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Hi Ironic,

You are wrong in your comments :

(1) From the IPO document :
Number of Ordinary Shares in issue prior to the Placing and Admission 254,934,212
Number of New Shares being issued pursuant to the Placing 19,907,629
Number of Sale Shares being placed on behalf of Selling Shareholders 19,907,629
Total number of Ordinary Shares being placed pursuant to the Placing 39,815,258
Number of Ordinary Shares to be issued to the LTIP on Admission 5,574,135
Number of Ordinary Shares in issue immediately following the Placing and Admission 280,415,976

(2) The JV didn't "pump in a few hundred million dollars from GLEN", a contribution in kind was made by Xstrata (subsequently acquired by GLEN) as part of setting up the JV. Zanaga barely rates a mention in GLEN's Annual Report and Accounts, in view of its lack of materiality.

(3) The Market Cap of ZIOC didn't fall because the wicked, frustrated Market Makers (boo ! hiss !) weren't happy at lack of money-making placement opportunities, it fell because Zanaga was required by the rules to write down the value of its assets because of the then dire state of the iron ore market …….and investors have taken their cue and valued those assets as worth....10p per share, today.

(4) If the Investor Presentation is convincing, people may decide that the assets (including prospects) are 'worth' 20p, 30 p , 50p per share, whatever, and the Market Cap will then rise.

Something is certainly silly, but it's not the market.

ATB

Hi jay12,

…"was not the original deal with glencore included a total buyout at NPV? …"

The short answer is : read this https://www.telegraph.co.uk/finance/newsbysector/industry/mining/9529658/The-Glencore-Xstrata-war-has-turned-friends-into-foes.html (from my 'willy-waving' post of a few days ago), and ask yourself what value you think Mick Davis would put on any agreement with GLEN ? That's a real world test, not a theoretical position.

The slightly longer is :

(1) Yes, it did, IIRC
(2) Who determines NPV ?
(3) The discount rate I've shown in various examples on this board has been a uniform 10%. This is used for projects in first world countries like Canada, second world countries like Ukraine …..and third world countries like C-B, which makes no sense.
NPV is a tool to compare the merits of different investments and to help you decide which is the best use of your money, see https://en.wikipedia.org/wiki/Net_present_value
If I can get 5 % for low risk investment in Canada , a 10% return is good; 10 % in Ukraine is doubtful; and 10% in C-B, where I can probably get 15-20% on short-term trade finance, is a non-starter.
(4) A lot of our mooted project 'value' comes from its 30+ year life. In the real world - even more so because of the discount rate that will apply to C-B - you can forget anything over 10 years or so. Why ?
Because the discounted value of cash in just 10 years time is a lot lower than cash today : at a 20% discount rate , £100 received in 10 years time is only worth £ 23 today. In 30 years time, it's worth £ 0.42 today.
(5) On the other side, we have to invest a couple of £ BN up front...and wait 2, 3, 4 years before seeing any return.
You can bet that GLEN - or whoever - will charge royally for any free carry we get.
(6) The main shareholders - the only ones that matter - have already recouped most of their investment, at the time of the IPO. I think it likely that - if they were 'made an offer' of 2 x IPO price - they'd forget any paper contractual 'right' and jump at the chance....and hopefully take us with them.
(7) As it happens, that's about the price of 1 x GLEN share today. GLEN has 14.5 BN shares in issue....of which 675 million shares in Treasury.
(8) If GLEN wanted to play fair, they could buy us out for barely 40% of their idle Treasury stock......

Does GLEN want to play fair ? Ask Mick Davis what he thinks ;_>

ATB

Hi Scottology,

ZIOC is my only greenfield miner, I'm more familiar with small oilco's - at the E + P (exploration and production) stage.

What tends to happen there is that the small guys do all the initial work, take a lot of the risk and hassle...….and occasionally strike lucky.

