Zanaga Iron Ore Company Limited Share Chat (ZIOC.GB.PL)

The problem is the ZIOC management team are like the boy who cried wolf.

From depeches

C-B gets a USD100M grant from the World Bank, for improvements to decayed electricity network :

.."Congo is implementing an emergency plan to put an end to the inconvenience the population has been experiencing for months and to tackle, in particular, the problems with the electricity between the two towns. According to him, the electricity produced at Pointe-Noire is having difficulty reaching Brazzaville. "We currently produce 300 megawatts dedicated to Brazzaville. But when this is fed into the national grid, users only receive 110 megawatts because of the dilapidated power lines. They have not undergone any major maintenance "he explained...."

No surprises there, maybe - other than his frankness as to the cause.

Interestingly, the Minister went on to say that credit requirements have improved for dams , it sounds like a climb-down from historic Build Own Operate Transfer (BOOT) or Build Operate Transfer (BOT) and a boost for Little Den's Public Private Partnership (PPP) approach

..""Today, the government has decided to LEASE the concession of dams, and take the fear away from investors

who were reluctant to invest outright, produce and sell electricity and then not get paid. Now that this has happened, everyone is comfortable. The removal of this knot frees up investors WHO ARE STARTING TO COME IN WITHOUT ASKING FOR SOVEREIGN GUARANTEES OR BANK GUARANTEES. These are the the results of SEVERAL MONTHS of negotiations as part of the reforms", explained the Minister.

All a bit sketchy, but my guess is relevant to CMEC and 'our' hydropower . From the 28 December RNS :

.."Following CMEC's preliminary inspections and engineering of potential hydroelectric sites near the Zanaga Project, an MoU has been agreed between ZIOC and CMEC with the following objectives:

o Advance engineering and related studies for the identified hydroelectric sites near the Zanaga Project.

o DRAFT ARRANGEMENTS FOR THE FUNDING OF DEVELOPMENT AND OPERATION OF THE IDENTIFIED HYDROELECTRIC PROJECT(S) BETWEEN THE GOVERNMENT OF THE REPUBLIC OF CONGO AND THIRD PARTIES..."

The timing certainly fits.

What do folk think?

GLA and ATB

I make the comment that ZIOC's BoD did not (and most likely could not) refute anything in the This is Money article apart from some 'lawyer speak' about any deal 'at this time' - a clause that immediately became historical.

It's worth recalling some other juicy bits from the article, as delivered by an 'insider' (enough of an insider to worry the BoD and NomAd into action) and written by the editor himself.

Again, none of the points below were qualified/denied by the company:

> Yet, these historical issues are less relevant to where the company stands today, on the BRINK OF A SIGNIFICANT VALUE INFLEXION POINT, a reality that the market has largely overlooked.

> This investment projects a net present value (NPV) of $3.68 billion, rising to $7.36 billion upon full build-out.

> The updated feasibility study offers potential strategic investors a wealth of new information.

> Several companies are reportedly interested, ranging from those considering a consortium stake to others looking to acquire Zanaga entirely.

> Although there is no formal deadline, a deal is expected within a few months, according to an insider.

> The strike length is 47 kilometres, with ore extending to a depth of 450 metres, hinting at an even larger potential resource.

> ...capable of becoming one of the largest iron ore mines in the world.

> Despite these promising prospects, the market has yet to respond. This could signal a company on the cusp of a value crystallisation event.

https://www.thisismoney.co.uk/money/markets/article-13563755/SMALL-CAP-IDEA-Zanaga-Iron-Ore-48m-company-multi-billion-pound-asset.html

A sensible head at last!

Makes a change from all the crazies running around, waiting for the sky to fall in.

⏰ time is ticking.

Key qualifier in the non-denial denial RNS was, '...at this time':

'The Company is always exploring potential strategic options in relation to the future development of the Zanaga Project and regularly engages in early-stage discussions of this nature but is not currently in active discussions around a transaction of any nature AT THIS TIME.'

Well, 'at this time' was the time of writing/publishing the RNS, which was '25 Jun 2024, 17:38'.

That statement was instantly historic because 'at this time' immediately passed. Pure lawyer speak.

'At this time' is now 11th July and we could well be in discussions, in fact I reckon we are. Of note is that none of the rest of the This is Money article was denied.

