Zanaga Iron Ore Expects Low Congo Project Capital Costs After Testing

LONDON (Alliance News) - Zanaga Iron Ore Co Ltd on Thursday said its early production project in the Congo is expected to be a low capital cost development based on bulk sample testing.

Shares in Zanaga, which owns 50% of the Zanaga Iron Ore project less one share, were down 6.9% at 9.22 pence on Thursday. Glencore PLC owns the other half plus one share.

Zanaga said it is targeting a less than USD50 million of capital costs to create an iron ore pellet feed project or USD110 million to create a full iron ore pellet project.

Moreover, substantial plant technical work for the early production plant is complete, with samples having already been selected from a work programme at the Zanaga project, including bulk sample testing.

From this testing, it has been estimated that a 1 million tonnes per annum pellet feed concentrate plant would have capital costs of USD38 million. Its operating costs would be USD3.35 per tonne of ore for the entire run of the mine - excluding power - and it would be fully installed on site within 22 months. The target product grade would be more than 65% iron.

For the pelletising of the pellet feed concentrate into a higher value product, the high-level indicative cost estimate is between USD50 million and USD60 million with a power consumption estimate of 4.0 to 4.5 megawatts. The operating costs for this type of project have not yet been defined.

Zanaga Non-Executive Chair Clifford Elphick said: "It is pleasing to see that gradually the Zanaga project is passing critical milestones in assessing the viability of the early production project, with significant successes in defining a milling solution and ensuring product beneficiation aimed at achieving targeted quality outcomes at the proposed process plant. This is an important element in the evaluation of the viability and economic feasibility of the [early production project]. We look forward to providing an update to our shareholders in due course."

Zanga's ultimate goal is to develop a larger staged development mining project that would produce 30 million tonnes per annum of iron ore, stage one of this being to produce 12 million tonnes per annum with a capital cost of around USD2.2 billion. The second stage would have associated capital expenditure of USD2.5 billion and could be financed with cash flows from stage one.