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

PS

At the risk of stating the obvious, it absolutely DOESN'T explain the s/p, which is languishing for reasons various posters have suggested.

IMO

Have a great weekend!

GLA

Driving is describing g a practice followed by Tesco, amongst others : it will buy up potential supermarket sites in towns where it is already well represented.

It does this to prevent the entry of competitors whose presence would damage turnover and profits.

From the site owners point of view, Tesco's strategy is , if anything, somewhat beneficial: to secure the site Tesco has to pay at least as much as anyone else, possibly more.

It's the end customer who pays in the end, of course, but 'twas always thus.

AIUI

HTH

You make the perfect point about ZIOC NEVER being developed which would explain the current SP.

Ex- one other risk associated- That now simandou seems near certain to being developed, is the “cartel effect”, that is not to allow over supply(further green field projects to get developed)(although I’m happy to be brought by a rival major, solely for the purposes of mothballing), thus applying price pressure on the iron ore markets.

Luckily (I hope!), for us is that we have two potential “non cartel” members “interested”(I hope!!)..CHINA & SAUDI ARABIA.

Gla.

hi mm,

it took you 6 minutes to reply to a question re the political situation in c-b with a boosterish 'my (unidentified' -but hinted at) sources tell me it's all ok...' and - so far, nearly 24 hours later no comment giving greater support to your claim re a quite important topic.

as chance would have it, yesterday's depeches included this assessment of c-b from the world bank :

.."the experts stressed the inflationary pressure, which remained high at 4.3% last year. the surge in prices of basic necessities follows the withdrawal of fuel and transport subsidies for the transport sector.

the ****tail of inflation, rising debt and economic fragility has had repercussions on the

purchasing power of the population. serious food insecurity now affects 59% [repeat : 59%] of the population,’ said the expert, while widespread poverty persists, with nearly one in two congolese living on less than us$ 2.15 a day..."

these appalling numbers may not affect the strategic investors' interest in investing in c-b, but it would be foolish - imo - to belittle or ignore the identifiable (and identified) country risks that exist and will surely feed through to whatever price they're willing to pay.

you still haven't come back on what i believe to be the 'clincher' argument for zioc vs simandou ie comparative impurities, however two other arguments in any favourable assessment are :

(1) capital intensity

- $ 230 per tonne capital intensity (said to be 4x-5x w australia cost ; 2 x rhodes ridge cost). based on $ 13.8 bn for 60mtpa. simandou is described by management, somewhat defensively, as ‘like an lng project’….

on the same basis, @ $4.7bn for 30mtpa, zioc’s capital intensity is approx. $ 160 per tonne; with possibility of lowering further if e.g. the floating port option is implemented.

(2) strategic port option : while we don't know what the final mineral port shape for zioc might take, we do know that simandou (a) doesn't include a deepwater port at present ; and (b) is identifiably challenged in this respect, needing a work-around barge trans-shipment 'solution' to overcome its very real geographic and geological constraints.

gla

Spot iron ore prices for immediately delivery have *always* been volatile - in both directions.

However Strategic players (both producers and consumers) with very long term time horizons disregard spot prices.

The weekly chart below shows the Chinese/Dalian spot price (black) compared to 1-year (blue), 2-year (green) and 4-year (red) prices.

2 things of note: Firstly, that the longer term prices (for investment decisions) move very much more slowly than spot (a mathematical truism if you like), and, secondly, that long term prices have risen since 2020 and stabilised around 15% higher than the current sport =c. $110-115/t for 62% Fe. Zanaga's 67.5% Fe will be some $20-25/t higher again.

It is this *long term* stability that will bring confidence to our Strategics when it comes to investing in (buying out!!!) Zanaga.

https://invst.ly/161hx2

ZIOC used much the same long term thinking when calculating the reworked Feasibility Study this April:

'Note: Iron ore prices based on AME Group's long term real iron ore price forecast for 65% Fe IODEX. Operating costs exclude royalties payable.'

https://www.lse.co.uk/rns/ZIOC/feasibility-study-update-csf95xrss026cmq.html

Would that insight be from an 'insider insider' or an 'insider' ?

As recent experience shows, there's a qualitative difference.

ATB

My insight from the company says 'Congo' has been rationalised and squared away by the interested Strategic Investors. They themselves now have senior Government-level contacts that reassure.

None of this has reached the 'signatures on paper' stage and thus no announcements to the market.

Mr Market is unaware and the SP sits at a frankly absurd miss-price.