.."A delayed buy negates this afternoon's shake.....we're being played..."

Agreed. The only (eternal, per Lenin) question is : 'who/whom?'

ATB

15:45:28 5.1375 432,273 22.21k

A delayed buy negates this afternoon's shake.....we're being played.

Oops! Typo on re-read : for Bakmla, read Baniaka...

Talk of (and action on) an EPP would (maybe) serve to signal to third parties that 'we have options'...and to C-B that ZIOC was taking steps to protect its license for the 2 years between announcement of start of FEED and completion 15 months later (per MK). I've listened again and he's confident on the timeline.

This takes us to 2026, when C-B 's next Presidential elections are due : Big Den is probably barred constitutionally (technically by law and physically by age...but cf Biden...), but that's a big political unknown.

The mood isn't good . This editorial , from depeches on 8th July, gives a flavour. Note that the editor used to be considered a Big Den mouthpiece :

.."To date, even if potential candidates have not yet breathed a word, the web is revisiting the issues that

that could dominate the next major electoral campaign . Without being exhaustive, the concerns

below give a general idea of their scope.

Growing urban insecurity, the age-old issue of youth employment , the current economic situation and its corollary,

foreseeable social tensions, uncertain water and electricity supplies, the hoped-for improvement in living environment, the expected improvement in health issues, and the overhaul of the education system, external relations and their implications in terms of in terms of strengthening Congolese diplomacy, national cohesion and the willingness of

partners, all of which are essential to the implementation of the reforms that the country needs to move forward, this body of concerns around which the reflections of some and thoughts on the web speak volumes...."

I take it you're not proposing delivery to PN ?, the reference to AD Ports.

The logistics of delivery of anything to Franceville remain considerable, IIRC someone years back (atg ?) pointed to its challenges - over a mud road, with seasonal issues.

Even 1m tpa on 40ton trucks would entail delivery of 3,000 tons per day @ 350 days pa, a minimum 75 truckloads, so probably 100-150 trucks (capex) for the cycle (consumables opex).

I can't see $ 50 /t cost at quayside (the above + freight Franceville > Libreville / Owendo)being realistic.

See the recent post re Bakmla (which has a short drive to the Franceville railhead for comparitives):

It's at a similar inflexion point to ZIOC , and also pursuing a go-it-alone strategy, made possible by low capex/low -tech approach.

It's close to the Franceville railhead and available 'green' hydropower, has reasonably high quality ore, target production of 5mtpa and 4 x short-life offtake MoUs with Chinese co's, including Bao Wu.

Also : a USD 10M royalty agreement with Anglo American and some interesting economics, including a claimed 38% IRR...

https://www.genmingroup.com/investors/presentations/

and

https://wcsecure.weblink.com.au/pdf/GEN/02770418.pdf

I don't understand MK's confidence and your ref to flights, Vale and Luanda.

GLA

If after all this we are only left with a DSO, it would be desperately sad..

While most of us would prefer a blockbuster buy out so we can count our winnings, the EPP could well be an intermediate step that bypasses a number of issues: finances primarily however it would also allow an incoming Strategic/Consortium to feel their way into doing business with Brazzaville.

In various releases the company have detailed 1mtpa+ of DSO for up to 7 years. Direct Shipping Ore is great stuff. It does what it says on the tin; at surface (just needs a JCB and screening), transport to coast and shipping. Thereafter it is of the size and quality that it can be heaved straight into existing blast furnaces. As such it trades at roughly the same price as 65%Fe fines, or c.$125-130 at present. If we say $50/t cost at quayside and $15/t to ship to Europe then we arrive at a very tasty $60/t on that 1mtpa.

CapEx is a likely $10m, some of which could come from development finance if not wholly financed by an off-taker.

The point is that ZIOC could clear $50m pa whilst the staged project is being built out. This would mitigate all manner of risks and concerns. The BoD must be considering it.

https://www.zanagairon.com/wp-content/uploads/2023/11/Zanaga-Investor-Presentation-1-Nov-2023-1.pdf

Nothing more than official notification of Glencores current % holdings after last weeks shenanigans.

Nobody spotted todays RNS ???

>>"Dubai > Brazzaville > Pointe Noire > Brazzaville > Libreville > Luanda?

