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Hi both,

Bear with me, it may be off the wall, but consider : ' When the facts change, I change my opinion, etc....'

The GLEN acquisition was signed in Nov 2022, agreed probably months before, in frustration.

Manara Minerals- with its mandate- wasn't established until Jan 2023.

We've then had the Vale Base minerals false start...and the Reqo Dik false start.

GLEN has been thwarted at Teck.

Add to that the whole delayed-until-recently emerging Pilbara rust situation; the accelerating, intervening 'green ore' pressure; the China steel demand switch from property (outlook poor) to export manufacture (white goods, cars, steel itself) - outlook better; the BRICS de-dollarisation trend and inflation-outlook interest in 'hard' assets....a lot reflected in the latest M & A 'animal spirits'. Did I forget to mention Trump ?

Then look at the progress on milestones we're celebrating re ZIOC itself POST ACQUISITION, under 'new management' : FS, hydro, recosting, port , balance-sheet tidy-up etc.

Then C-B maybe, maybe getting its act together (relatively speaking) : IMF, FIMC etc etc. ENI LNG facility; AD Ports investment; MSC Group investment and so on. The Chinese no longer being so open-handed with their support....

Looking at the global chess-board, I think it's fair to say that at Acquisition time, GLEN saw ZIOC as a mere pawn. .....while now maybe it has potential (in context) as a knight, a bishop or perhaps even a queen. Either in a merger / acquisition or as a bargaining/negotiating chip in defence.

I chose a simple 7% tender as a worked example...but maybe it's worth considering - from GLEN's perspective (not 'ours/Elphick's) whether it might be 'simpler' for GLEN just to go for 100%...and 'buy with a view to sell' ?

I'm interested in finding out whether either would be technically feasible.

Remember the supposed CIA mantra ' we listen to people's intentions, but plan according to their capabilities'.

We maybe ZIOC-centric, you can bet your bottom $ that GLEN isn't.

I'll come back to the Shard angle later today or tomorrow.

Appreciate any and all comments, criticisms, alternatives etc.

GLA and ATB

Further musings re 'possible scenarios' , prompted by the 'Salvator Mundi' analogy, which went from 'attributed to school of Leonardo' (when sold at auction for £ 45 in 1958) to $450 million.

The step-change came about through re-valuation as its 'worth' was recognised on re-appraisal and validated by the market, hyped into overdrive by a competitive auction process.

Where are we today ?

(1) Corporate M and A in the mining sector is expected to rise:

-we've just learned of the RTZ/GLEN discussions, carefully left open (hat-tip to MM);

- today's FT has a lengthy GLEN-focussed article, suggesting a GLEN tie-up with Anglo is a possibility

"What next for Glencore after failed Rio Tinto merger talks?

Early discussions between the miners went nowhere but mega M&A deals are back in vogue.."

Article points to relative shareprice (Anglo up/GLEN down) as a problem.

In M& A, the concern is that predator becomes prey, so there's importance to synergies but also to defences...and a good share price is a good defence.

(2) Re iron ore specifically, the 'Pilbara rust' issue is now front and centre as an existential issue for Australian mining. It was Ivan himself who presciently described Simandou as a 'Pilbara killer' a few years back.

RTZ's rising dependency on Simandou for admixture is acknowledged, this may be complicated by Chinese co-ownership of the asset and 'single point of failure' concerns .

Meanwhile, FMG's own admixture strategy at Belinga has just 'gone off the rails', highlighting similar risks (and presumably stoking a more urgent search for alternative solutions).

(3) GLEN's position : as the article says, 'Dealmaking is in GLEN's DNA'

"Glasenberg — who still owns 10 per cent of Glencore’s shares — earned a reputation as an enthusiastic dealmaker and his successor Nagle has continued that tradition, holding talks on potential megadeals every year since he became chief executive...GLEN is 'highly opportunistic'.

It currently sits on 44% of ZIOC, which it probably doesn't want to develop itself and is hampered by the 'NPV valuation' requirement that it inherited from Xstrata. It relinquished majority control to 'unlock value' , with so far unknown (to us) success.

Problem : how to turn a challenge into an opportunity?

What if it were to do an about-face (it has form) and reacquire AT LEAST a SIMPLE majority of ZIOC (7%) by a TENDER OFFER; at NPV incl Phase2 ; payable in GLEN (Treasury) shares; at a 1: 1 ratio; for 1 in 15 of others' shareholdings ?