At which point, unless you're very lucky/they're very careful, the smallco gets squeezed out of the picture as one of the big boys snaps them up.
And the PI gets a 'nice' return, but not a fantastic one.....maybe pennies in the £ of 'ultimate value'

That could be what happens here. However,

"God is on the side of the big batallions", said Napoleon. To which Voltaire is supposed to have replied " God is not on the side of the big batallions, but on the side of those who shoot best"

The Zanaga team (mixing metaphors) appear to be playing a relatively weak hand relatively well, let's see what happens over the next few months.

There are quite a lot of moving parts, given the coincidence of the Vale issue, the Simandou issue and the C-B issue....all with a China / US trade spat overlay ......and the Chinese air quality political imperative.

There are a lot of 'motivated' players at the moment (and that's before any personal rivalries), so - if we play it right / get lucky - we could actually come out quite well....

All IMO, of course. NAI and DYOR

ATB

And, specifically re the IMF : nothing on their agenda re C-B until March 6th, per
https://www.imf.org/external/NP/SEC/bc/eng/Index.aspx

ATB

Hi Pawpawman,

Re Indaba : yeah, I'd overlooked that ;-<
May be just flying the flag, who knows ?

Time will tell, I hope !
ATB

Hi all,

I think ZIOC is in a bit of a pickle.

If you think, as I do, that they've been to some extent 'playing for time' (sound familiar ?) , they probably don't have too much 'hard' news of their own to share.

Equally well, there are clearly a lot of things going on behind the scenes (outwith ZIOC's control and maybe even knowledge) that are or may be coming to a head : an IMF debt restructuring; a Chinese green light for the SEZ; the tailings disaster in Brazil; the recent corporate developments involving Simandou and Chinese muscle flexing on coal / emissions; maybe even the recent political unrest in Gabon, where Nguesso has close family ties, see https://www.nation.co.ke/lifestyle/dn2/957860-2206034-w16g7tz/index.html)

My guess - and that is all it is - is that the ZIOC-sourced news itself will likely be a bit of a damp squib.....but that there could well be other 'game-changing' news from elsewhere in the not-too distant.

As the Arab saying has it : "sabrun jameel " : patience without complaining is a beautiful thing.

ATB

Sure , they promised an update. But (a) a few days either way is hardly material, in the scheme of things and (b) more importantly, I think there are so many moving parts going on behind the scenes (IMF, China debt talks, the Simandou developments

Hi all,

From today's Africa Intelligence, behind paywall, the headline : Denis Nguesso looks to re-election in 2021

…"Decisive for the economic future of the country, the negotiations with Washington may also provide the president with a platform for winning the next presidential election....."

No doubt the IMF will have pointed out the obvious carrot of the 'feel good' factor that would come with an upsurge in economic activity.

ATB

Hi Scottology,

In some ways, it would be nice for Chinalco to make us an offer - it would give ZIOC shareholders a clean exit (if the price was reasonable).

But why should GLEN be interested in selling out - unless they have better use for the cash elsewhere ? They're the middleman : sourcing ore and trading/selling it on to the Chinese . Sell this source (Zanaga) and they're out of the loop, cutting back their own future trading opportunities.

I'm hoping that GLEN would want to keep some skin in the game and will step up to the plate. They could at the least plausibly make the case for an offtaker role in any Zanaga deal as a means of ensuring transparency and that there were none of the transfer pricing shenanigans that an otherwise all-Chinese deal would permit. That might play well with the IMF/ World Bank US DoJ, for instance....

ATB

continued...Does the technology actually work ?

Well, the jury seems to be still out on this one . See my earlier post re Element ASA (the Norwegian buyer in to Ambershaw), their Q3 2018 update says :

…"Ambershaw will produce super premium DR grade pellets for use in the North American steel production market, through INNOVATIVE TECHNOLOGY [ that's our cold polymerisation, btw] for which Ambershaw holds an exclusive license for North America. The ADEX permit applied for will allow for sample extraction of 100,000 tons of mineralised ore, which is expected to yield 20,000 tonnes of 68% Fe concentrate which will be used to produce the pellets. Pellets produced DURING THE SAMPLING PHASE will be offered to various steel producers with the aim to conduct tests and thereby secure long-term contracts.."

100,000 tons......As Cilla might say, that's a lorra , lorra metal, lads. For samples. About 1/10th of our hoped-for annual production...