EPP export options? AD Ports and Vale?.."

Neither, AFAICS.

EPP first :

Cross-border > Gabon has become, if anything, more problematic since ouster last year of Big Den's relative-by-marriage and fellow Freemason Grandmaster Ali Bongo; rail capacity Franceville> Libreville/Owendo is limited and freight capacity expansion underway 12mtpa > 19mtpa will likely be taken up by Bakiama's initial 5mtpa target. The trucking of iron ore Zanaga to Franceville is also 'challenging'. Apart from manganese, its freight also includes uranium, iron ore and TIMBER.

Vale may be agnostic, but AD Ports will be interested in a Congo/Pointe Noire solution.

Re flts : Given the above, the relevance of destinations Libreville and Luanda to your speculation re Vale/AD Ports discussions and a ZIOC context is hard to see.

HB-IIW appears to have sat around in AbuDhabi since 2nd July and PP-FCC (owned by Asperbras, the known timber trader) HAS been shuttling between Brazzaville, Libreville and Franceville, but left for Cascais today.

Asperbras, of course, itself has a presence in Luanda -from whence it funnelled funds to Lula's election campaign - and where (true to form ?)- it's been accused of double-invoicing /over-charging on bus-supply contracts .

https://angola24horas.com/politica/item/8398-governo-compra-3-000-autocarros-escolares-com-suspeita-de-superfaturamento

Maybe Asperbras is also the owner of your mystery jet....and further speculation is idle ?

Ho hum

On the other hand:

The company are now debt free and have cash in hand for 6 months+. That's more than enough to see us good until FEED is financed, and FEED itself is due to start round about the end of September.

Plus, PIs can now buy where Glencore and Elphick did which I figure gets them off the hook for when the SP rockets on finance news.

I'm very chilled...

They are full of s. I don't think you can quote anything the company has said with much faith. Shares are a write off imo.

Recall that ZIOC have been majoring on Congo for the EPP, very likely for political reasons:

· Early Production Project ("EPP Project" or "EPP") remains under investigation

o Multiple production scenarios remain under investigation on processing facilities and suitable logistics solutions, with a focus on an export solution through the Republic of Congo ("RoC").

> However previously the company had a preference for the Gabonese route, i.e. JCB and sift, truck to Franceville, and then rail to Libreville. I don't think such sensitivities would apply to the likes of Vale in a JV with AD Ports.

https://www.lse.co.uk/rns/ZIOC/zioc-2023-annual-results-announcement-ttfiqmzkg6vd8ax.html

Dubai > Brazzaville > Pointe Noire > Brazzaville > Libreville > Luanda?

EPP export options? AD Ports and Vale?

Some interesting 'compare and contrast' info re the above, which seems to be at a similar inflexion point to ZIOC , but pursuing more of a go-it-alone strategy, made possible by low capex/low -tech approach.

It's close to the Franceville railhead and available 'green' hydropower, has reasonably high quality ore, target production of 5mtpa and 4 x short-life offtake MoUs with Chinese co's, including Bao Wu.

Also : a USD 10M royalty agreement with Anglo American and some interesting economics, including a claimed 38% IRR...

https://www.genmingroup.com/investors/presentations/

and

https://wcsecure.weblink.com.au/pdf/GEN/02770418.pdf

Its principal backer to-date has been Tembo Capital, an ESG-themed private equity company, see

https://tembocapital.com/about-tembo-capital/

and

https://naturalresourcesforum.com/companies/tembocapital/

This earlier presentation has some useful maps that show the various mines in the area, including the disputed Mbalam-Nabeba/Avima to the North and stretching to Zanaga to the South.

https://www.genmingroup.com/mining/baniaka/

Some 'light reading' for the weekend...

ATB

Expected patronising response!

You're straying a bit from base, aren't you beardozer ?

I'm with atg

.."Info hungry Investors having a good time shooting the breeze while awaiting real news and developments...".

HTH

What's wrong with PI's being "typically like children: irritable and quarrelsome"? extrader and MM may be happy to play ping-pong for eternity but some of us have had more than enough! All we want is shareholder value - why is that so difficult?

Hi MM,

I get to the same ultimate conclusion , but think it's a bit more nuanced than you suggest :

(1) .."Given the loan position at the end of last month, Glencore were in a position to stifle such terms.."