If that were technically possible (manipulation risk?) :

- GLEN would have control of ZIOC; it would have set a new 'market' price, anchoring 'valuations'; forced up its own shareprice*; and tidied up ZIOC's shareholder base (esp. if it were 'oversubscribed).

*a virtuous circle and useful currency, either for offence or defence...

Would this (or a variant) be possible ?

(4) I've also had some thoughts on the auction aspect.

To be continued...

Hi MM,

Just a nuance re 'walkaway rule', ironically spotted on reading about the earlier Rio/GLEN 2014 talks

.."An oddity of the Takeover Panel rules means that Glasenberg could, in theory, return to the fray in three months with a one-off, secret offer..."

https://www.thetimes.com/article/agenda-a-truth-universally-acknowledged-ivan-covets-rio-

ATB

Thank you StarBright, for a calculated 'base case'.

As atg has suggested, I think there's an argument (one I'm sure Elphick will make !) for including in any negotiations on price some significant uplift for Phase 2, to which I'd add:

- resource redetermination and annual throughput increase to 40-60 mtpa (as mentioned in earlier presentations);

- any resultant increase in capex netted off against increased minelife 40-50 years (I appreciate the effect on NPV would be modest);

- 20-30% premium (wild-a*sed guess!) for Zanaga's scarcity value as ' the largest high-grade iron ore mine in Africa'.

Considering the likely Strategic Investor (esp if there's competition between MBS and MBZ), I asked Co-pilot , in a fit of weekend whimsy, to "Summarise the justification for spending USD 450million on Da Vinci's Salvator Mundi",

which it summarised as

- historical significance; artistic value; MARKET DYNAMICS; cultural symbol; and STATUS SYMBOL.

Replace the lower-case factors with GEO-POLITICAL and BRAGGING RIGHTS (if MBS / MBZ rivalry has any legs) and there's quite some overlap.

I'm happy - all things considered - to stick with my 200p charity sweep entry.

Will you join us ?

;->

Enjoy the weekend, one and all!

GLA and ATB

.."'We deal with the world as it is, not as we would like it to be'.

For all his evident failings, Big Den has good working relationships with a wide range of world leaders, from fellow autocrats like Putin and Xi, through Brazil's Lula to Macron of France (guest of honour at the re-consecration of Notre Dame) ...and even to 'other-worldly' leaders such as Pope Francis, with whom he had a private audience barely a month ago.

Minimal dilution, as I've already explained to you : 280 m shares for 1/2 the asset 14 years ago vs. 670m today for 100%.

560 vs 670 or 20 %.

Over 14 years.

Including management and board taking shares in lieu of cash emoluments.

Why.do you persist in this intellectual lack of integrity?

Hi Matt,

Yes.

Your man is probably best known for this

https://www.brettlogancarter.org/the-congo-project

He's (rightly) concerned - as we all are or should be - at the corruption issues, which I for one have drawn attention to when referring to the 'country risk' discount that would likely apply to any take-out.

Unfortunately, it rather goes with the territory - consider Simandou in Guinea; the travails in DRC and Gabon; the concession expropriations in C-B itself.

I venture to suggest that involvement by a FTSE100 company/companies is likely 'less harmful' to the country and its population than most of the alternatives, including the Chinese (who have a less than stellar record at logging and goldmining in C-B itself, for instance) : at least folk (both Western advocates / activists and literate locals) can get SOME transparency and basic accountability : I suggest that the recent creation of the FIMC is an acknowledgement (of sorts) of this.

'We deal with the world as it is, not as we would like it to be'.

HTH and ATB

I see MJWandCo, unabashed, is still drawing false comparatives, querying ZIOC's valuation.

He hasn't addressed the issue that Mr Market thought 1/2 of a less-developed asset was 'worth' £ 1.56 14 years ago - pre 'green ore- by folk such as JPM, BlackRock and Fidelity.

