REG - Zanaga Iron Ore - Proposed Strategic Investment in Zanaga Project

Zanaga Iron OreAnnouncement

10/02/2026 07:00

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RNS Number : 3241S  Zanaga Iron Ore Company Ltd  10 February 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

10 February 2026

Zanaga Iron Ore Company Limited

("ZIOC" or the "Company")

Binding Term Sheet Signed for Proposed Strategic Investment in Zanaga Project

Zanaga Iron Ore Company Limited (AIM: ZIOC) is pleased to announce a strategic
transaction with Red Arc Minerals Inc ("RAM"), a private investment company
backed by leading mining industry executives and focussed on the development
of strategic-scale high-grade iron ore assets.

ZIOC and its wholly owned subsidiary, Jumelles BVI Limited ("Jumelles"),
have signed a binding term sheet ("The Binding Term Sheet") for a proposed
strategic investment by RAM (the "Transaction") in the Company's Zanaga Iron
Ore Project (the "Zanaga Project" or the "Project").

The proposed strategic investment by RAM would enable the completion of
essential technical work to advance the Project towards a Final Investment
Decision ("FID"). It would also secure additional upside value potential and
further optionality linked to the successful development of the Project for
the benefit of ZIOC shareholders and stakeholders in the Republic of Congo. As
a result, the Board believes that the Transaction has the potential to deliver
meaningful value to ZIOC shareholders both in the short and long term, while
also being non-dilutive to ZIOC shareholders.

The Transaction is subject to the completion of due diligence, entering into
of definitive documents as well as approval by shareholders and regulators as
set out in the Binding Term Sheet.

Jumelles is a wholly owned subsidiary of ZIOC and currently holds a 100%
interest in the Zanaga Project.

Transaction highlights

·      Binding Term Sheet agreed with RAM, setting out the principal
terms of proposed staged investments in the Zanaga Project via two tranches,
which would deliver substantial financing that is non-dilutive to ZIOC
shareholders.

·      Tranche One investment of up to US$25 million in cash to advance
the Zanaga Project to FID and acquire an aggregate 20% interest in Jumelles
(to be funded in five equal sub-tranches).

·      Tranche Two investment of US$125 million via a cash payment to
ZIOC (at RAM's option) to acquire an incremental 67.5% fully diluted
ownership of Jumelles from ZIOC (resulting in aggregate RAM ownership of
Jumelles of 87.5%), exercisable within 18 months of completion of the full
US$25 million Tranche One.

·      Royalty granted to ZIOC on the closing of Tranche Two of 1.0% of
Net Sales Revenue ("NSR") on all iron ore concentrate sales from the Project,
subject to a partial buy-back at RAM's option (US$50 million for 0.50%).

·      From the closing of the Transaction, RAM will have the right to
representation on the Jumelles board and to reserved matters. Upon
reaching 50.1% or more ownership of Jumelles RAM will be granted the right
to majority board representation.

·      From the closing of the Transaction, the Company shall have the
right to require RAM to exchange its Jumelles shares for ZIOC shares at a
price of 15.0 pence per share (which represents a ZIOC market valuation of
£125 million (c.US$169 million 1  (#_ftn1) ), a 96% premium 2  (#_ftn2) to
the ZIOC 30-day VWAP, if RAM does not complete each Tranche One and Tranche
Two closings within a defined period.

·      The Transaction is a fundamental change of business for the
purposes of AIM Rule 15 and is therefore subject to shareholder approval, by
way of ordinary resolution at an Extraordinary General Meeting ("EGM") of the
Company, as well as definitive documentation, amongst other things.

·      ZIOC has agreed to exclusivity provisions until 30 June 2026
(which may be extended) and a Break Fee of US$1.5 million payable to RAM as
well as an Alternative Transaction Fee within 12 months after the exclusivity
period, if applicable.

·      Completion of the definitive long-form documentation (including a
joint venture agreement) is targeted by 31 May 2026, and an EGM to approve
the Transaction is targeted by 30 June 2026.

RAM is backed by, among others, certain individuals and groups who
participated in ZIOC's fundraising in 2025, including Sir Mick Davis and
Heeney Capital. Entry into the Binding Term Sheet is a related party
transaction for the purposes of the AIM Rules. Pursuant to the definitive
documents, the Company also expects the Transaction to be a related party
transaction for the purposes of the AIM Rules.