How exactly ? Any attempt to strong-arm ZIOC would be seriously disruptive and undermine the ' we're in lock-step/not calling the shots' thesis that has got us/them this far, surely?

Topically, we've seen in the UK election results how counterproductive the Reform/Tory fall-out has been to their supposedly overall shared views.

GLEN would be shooting itself in the foot, similarly, IMO.

(2).."the off take issue remains. The solution to that is to *potentially* buy Zanaga entirely (as per the 'This is Money' article). Doing this would mean that Glencore, under the terms of the November 2022 restructuring, would reduce to a simple royalty and not an off take - (see next post for details).."

The Gulf Consortium (in your example) doesn't have to buy ZIOC ENTIRELY, it's enough if it buys 50% +1. It can LATER bring in others, to do the 'heavy lifting'. Which it needs to, lacking the skill-sets.

AD Ports committed $ 500M + for what seems - with hindsight - to have been a 'placeholder' re the port aspect.

I think we could well see another 'placeholder' INTERIM arrangement - that would move the Project forward, with the GC having picked up a few useful trading cards (maybe FEED?) in the process.

What the sections you've quoted do is say :

- if you (Strategic Investor/SI) want access to offtake, you have to buy 50% +1 of ZIOC/MPD : 20 to 30% won't cut it;

- if you DO buy 50% + 1, you get the prize of access to 100% of offtake [not just prorata to your shareholding] but this is CONDITIONAL because GLEN has right of last refusal (ROLR) to new marketing terms;

- GLEN either matches SI new marketing terms (and GLEN retains 100% offtake) or - if new terms are uncommercial or disruptive (from GLEN's ore-trading pov) - it doesn't, in which case SI gets the prize of 100% offtake;

- in the latter case, GLEN gets the 'consolation prize' of an unquantified Royalty ('to be agreed') for life-of-mine.

Bottom-line message to SI(s) :

- if offtake [of our premium product] is important to you, you have to acquire a controlling interest in the concession-holder, anything less gives you no say;

- we [GLEN] still have a say in marketing rights PRICING for as long as it suits our overall ore trading book/strategy;

- if it doesn't and we don't match new terms, there's a variable in place for off-setting that discreetly. Others needn't know.

Bottom line : Carrot and stick - 'Offers invited, terms negotiable'.

Leaving for another day WHO exactly gets the mine to production.....but *potentially* leaving out GLEN (who doesn't like greenfield) and ZIOC (who - apart from IP - bring little/nothing to the table, apart from fractious PI's [joke!]).

PS You can commit to finance the FEED , as 'earnest money'

All AFAIC

Here are the relevant clauses from the November 2022 acquisition from Glencore.

(m) If there is a direct or indirect change in ownership of MPD amounting to 50% + 1 share or more of the issued share capital of the relevant target entity, and, following such change in ownership, MPD notifies Glencore International in accordance with the terms of the Marketing Agreement that it wishes to cancel the Marketing Agreement and enter into a new life-of-mine marketing agreement (a "New Marketing Agreement") in respect of 100% of the production of the Mine with the relevant investor or its Affiliate (a "New Buyer"), then Glencore International may notify MPD, subject to the terms and requirements of the Marketing Agreement, that either:

(i) it shall match the terms of the New Marketing Agreement, in which event the parties shall discuss and agree in good faith such minimum amendments required to the Marketing Agreement to align with the key commercial terms agreed between MPD and the New Buyer under the New Marketing Agreement; or

(ii) it agrees to the termination of the Marketing Agreement, in which event the Marketing Agreement shall be terminated upon execution by MPD of the New Marketing Agreement and thereafter Glencore International shall be entitled, for the term of the New Marketing Agreement and / or any replacement or supplement to such agreement, to receive a fee in each calendar month by way of consideration for the initial marketing role played by Glencore International under the Marketing Agreement ("Royalty"), and the Marketing Agreement shall be terminated only upon execution of the Royalty by Glencore International and MPD in a form acceptable to Glencore International acting reasonably.

https://www.lse.co.uk/rns/ZIOC/acquisition-of-100-of-zanaga-iron-ore-project-b1vcll71qsaa4z6.html