And he draws an analogy with (his?) unfortunate experience at DG Innovate, the advfn intro to which suggests that it's a recent University lab spin-out - a high-tech start-up in a nascent technology sector :

From April 2022

.."First day of dealings at 0.6 £18.6m GOV FUNDING

Path Investments plc, now renamed DG Innovate plc, has, on Admission, completed the acquisition of Deregallera Holdings Ltd (formerly DG Innovate Limited) ("DGI") for an initial consideration of £32.4 million satisfied by the issue to the DG Innovate Shareholders of 5,397,451,305 Initial Consideration Shares at a deemed issue price of 0.6 pence per Ordinary Share. Further conditional deferred consideration of up to £5.4 million, to be satisfied by the issue of up to 895,610,844 Deferred Consideration Shares on the first anniversary of completion, will become payable should DG Innovate sign one or more supply agreements for the provision of their motor technology with certain defined customers prior to this date with a combined potential value of £5.0 million or more. To date DGI has received approximately £18.6 million in funding through a mixture of equity from private funders, debt, grants and research funding from the UK Government, the Welsh Development Agency and through highly competitive grant awards under the Innovate UK Faraday Challenge..."

Hardly a like-for-like - or relevant - comparison, I would suggest.

By my count, that's the third (quick) rebuttal.

GLA

Hi StarBright,

Thanks for this.

Re the cultural differences, I note that GLEN (Ivan) and Xstrata (Mick Davies) were an unlikely cultural 'mix' - the 'dealer' vs 'the digger' - yet they ended up together...after GLEN double-crossed t'other and turned a merger into a take-over.

Like your analyst, a RIO/GLEN tie-up seems improbable for a host of reasons, but the news brings the importance of a number of 'new' and 'old' minerals further into the spotlight - 'green revolution' vs (literal) 'smokestack - with Zanaga's high grade ore in the sweet spot between the two.

AFAICS

A further Q : who/whom?

(1) The last Reuters/Bloomberg update I saw said that (a) it was GLEN that approached Rio and that (b) GLEN had also been the initiator of an earlier 2014 approach, also to Rio. So GLEN has 'form' for being proactive and 'making things happen'.

Nothing wrong with that - as a trader, GLEN will be keen to get maximum 'price discovery'. But I wonder whether it cleared this in advance with Zioc/Elphick ?

(2) From ZIOC's perspective, this might seem obvious, necessary and right. But I don't think GLEN would feel obligated to share its decision to have 'talks about talks' with another mining conglomerate with its own operating subsidiaries, much less with the management of a written-down, almost unreported, minor 'passive investment'.

And if it thought about ZIOC at all, it might well be from the perspective of 'we're leaving them to drum up interest, but if it doesn't work, we'd like to have a Plan B'. We've lots of other fish to fry'.

At the appropriate point of course, it can help close a deal (or at least keep it alive) if the other side knows/is told that there is a credible alternative, especially if that alternative were to be strategically damaging. Had/have ZIOC's talks with potential Strategic Partners advanced far enough?

(3) I keep coming back to the rushed mid afternoon release on first business day of the New Year and wonder if ZIOC were - for all the above reasons- kept in the dark until recently and hence the subsequent scrambling and 'holding ' flavour of the RNS ?

(4) The other curiosity is the timing of the story breaking : was it coincidental that it comes just after FMF ends, with no ZIOC deal announcement ....and just after Rio makes the 'Pilbara rust' issue a much hotter topic? Who benefits? Who leaked the story?

Questions, questions....

GLA

"....and the kicker to end all kickers:

If Rio has the inside track just imagine what a Vale/MM would have to bid to secure Zanaga for Saudi's green steel ambitions!.."

Actually, it may be even better than that : where would that leave Twiggy Forrest/FMG ?

RTZ has (unhelpfully) drawn public attention to the 'Pilbara rust' issue, which it has told the market it can address through new mines (Oz - Western Range; Guinea - Simandou), although Simandou will be 'slow'.

FMG has more of an ore quality issue than Rio...and has been more open in the past about its admixture solution - blending in Gabonese Belinga . It appears to have recently lost that 'get out of jail free' card and is now promoting a pilot plant with BaoWu as its solution.

If Rio gets Zanaga, its existing Simandou competitive advantage will only increase, leaving FMG further behind...unless FMG enters the lists, as a 3rd suitor.

Never mind 2 buses, we could have 3....

A 'nice problem' to have, if it turns out that way.

GLA

Hi BOTS_PROJECTS,

Q : Why is there 2 LSE chat boards for Zanaga on LSE ?

A: Clash of debate styles. Also, one allows us to see Aquis trades, the other the other.

Q : