REG - Zanaga Iron Ore - Completion of DRI Process Plant Costing

Zanaga Iron OreAnnouncement

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RNS Number : 1248D  Zanaga Iron Ore Company Ltd  06 May 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

06 May 2026

Zanaga Iron Ore Company Limited

("ZIOC" or the "Company")

Robust Project Economics Confirmed Following Completion of DRI Process Plant
Costing

Update on Strategic Investment in Zanaga Project

Zanaga Iron Ore Company Limited (AIM: ZIOC) is pleased to announce the
successful completion of the project development strategy programme (the
"Programme"), which now includes the results of a technical and commercial
evaluation of the process flowsheet to produce premium quality Direct Reduced
Iron ("DRI") pellet feed concentrates.

 

The Programme has provided increased confidence in the economic potential of
the Zanaga Iron Ore Project in the Republic of Congo (the "Project"),
confirming the achievement of significant value enhancements since the
Programme was launched in March 2025.

 

Background

In March 2025, the Company launched the Programme with the ambition to deliver
value enhancements to the Project through product quality enhancements,
improved thickened tailings solutions, and options for the pipeline
development solution. This was intended to culminate in securing updated
technical cost estimates and economic results, capable of being provided to
strategic investors, lenders and financiers.

 

The first key objective was to ascertain the potential to adjust the process
plant flow sheet to produce an even higher grade premium DRI grade product -
which was achieved and announced in July 2025. This provided a foundation for
the next phases of work, most of which were completed and announced in January
2026, but at that stage ZIOC still did not possess updated estimates for the
newly designed DRI process plant. Today, as the final step of the Programme,
the DRI process plant results are completed and incorporated into an updated
financial model and economic evaluation.

 

The Programme has achieved all of its most important objectives, and now
provides a clear pathway to launch the detailed engineering process ahead of a
Final investment Decision ("FID") recommendation, targeted for mid-2027.

 

Workstreams now completed include:

·    The confirmation of DRI product quality potential in Stage One and
Stage Two

·    The completion of costing and feasibility of:

o  modular hematite processing facilities for Stage One;

o  thickened and dry tailings facilities for both Stage One and Stage Two;
and

o  an optional single 30 million tonnes per annum ("Mtpa") pipeline during
Stage One (providing a compelling optional alternative to the April 2026 case
two-stage pipeline plan).

·    Update of specific project costs through an Original Equipment
Manufacturer ("OEM") enquiry process

·    Assembly of a Constructor Engagement Programme for the Project

 

Updated Project Economics

The completion of the Programme offers increased confidence in the Project's
economic prospects, which are now updated and accurate as of end December
2025:

 

Key Highlights from the April 2026 Case 1 , 2 

·      Stage One Capital Expenditure Estimate: US$2.17 billion

·      Stage One Net Present Value ("NPV"): US$2.54 billion (increase of
approx. 30.9% vs 2024 Feasibility Update)

·      Stage One Internal Rate of Return ("IRR"): 22.5% (vs 21.4%)

·      Combined Stage One & Two Capital Expenditure Estimate:
US$4.05 billion

·      Combined Stage One & Two NPV: US$4.90 billion (increase of
29.4%)

·      Combined Stage One & Two IRR: 24.3% (vs 23.0%)

·      Processing, Filter Plant and product handling Cost: US$11.95 per
tonne of concentrate

 

Martin Knauth, CEO of Zanaga Iron Ore Company Ltd, commented:

"The completion of the DRI flowsheet costing and OEM studies are a milestone
achievement for the Company and pivotal for Zanaga, in that these results
confirm that an integrated DRI-producing, modular hematite concentrator
design, incorporation of thickened tailings technology, dedicated pipeline and
concentrate handling facilities, significantly enhance project value while
maintaining robust returns and strategic optionality.

"This modular approach, combined with disciplined capital management and
strong constructor engagement, positions the Project as a highly competitive,
future-facing iron ore development aligned with global decarbonisation trends.

"Encouragingly, our projected economics are consistently improving with every
additional study element we complete, providing confidence in our development
path as we work towards a Final Investment Decision in 2027."

Clifford Elphick, Chairman of Zanaga Iron Ore Company Ltd, commented:

"The completion of this strategy programme represents an important milestone
for Zanaga, strengthening confidence in the Project's robust economics and
long-term value.

As demand for high-grade, lower-emission iron ore grows, we believe Zanaga is
well-positioned to play a key role globally.

The Board remains focused on progressing towards a Final Investment Decision
in 2027."

Strategic Advancement to DRI Product

Following successful laboratory-scale DRI test work completed in mid-2025,
ZIOC commissioned detailed conceptual and feasibility-level designs to refine
capital and operating cost estimates to ±20% accuracy.

 

The updated development strategy incorporates:

·      A modular 12Mtpa hematite concentrator complex consisting of
three 4Mtpa lines

·      A two-stage, 12Mtpa and 18Mtpa, pipeline system, with optional
single 30Mtpa slurry pipeline system

·      Thickened tailings storage facilities

·      A 12Mtpa filter plant and covered concentrate handling facilities

 

The Company's DRI product strategy positions the Zanaga Project to benefit
from:

·      Increasing demand for premium iron ores, particularly DRI grade
iron ore

·      Global steel sector decarbonisation via growth in Electric Arc
Furnace ("EAF") steel production

·      Firm positioning in the lowest cost quartile of iron ore
producers

 

Stage One Processing Facility Capital and Operating Cost Overview

The updated Stage One processing capital expenditure estimate (April 2026
Case 3 ) totals approximately US$753.7 million for processing, filtration, and
concentrate handling facilities, contributing to a total expected Stage One
capital requirement of US$2.17 billion 4 .

 

Operating unit processing, filter plant and product handling costs for Stage
One are estimated at US$11.97 per tonne of concentrate 5 .

 

While Stage One processing operating costs and capital expenditure estimates
have increased moderately compared with previous studies, the inclusion of
DRI-grade product premiums significantly improves the Project's Stage One NPV
by approximately 31% relative to the 2024 Feasibility Study Update.

 

Strengthened Financial Metrics

The investment in a DRI-producing flowsheet demonstrates strong value
creation, as shown below:

                           April 2026             Previous Studies                               Change vs 2024 Feasibility Update

              Economic Update
 Financial Metric          2026 6                 2024 7                     2014(7)             %

                           Based on DRI product   Feasibility Study Update   Feasibility Study
 Stage One
 Capex (US$m)              2,174                  1,935                      2,196               12.5%
 NPV (US$m)                2,539                  1,939                      2,132               30.9%
 IRR (%)                   22.5                   21.4                       22.9                +1.1%
 Avg. Product Grade (%Fe)  68.5                   65.9                       65.9                +2.6%
 Stage One and Two
 Expansion Capex (US$m)    +1,871                 +1,871                     +2,488              -
 Combined NPV (US$m)       4,897                  3,784                      4,026               29.4%
 Combined IRR (%)          24.3                   23.0                       23.92               +1.3%
 Avg. Product Grade (%Fe)  68.8                   67.2                       67.2                +1.6%

Moderate increase in April 2026 IRR due to a higher Stage One capital
expenditure estimate.

 

OEM and Contractor Engagement

As part of the Programme, extensive engagement with leading Chinese OEMs and
construction groups took place during 2025, enabling the Company to:

·      Pre-qualify equipment suppliers and contractors

·      Identify lump-sum and other cost frameworks for major equipment
and construction scopes

·      Define construction productivity assumptions

·      Improve cost transparency and risk management plans

 

A second qualification and RFQ process is planned during 2026, aligned with
metallurgical bulk testing and detailed engineering.

 

Optional Single Stage One 30Mtpa Pipeline

Upon analysis of the single-pipeline option, announced in January 2026, the
April 2026 Case retains the two-stage pipeline design basis, involving the
construction of a 12Mtpa capacity pipeline for Stage One, and an additional
18Mtpa capacity pipeline for the Stage Two expansion to 30Mtpa total
production capacity. However, the single 30Mtpa pipeline system is potentially
advantageous for large strategic investors seeking to ramp up production
capacity faster to 30Mtpa, as it eliminates the need for a second pipeline
installation, thereby simplifying permitting processes, reducing environmental
and community impacts, and significantly reducing financing needs in the
second phase of expansion.

 

A summary of the life-of-mine comparison between a twin-pipeline system
(included in the April 2026 Case) and an optional single-pipeline system is
provided below:

 

                                       Stage One (US$m)  Stage One and Two (US$m)
 Total Capex (Twin Pipeline System)    637               1,343
 Total Capex (Single Pipeline System)  986               986
    Capex Changes                      +349              (357)
 Total Opex (Twin Pipeline System)     915               1,724
 Total Opex (Single Pipeline System)   659               774
    Opex Changes                       (256)             (950)

 

2026 and 2027 Work Programme and Path to FID

Key milestones include:

·      Updated mineral resource and reserve modelling

·      Bulk sampling and pilot-scale metallurgical testing

·      Completion of Environmental, Social and Health Impact Assessment
(ESHIA)

·      Completion of non-process infrastructure design and costing

·      Definition of operating phase systems and related opex

·      Updated financial modelling and project economics

 

The FID gating process is expected to commence in early 2027, dovetailing with
investor consortium milestones to achieve a construction decision by the end
of 2027.

 

Update on Strategic Investment in Zanaga Project

 

The Board is pleased with the continued progress of the proposed strategic
investment by Red Arc Minerals announced on 10 February 2026, with a number of
key conditions now satisfied or well advanced. Based on the current timetable
and subject to the satisfaction or, where applicable, waiver of the remaining
conditions, the Company and Red Arc Minerals continue to work towards
finalisation of binding transaction agreements and completion of the technical
due diligence. Finalised transaction agreements are now targeted for
completion during July 2026.

 

Once the binding transaction agreements are entered into, completion will be
conditional upon shareholder approval and any required regulatory approvals.
 A shareholder circular containing further details of the Transaction,
together with a notice convening the EGM, will be published in due course
following the execution of the definitive documents.

 

The Directors remain confident in the strategic rationale of the transaction
and the value it is expected to deliver for shareholders. Further updates will
be provided as appropriate.

 

An updated corporate company presentation will also be made available shortly
on the Company's website here
(https://www.zanagairon.com/investors/results-presentations/) .

 

For further information, please contact:

 Zanaga Iron Ore Company Limited                         Andrew Trahar

                                                         +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                                               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.

 1 Based on 65% Fe pricing of US$115/t and a DRI premium of US$5/t per % Fe
above 65% Fe.

 2  The announcement on 11 August 2025 only included the impact of DRI product
quality in Stages One and Two. The April 2026 Case includes the impact of DRI
product quality in Stages One and Two, updated costing for the Stage One
processing plant, and updated costing for thickened and dry tailings
facilities.

 3  Stage Two process plant capital expenditure is estimated from 2024
Feasibility Study Cost Update

 4  2024 Feasibility Study Update, estimated the total Stage One capital
requirement as US$1.94 billion

 5  2024 Feasibility Study Update, estimated the total Stage One processing
cost of US$8.42 per tonne

 6  Based on a Fe Pricing Case (65% Fe US$115/t, DRI premium per % Fe of
US$5/t above 65% Fe);

including twin pipeline system, thickened and dry tailings technologies, DRI
product quality, 12Mtpa filter plant   and concentrate handling, and 12 Mtpa
DRI hematite concentrator complex costing

 7  Based on a Fe Pricing Case (65% Fe US$115/t)

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