I'm not a techie metallurgist, I'm probably missing something obvious, but from what I've read, the cold polymerisation remains 'unproven (and not in the Scottish legal sense). If anyone can show me otherwise, I'm all ears.

Otherwise, I guess we wait to see what ZIOC has to say in the next few days.

ATB

Doesn't look to me like

Hi all,

We - and certainly ZIOC - have been hanging our hats a bit on the new cold polymerisation technology that is going to take us to the sunlit uplands.

I hope that the 'imminent' RNS (= Regulatory News Service) will indeed give positive news on this profit-enhancing initiative.

And yet, and yet.....

If it's such a sure fire deal, why has ZIOC been going cool on it in its latest communications ? From the December 2018 RNS :

.."While the focus continues to be on a EPP project producing a PELLET FEED PRODUCT, the Zanaga Project Team continue to investigate the option of incorporating a pellet plant into the project. Discussions are underway with conventional pellet plant providers to propose and refine the costs associated with this solution. IN ADDITION, the Zanaga Project Team are continuing discussions with a cold pelletisation technology provider as regards pellet product acceptability with steel mills."

From which I take it (feel free to challenge or correct) that the cold pelletisation technology remains unproven....and hasn't yet achieved commercial acceptability.

That's point (1). Now go back to the 'research' elsewhere that uncovered Ambershaw in Canada, which was undergoing similar technology testing , with a research facility in the UK. The testing was being done by a sister company (fellow subsidiary, at the time) of Legacy Hill Resources (LHR). Those test results were described as positive, but then 2 curious things seem to have happened : LHR sold off / 'flipped' half its stake in Ambershaw to a Norwegian investor....and appears around the same time to have sold off/reduced its stake in LHR Technologies, the provider/tester of the 'enhancing' technology.

I don't understand (point 2) why - in the face of the Holy Grail : an apparent ability to turn lead into gold and OK quality iron ore into exceptional stuff - LHR sold off / scaled back its interest in both the golden goose (Ambershaw) and the fertile egg (LHR Technologies. The proceeds seem to have gone into.....coal in the US, a smokestack industry if ever there was one.
I see people twittering on about Trahar Senior's involvement with LHRT > Binding Solutions...and can just about see why, if the technology works, this might be a Good Thing FOR HIM (selling royalties to every existing iron producer) but don't see why this is supposed to be great news for ZIOC/ Zanaga, who aren't producing anything to beneficiate....

And then we reach point (3) :does the technology actually work ? ……...to be continued

ATB

Hi all,

The FT headlines today that '"Beny Steinmetz ends iron ore dispute with Guinea
Israeli tycoon agrees to exploit new deposit with investors including former Xstrata boss Mick Davis"

Steinmetz has relinquished his long-running claims on the massive Simandou iron ore project and been asked by Guinea to fast-track another, smaller and less complicated project, Zogota (target production 2m tpa), working with Mick Davis, , former head of Xstrata, ousted by Glasenberg in the course of its takeover by Glencore.

Glasenberg and Davis ( aka the Dealer and the Digger) go back a long way and , from being best of mates, are now said to be bitter rivals, see a detailed description of the 'double' dealing that went on at the Xstrata takeover :

https://www.telegraph.co.uk/finance/newsbysector/industry/mining/9529658/The-Glencore-Xstrata-war-has-turned-friends-into-foes.html

Let's see whether news of Davis's return to the corporate fray at Zogota is enough to prick (see what I just did?) Glasenberg into action at Zanaga …

ATB

Hi all,

FWIW, this is Ashmore (emerging markets specialist)'s take on the US / China trade spat :

…" Trump and Chinese President Xi Jinping are expected to meet later in March. The United States is now seeking a resolution to its own instigated trade war to avoid recession. Besides, the trade war has served its main political purposes to help Republicans in the November 2018 mid-term elections and to give US President Donald Trump the opportunity to conclude a deal.
China’s growth outlook is stabilising, while the US economy is slowing. Delaying the deal further would therefore merely shifts the balance of power in the negotiations further towards China.
We expect the final trade agreement to be underwhelming in terms of content, just as was the case with NAFTA II.
It made political sense for the Trump Administration to tear things up only to put them back together again with very few changes to the original arrangements, but the US and global economies have paid a price due to the resulting uncertainty and bouts of volatility...."

Nah, tell us what you think, what you really, really think....

ATB

Hi PBateman,

Good find - and certainly makes for encouraging reading.

Do you have a link to source, pls?

TIA and ATB

Hi beardozer,

It's the weekend...and what a vision ! I hope it works out for you - and the rest of us.

Just don't let 'er next door' wear the scarf too loosely....

https://en.wikipedia.org/wiki/Isadora_Duncan

ATB

Hi atg,

Yes, it's all very well wittering on about GLEN's TRADING arm signing up offtake agreements from (nearterm) third-party producers, eg BKI, Champion and CSN, let's see whether the MINING arm is ready to start investing for the longer term in its own assets.

ATB

Hi atg

Agree re interconnectedness : the World Bank and Export Credit Agencies will only kick in and be able to consider supporting projects in C-B (not just ours, we may be competing with others (Mayoko, Evergreen, Kropz for whatever available country limit is freed up once there's an IMF agreement in place).

These bureaucracies will all have their procedures and credit committees to go through....and there's a saying in finance that ' If you want a quick answer, it's 'No'.....: 'Yes' involves follow on work and risk ...and may have professional consequences if things don't work out , 'No' is the 'safer' reaction for a lot of people...;-<

C Northcote Parkinson (of Law of Delay fame) described this well in an article "The abominable no-man"

ATB

Hi allthatguff,

I'm with you, FWLIW re 'expectations management'......oh, and re the 'twatterati'.....;->

All eyes on IMF and China, where we may hear something this week or next.

See https://www.debtwire.com/info/congo-trade-finance-creditors-organise-against-unresponsive-government-imf-awaits-chinese-financial

…"“[The issue with China] is that this is the first time that Beijing is going to agree to such a large debt restructuring,” said the second source close. “[While China may have committed to ensuring Congo’s debt sustainability], neither the IMF nor Beijing know what the definition of "debt sustainability" being used by either side is. This is an issue that wouldn’t arise with the Paris Club for instance, because the IMF could be certain that this group of creditors is using the same definitions and assumptions.”

“China’s behaviour so far in these situations has been very much to kick the can down the road, without really putting the borrower on a path to sustainable debt servicing,” the second source close continued. “They already agreed to a small debt rescheduling earlier in the year, but it's basically nothing. So the ball is in China’s court on this one, and I expect the final decision will come from the highest level.”

...But despite all the headwinds, …. the IMF appeared willing to support Congo with an ECF. Indeed, the Fund’s end of mission statement commended the government’s progress in implementing structural reforms and transparency measures.

“The IMF is very keen to get Congo on a programme, as it is the only country in the CEMAC [Central African Economic and Monetary Community] that isn’t on one,” said the source familiar. “I think the programme talks can go ahead without an agreement with Glencore or Trafigura, but China is the missing piece.”

As posted recently, the IMF and China appear to have found common ground re Ecuador debt restructuring, let's see if they can here...

ATB

Hi Scottology,

It wouldn't make sense for the Chinese - if it is them - to do more than basic clearing and scraping, until the end-user has specified his requirements : the civil engineering will have to take account of intended use and related load-bearing, as well as power and drainage requirements, for example.

This in turn will dictate the specifications for foundations and the start of serious spend.

I'd be surprised if Zanaga would commit much in advance, certainly not before they've decided (and told the market) what they're doing.....

Roll on the IP !

ATB

Hi scottology,

Thanks for this - every little indication that things are moving helps !

ATB

Hi BlooBird,

AIUI, it's the low population density / area that is a factor : long distances to transport stuff inefficiently for relatively few people. Same thing in Saudi, but they also use energy to cool down, instead of warming up, which is Canada's issue.

The interesting outliers are Germany, which has relatively low oil consumption because of extensive solar/coal and France ditto (gilets jaunes notwithstanding) because of high nuclear and other renewables.

Thanks for sharing !
ATB