It's just an o

So, is it the Political Situation in CB that scares investors?

While the media salivate over Simandou in Guinea they are all missing the even juicier prospects at Zanaga. Overall Zanaga has 3 huge investment advantages in comparison:

1. Zanaga has ignificantly lower CapEx at sub-$2bn for Stage 1, compared to $11bn+ for Simandou

2. Zanaga's FE grades are higher at 66.0% rising to 68.5% for an average of 67.5%, good enough for high grade 'green steel' pellet feed. Simandou reaches to 65% of DSO and hence doesn't make the green steel premium obtainable by Zanaga.

3. ZIOC's April Feasibility Study restatement projects an IRR of 26.8-28.2%. This compared to 2023 when Rio stated just 11% for their share of Simandou.

So compared to the media's current darling, Simandou, Zanaga has much lower CapEx to produce a higher grade for green steel which results in an IRR much better than double than that of Simandou.

Oh - there's a 4th advantage. Even Zanaga's upper NPV of $7.8bn is but half what they had to pay for Simandou.

Mr Market is completely missing the massive upside potential here with the SP less than 1% that of a potential buy out.

On the RTZ website there is copy of a presentation: 2023 Invest Seminar Sydney. P.29 references calculations of the premium for 67% vs 62% with an increased carbon tax, this was the result;

At $100/t CO2 penalty.

67%Fe DRI/EAF (gas DRI) = +$60-80 (over 62%)

67% Fe DRI/EAF (H2 DRI) = +$80

Thanks for this.

Reminding folk of those Simandou comparatives -esp grades and impurities - would help the ZIOC argument.

GLA

China’s Agenda at FOCAC 2024: Climate, Connectivity & Coalitions

https://chinaglobalsouth.com/analysis/chinas-priorities-for-focac-2024/

On July 23, 2024, Special Representative of the Chinese Government on African Affairs and Ambassador for the Affairs of the Forum on China-Africa Cooperation (FOCAC) Liu Yuxi visited the Republic of the Congo, during which he paid a courtesy call on President Denis Sassou Nguesso of the Republic of the Congo and met with Foreign Minister Jean-Claude Gakosso. Chinese Ambassador to the Republic of the Congo Li Yan attended relevant events.

Liu Yuxi said that this year marks the 60th anniversary of the establishment of diplomatic relations between China and the Republic of the Congo. Under the strategic guidance of the leaders of the two countries, the traditional friendship between China and the Republic of the Congo is deeply rooted in people's hearts, and the comprehensive strategic cooperative relationship between China and the Republic of the Congo continues to develop. China is ready to further deepen political mutual trust with the Republic of the Congo.....etc

https://www.mfa.gov.cn/eng/xw/wjbxw/202407/t20240725_11460087.html

CHINA’S GREEN STEEL PUSH COULD CRUSH AUSTRALIA’S DIRTY IRON ORE EXPORTS

Australia’s largest export, iron ore, has long been a powerhouse of economic growth. Over the past two decades, its contribution to our national income has surged from just A$8 billion in 2005 to over A$124 billion today.

But the Australian iron ore industry faces a major challenge as its biggest customers – China’s steel mills – move to drastically reduce their carbon footprint.

The issue lies in the purity of our product. Most of Australia’s current iron ore exports are not classed as high grade. Typically, the lower the iron content of an ore is, the more energy is required to refine it.

Our competitors – countries such as Brazil and Guinea with higher-grade ores in relative abundance – are positioned to become the steel industry’s suppliers of choice.

Australia could adapt its production to meet this change in demand. But if it doesn’t do so quickly, it may find itself left behind in the new green economy.

IRON ORE’S BIGGEST CUSTOMER CLEANS UP ITS ACT

China is the largest importer of Australian iron by a hefty margin. Australia shipped 736 million tonnes – more than 80% of iron ore exports – to China in 2022.

Last year, China’s steel mills made up the majority of global steel production. But they were also a major polluter, accounting for about 15% of China’s total greenhouse gas emissions.

They’re now facing a double whammy of decarbonisation pressures.

At home, the Chinese government has mandated the steel industry reduce its emissions as part of China’s wider “dual carbon” goals. These will require emissions to peak before 2030 and for the country to become carbon neutral by 2060.

And internationally, upcoming tariffs on carbon-intensive steel imports are set to make producing “dirty” steel much costlier.

