 2868
 Shard Capital Partners LLP                              Damon Heath

 Joint Broker                                            +44 20 7186 9952
 BlytheRay                                               Tim Blythe / Megan Ray / Will Jones

 Public Relations                                        +44 20 7138 3204

                                                         Zanaga@BlytheRay.com

 

 

About ZIOC:

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

The Zanaga Iron Ore Project is a globally significant asset with a 6.9 billion
tonne resource and a 2.1 billion tonne reserve, targeting 30Mtpa production of
high-grade DRI pellet feed with very low impurity levels. When fully
developed, Stage One (12Mtpa) and Stage Two (18Mtpa expansion) together could
establish Zanaga as one of the world's largest iron ore mines. With all key
permits secured, Zanaga is well positioned to benefit from increasing demand
for high-quality, low-impurity iron ore, supported by low operating costs and
an efficient slurry pipeline to port.

In the context of the global transition towards lower-carbon steel production,
the Zanaga Project is well positioned to become one of the largest producers
of high-grade, premium DRI pellet feed iron ore concentrate.

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

 

 1  Compared to 2024 feasibility study update for Stage Two (12+18Mpta
expansion)

 2   Based on a DRI pricing case (65% Fe CFR China US$115/t, 68% Fe CFR China
US$130/t)

 3  Source: AME Group June 2025

 4  Source: AME Group June 2025, DRI pellet premium over 68% Fe

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