LONDON (Alliance News) - Zanaga Iron Ore Co Ltd shares plunged lower on Friday morning after the company said its pretax loss widened significantly in 2014 due to a writedown booked on its project in the Republic of Congo.
Zanaga said its pretax loss for the year was USD164.8 million, substantially wider than the USD6.7 million loss the company posted in 2014.
The loss was attributable to a USD110 million impairment charge booked on the carrying value of the Zanaga project, a joint venture with FTSE 100-listed miner Glencore PLC, in the Republic of Congo, owing to a fall in global iron ore prices and continuing volatility in iron ore markets.
"The Zanaga Project achieved numerous significant milestones during 2014. The feasibility study concluded more than six years of detailed study work and confirmed the project's robust economics. Shortly thereafter, we were delighted that the project received its mining licence and that a mining convention was signed which established the fiscal and legal framework for the project," said Clifford Elphick, Zanaga's chairman.
"However, these positive developments have been discounted to some extent by a number of significant changes in the global iron ore industry. A major negative impact has been the substantial fall in iron ore prices due to the slow down in the Chinese economy reducing demand, as well as significant supply increases from the major diversified mining companies. These factors have led to the closure of numerous high cost iron ore mining operations globally," he added.
Zanaga shares were down 24% in early trade to 2.1 pence, the worst performer in the AIM All-Share.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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