Martin Knauth, CEO of ZIOC, commented:

"I am pleased to announce the signing of binding terms with Red Arc Minerals,
a company founded  by Sir Mick Davis and Heeney Capital to invest in
strategic high-grade iron ore assets.

"The transaction represents a major acceleration of the Company's growth
strategy by providing the non-dilutive capital required to advance the Zanaga
Project through the pre-production phase and towards a final investment
decision.

"The transaction aims to deliver significant value to ZIOC shareholders, in
the short and long term, by creating a clear pathway to retaining a strategic
ownership stake and securing a compelling royalty interest in a world-class
producing iron ore asset.

"Through our extensive strategic partnering process, we believe this proposal
provides the greatest opportunity for the Company and its shareholders to
participate in the success of the Project as it advances towards production.

"Red Arc Minerals brings both financial strength and deep industry expertise
that enhances our ability to deliver the Project. Our established relationship
with some of the mining industry's most respected leaders continues to mature,
and this transaction is indicative of their confidence in the Project's
world-class technical and financial credentials.

"I look forward to addressing shareholders and interested parties at our
forthcoming investor event in Cape Town."

 

Investor Event

The Company will provide an update on the Binding Term Sheet and Transaction
at its investor event during Mining Indaba 2026, on 10 February 2026 at 3 pm
South African Standard Time, at the Mount Nelson Hotel, Cape Town, South
Africa. A copy of the presentation will also be made available on the
Company's website.

Rationale for the transaction structure

The Transaction, as envisaged in the Binding Term Sheet, has been structured
to achieve multiple objectives for ZIOC shareholders, which are summarised
below:

1.   Limiting dilution to ZIOC shareholders

·      The transaction envisaged would not result in direct dilution to
ZIOC shareholders as it is an investment at the Jumelles subsidiary level and
the Tranche One investment may only potentially be converted into ZIOC shares
by either party at 15 pence per share (and subject to certain conditions and
restrictions).

2.   Advance the Zanaga Project to a FID

·      Tranche One is expected to fully fund the Project through Front
End Engineering Design ("FEED") completion to FID, including capital available
for contingency and continued Jumelles project working capital costs to cover
the final financing negotiation phase of the Project post FEED.

3.   Near-term path to significant floor price cash value (via Tranche Two
payment)

·      If RAM exercises the Tranche Two option, US$125 million of cash
will be received by ZIOC, which may be distributed to ZIOC shareholders in due
course (equating to 11 pence per share).

·      ZIOC intends to retain this cash on the Company's books until
such time as the Zanaga Project FID is taken, in order to consider the
attractiveness of investing it to retain an equity stake in the Zanaga Project
going forward (such decision will depend on the project economics at the time
of the Project's FID).

4.   Optionality to retain 12.5% project ownership

·      The envisaged transaction has been structured to enable ZIOC to
fully fund its pro-rata 12.5% share of an estimated US$1 billion total project
equity contribution required from the final equity investors in the Project at
construction.

·      In the event that ZIOC elects to fund such pro-rata 12.5% final
equity contribution at construction, ZIOC would have retained a sizeable share
of a fully financed strategic iron ore asset with highly attractive economics.

·      By way of illustration, if the Zanaga Project generates EBITDA of
US$2 billion per annum in Stage Two, ZIOC's attributable share of such EBITDA
would equate to US$250 million per annum, or 22 pence per share per annum to
ZIOC only (with no RAM participation).

5.   Royalty upside to ZIOC shareholders only

·      The transaction structure envisages a 1% NSR royalty to be paid
to ZIOC only (subject to a partial buy-back at RAM's option of US$50 million
for 0.50%), which enables additional substantial value upside that is
indifferent to the Project's economics.

·      ZIOC is not expected to need to invest further in the Zanaga
Project to receive this annual royalty payment.

·      By way of illustration, based on a 1% NSR royalty if the Zanaga
Project generates US$3,246 billion of net sales revenue per annum in Stage
Two, the NSR royalty payable to ZIOC would equate to US$32.5 million per
annum, which would equate to 3 pence per share per annum to ZIOC only (with no
RAM participation).