AUSTRALIAN ORE DOESN’T MAKE THE GRADE

Making steel with low-grade iron ore isn’t at all carbon friendly.

For one, it consumes vastly more energy in the traditional steelmaking process. My analysis shows that using one tonne of low-grade ore can emit over 200 kilograms more carbon dioxide in a blast furnace than high-grade.

Much of the iron ore exported by competing nations like Brazil and Guinea is high-grade, containing more than 65% iron. But most of Australia’s current exports fall below that threshold, between 56% and 62%.

https://theconversation.com/chinas-green-steel-push-could-crush-australias-dirty-iron-ore-exports-219299

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

As one of the last unplucked gems of high-grade iron ore in the world, Simandou holds out the prospect of alleviating China’s overreliance on Australian iron and in doing so eroding the economic leverage of the collective West in the event of, for example, a war in or around Taiwan.

https://www.geopoliticalmonitor.com/simandou-the-pilbara-killer-comes-of-age/

With Simandou now accounted for, what is the final world class, high grade deposit available to Strategics?

ZIOC emphasise Zanaga's significance on slide 8 of the company's most recent presentation (Nov 2023):

THE ZANAGA PROJECT IS A GLOBALLY SIGNIFICANT IRON ORE RESOURCE

One of the only large, long-life, iron ore assets not controlled by existing major iron ore producers

Orebody supports >30 year mine life, even at 60Mtpa production scale....

A straightforward comparison of ore quality incl impurities Simandou vs ZIOC would likely succinctlymake the point.

Travelli g atm, so can't do it myself

Over to you!

But answer came there none...

*confidence in stepping up again to 67.5% pellet feed

Darned predictive text.

An issue for Zanaga and ZIOC is how to accurately price the 66-69.5% ore. For our purposes that translates into how to value the mine with a high degree of confidence.

The SGX 65% is helping us here with volumes growing to a record, and as it does so, traders have confidence in the stepping up again to 67.5% seller feed - ZIOC's proposed blended product for Stage 2.

SGX IRON ORE 65% FE CONTRACT SETS NEW DAILY TRADED RECORD

9th August

(edit)

Expanded utility of high-grade pellet feed indices

“Mid-grade iron ore futures volumes have grown rapidly in the past years and the SGX Fastmarkets Iron Ore 65% futures, a high grade, are well positioned to grow in the coming years giving traders a vehicle to express their views on the high-grade market as the transition to a green economy continues. We are excited to see that the volumes on SGX noted a record day and expect higher volumes to continue in the near and medium term,” Fastmarkets global head of market development Przemek Koralewski said.

Market participants also attributed the increase in utility of the 65% Fe derivatives to an uptick in usage of high-grade pellet feed indices in the seaborne market.

A trader in Shanghai told Fastmarkets that a high-grade pellet feed producer is exploring the use of Fastmarkets’ 67.5% Fe pellet feed premium CFR Qingdao and 67.5% pellet feed index CFR Qingdao for their cargoes in their off-take agreements.

The trader added that this move follows the use of the 67.5% pellet feed index to settle contracts for a widely used Brazil-origin pellet feed in the previous year.

https://www.fastmarkets.com/insights/sgx-iron-ore-65-fe-contract-sets-new-daily-traded-record/

Put simply and as per Simandou, China wants and needs to diversify their iron ore away from Australia.

Continuous Western provocations in hot spots around the Eurasian landmass will serve to reinforce this geostrategic necessity for the Chinese. It's been an article of faith for centuries, that in times of war, Secure Resources!

The bidding war for Zanaga could be frantic....

SIMANDOU: CHINA’S PILBARA KILLER COMES OF AGE

August 8, 2024

SUMMARY

The Simandou iron mine in Guinea represents one of the last greenfield projects in the world, and its vast reserves of high-grade ore are expected to tip the scales of global supply. Some even call it the “Pilbara killer,” referring to the potential of Simandou to erode Australia’s dominant position in global iron markets.

There are two takeaways here. One, iron is highly strategic in that it’s necessary for the smooth functioning of the Chinese economy. It remains the lifeblood of a Chinese steel industry that is both overwhelmingly state-owned and a crucial job provider, so much so that rampant overproduction and dumping are treated as the acceptable cost of meeting domestic social stability and economic security objectives. And two, shortfalls in domestic supply mean that China must look to global markets to source the iron it needs.