Principal terms of the envisaged Transaction (as set out in the Binding Term
Sheet)

Parties

·      Zanaga Iron Ore Company Limited

·      Jumelles BVI Limited, a wholly owned subsidiary of ZIOC

·      Red Arc Minerals Inc, a private investment company incorporated
in the United States of America

 

Tranche One - subscription for up to 20% of Jumelles for up to US$25 million
to fund the Zanaga Project to FID

Subject to satisfaction of the relevant conditions (including due diligence,
definitive documentation and shareholder approval), RAM is proposed to
subscribe, in a series of primary issuances, for newly issued common shares in
Jumelles (the "Common Shares") representing in aggregate 20% of the
outstanding Common Shares for total cash consideration of US$25
million ("Tranche One").

Tranche One is proposed to be funded in five sub-tranches of US$5 million
each, with each sub-tranche representing 4% of the outstanding Common
Shares. The first sub-tranche is expected to close as soon as reasonably
practicable following completion of long form transaction agreements, final
due diligence, and securing of ZIOC shareholder approval. Subsequent
sub-tranches are expected to be completed over the following 18 months in
accordance with the definitive documentation, with sub-tranches 1A, 1B and 1C
being binding on RAM, sub-tranches 1D and 1E will be at RAM's option, and RAM
having the right to accelerate the timing of subsequent sub-tranches.

Tranche Two - RAM option to purchase a further 67.5% interest in the Zanaga
Project from ZIOC for US$125 million

At RAM's election, RAM has the right, within 18 months following completion
of the final Tranche One sub-tranche, to purchase, from ZIOC, additional
Common Shares in Jumelles for US$125 million in cash (Tranche Two),
resulting in RAM holding an aggregate 87.5% fully diluted ownership of
Jumelles.

Exchange of shares

If on or after 30 June 2027 the conditions for each Tranche One sub-tranches
closing have been satisfied, the Company and Jumelles are not in breach of the
agreement, and RAM does not complete each Tranche One and Tranche Two
closings, the Company has the right to require RAM to exchange its Jumelles
shares for Company shares at 15.0 pence per ZIOC share for the amount invested
by RAM (which represents a ZIOC market valuation of £125 million (c.US$169
million(1)), a 96% premium(2) to the to the ZIOC 30-day VWAP). RAM also has
that right to require exchange its shares in Jumelles for shares in the
Company at that price after the expiry of three years from the date of the
definitive documents, if the Company was entitled to but has not required RAM
to exchange the Jumelles Shares. Based on today's issued share capital, if the
entire Tranche One US$25m is ever converted into ZIOC shares, RAM would own at
most 13% of ZIOC. The Board has agreed that it will not invoke the Takeover
Provisions in Article 33 of the Company's Articles Association in respect of
such conversion.

Royalty (to ZIOC only)

Upon completion of any Tranche Two closing, ZIOC would be granted a 1.0% NSR
royalty on net sales revenues from iron ore concentrate sales from the Zanaga
Project by the relevant project-owning entity (the "Royalty").

Royalty payments (once payable) are proposed to be made semi-annually on 31
March and 30 September.

Jumelles would have the right to reduce the Royalty to 0.50% NSR upon
payment to ZIOC of US$50 million in cash.

Joint venture agreement and governance

The parties intend to enter into definitive long-form documentation, including
a joint venture agreement (the "JVA"), expected to govern, among other
matters:

·      The terms of the joint venture and control/management of the
Zanaga Project

·      Funding and work programmes

·      The composition of the Board of Jumelles and reserved matters

·      The annual budgeting process and approval framework

·      Information and reporting required for ZIOC's public disclosures

 

Jumelles Board representation (indicative):

·      Following the initial closing: four directors (RAM nominated:
two; ZIOC nominated: two)

·      Following RAM reaching 50.1% or more ownership (the "Governance
Flip"): RAM may designate three directors and ZIOC one director (with ZIOC's
director designation rights ceasing if ZIOC's ownership falls below 5%)

 

Liquidity and project financing provisions (indicative)

Subject to the definitive documentation and relevant regulatory approvals, and
following completion of Tranche One and Tranche Two, RAM would have certain
rights to pursue a sale of Jumelles (subject to an equity valuation threshold)
or to progress a financing constituting a final investment decision in respect
of the Zanaga Project, with ZIOC and other equity holders required to
participate on the terms set out in the definitive documentation.