The top-heavy nature of the global iron market represents a vulnerability in China’s supply chain. And much like how the United States is now engaged in the friend-shoring of strategic critical minerals, China can no longer ignore the charged geopolitics of an iron market dominated by Australia and Brazil. Australia alone accounted for a staggering 736 million metric tons of exports to China in 2022. Such stark reliance on a close US ally is conspicuous in the Xi Jinping era, when supply lines from defense to tech to food are being rerouted through friendly (non-Western) states. The contradiction was on full display throughout the post-2018 collapse in China-Australia relations, a period that saw open discussion of potential iron export controls by Australia in reprisal for Beijing’s trade war. For its part, China was never able to bring its full coercive weight to bear on Canberra, for fear of the economic blowback at home that a ban on Australian iron would surely bring.

Though it was eventually fought to a draw, the Australia spat ended up being instructive: Beijing redoubled its efforts to stimulate domestic iron production and diversify foreign suppliers. And though the original plan to develop Simandou pre-dates these tensions, the project should still be viewed as a part of this overall effort. As one of the last unplucked gems of high-grade iron ore in the world, Simandou holds out the prospect of alleviating China’s overreliance on Australian iron and in doing so eroding the economic leverage of the collective West in the event of, for example, a war in or around Taiwan.

https://www.geopoliticalmonitor.com/simandou-the-pil

Jiving makes a coherent argument.

You might try addressing it, instead of bluster and threats, which is neither educational nor - in grownups - edifying.

And if anyone wants to go the original source it can be found on P35 of the 2010 prospectus, which also makes clear the disproportionate effect such an ownership concentration can have on corporate votes/decision making. I quote:

"On Admission, Garbet and Guava will own 115,671,186 and 88,730,397 Ordinary Shares, respectively, representing 41.25 and 31.64 per cent. of the Company’s issued Ordinary Shares. As a result of their significant shareholdings, both Garbet and Guava will be able to exercise significant influence over all matters requiring Shareholder approval, including the composition of the Board, approving the timing and amount of dividend payments and approving general corporate transactions. "

If this message is aimed at my Sunday post on the other board, it is completely misunderstanding & misinterpreting that post.

1. There is categorically no implication of criminal behaviour by anyone, exactly the opposite I am sure everything will have been done exactly in line with BVI corporate law & the company's memorandum of association. Clifford Elphick, the ZIOC Board & the 'new' Glencore I am sure will scrupulously follow the law in BVI & everywhere else, with regard to the company & any transactions. I have never seen anything that suggests otherwise, & I would never imply otherwise. Indeed it would not surprise me if all decisions were always taken in conjunction with legal advice from a leading law firm in the BVI or elsewhere, which insulates from potential future legal challenge.

2. It is a matter of historic record that Guava, Garbet & Xstrata/Glencore after the 2010 IPO owned well over 75 % of the Zanaga mine. The actual figures would be :

Xstrata (now Glencore) 50% +1

Garbet owned 41.25% of ZIOC so 20.6% of the Zanaga mine

Guava owned 31.64% of ZIOC so 15.8% of the Zanaga mine

The Big 3 therefore owned 86.4% of the mine, which had Xstrata/Glencore done a share swap as per 2022 would have translated into 86.4% of the voting shares of ZIOC. That is a considerable margin over the critical 75% level, & even allowing for sales after the dissolution of Garbet, & for dilution from placings it makes it likely that around 75% of voting shares could be in the hands of the Elphick/Glencore camp & always have been - particularly if management/Board shares/options count towards 'friendly' holdings. All clear, legitimate & above board.

3. The existence of Elphick/Glencore potential 75% holding/vote is not a threat to minority shareholders but a blessing. It allows them to negotiate a sale or JV with strategic investors on the basis they can deliver 100% of the project unimpeded by potentially blocking shareholders. This is one of their key negotiating strengths in arguing against a ZIOC market cap based sale price and on the basis of essentially a 'private' sale price based around NPV. I expect all 100% of ZIOC shareholders to receive exactly the same price for their shares in the event of a takeover.

4. The whole gist of my post was that I took this to be indicative of the end game. The haggling over price/structure was over & we were moving to the critical (but straightforward) of preparing for an announcement & the critical corporate timetable that would follow on from that.

I hope everyone enjoyed it. Of course it is very important to act sensibly, i.e. wear a hat, perhaps, and take plenty of fluids. What's important, particularly at these times, is that people's rehydration doesn't include too much drink and then acting rashly, such as spreading criminal accusations on bulletin boards and SM, for example. That would be stupid and perhaps invite others to take matters into their own hands.