ZIOC equity issuance

From the closing of the first tranche until the expiry of the Tranche Two
Option, RAM will be provided with a right to participate in any ZIOC equity
raise, up to the minimum of the Heeney Capital or Red Arc Minerals related
Concert Party holding, or 30% (less any shares taken up by a member of the
Heeney Capital or the Red Arc Minerals related concert party).

Conditions and other provisions

Completion of the Transaction will be subject to customary conditions for a
transaction of this type, including confirmatory due diligence, approval by
the Company's Board, shareholder approval, execution of definitive
documentation and receipt of any required regulatory approvals.

Exclusivity and Break Fee and Alternative Transaction Fee

The Binding Term Sheet includes exclusivity provisions through 30 June
2026 (subject to renewal mechanics for up to three, 30 day, extensions if RAM
is continuing to pursue the transaction).

ZIOC has agreed to pay RAM a Break Fee of US$1,500,000 if it or connected
parties breach the exclusivity provisions in the Binding Term Sheet or if they
do not proceed to definitive documentation where RAM is willing to on the
terms in aggregate no more onerous that those set out in the Binding Term
Sheet. This fee will not be payable where definitive documents are entered
into but the ZIOC shareholders do not approve of the transaction.

In addition, where Break Fee has become payable or if an alternative
transaction is announced prior to the meeting at which the approval of ZIOC
shareholders is sought and the ZIOC shareholders do not approve the
transaction and, definitive documents for an alternative transaction are
executed within twelve months following the end of the exclusivity period
(including any extensions thereof), then a further alternative transaction fee
will be payable to RAM equal to 10% of the consideration under the alternative
transaction.

Timetable and next steps

ZIOC and RAM have agreed on the following timetable:

·      By 31 May 2026: execution of the definitive long-form
transaction documentation, including the JVA

·      By 30 June 2026: convening of an EGM for shareholders to vote on
the Transaction

 

A shareholder circular containing further details of the Transaction, together
with a notice convening the EGM, will be published in due course.

Related party transaction

RAM is controlled by Heeney Capital, which is a related party of ZIOC for the
purposes of the AIM Rules by virtue of being an associate of a Substantial
Shareholder of ZIOC. Heeney Capital controls and makes all investment
decisions for, Greymont Bay I LLC and Regatta HCRP I LP, which in aggregate
own 25.26% of ZIOC's issued share capital. Therefore, RAM is a related party
of ZIOC for the purposes of the AIM Rules.

As the Break Fee and alternative transaction fee summarised above are binding
from execution of the Binding Term Sheet, the entry into the Binding Term
Sheet with RAM is a related party transaction for the purposes of the AIM
Rules for Companies. The Company's independent directors, being all of the
directors with the exception of Philip Mitchell who is a representative of
Greymont Bay, following due and careful consideration and in consultation with
the Company's Nominated Adviser, Panmure Liberum Limited, consider the terms
of the Break Fee and the Alternative Transaction Fee in the Binding Term Sheet
to be fair and reasonable insofar as all shareholders of the Company are
concerned.

For further information, please contact:

 Zanaga Iron Ore Company Limited                         Martin Knauth

 CEO                                                     +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

 

 

ENDS

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.

About RAM:

RAM is a private investment company focussed on the development of
strategic-scale high-grade iron ore assets. RAM is controlled and founded by
Sir Mick Davis and Heeney Capital, and other leading mining industry
executives and experienced investment professionals. Its team has extensive
technical expertise in large-scale project financing and development, along
with a proven track record of project delivery, including specific iron ore
expertise.

Andrew Trahar acts as Corporate Development & Investor Relations Manager
of ZIOC, pursuant to a consultancy arrangement with ZIOC. Given Andrew
Trahar's extensive Project expertise, the ZIOC Board has consented to him also
providing consultancy services to RAM, to assist RAM in its subsequent
engagement with strategic stakeholders.

 1  (#_ftnref1) Note FX GBP:USD assumption of 1.36

 2  (#_ftnref2) As of 6(th) Feb 26 ZIOC 30-Days VWAP 7.65GBp

 

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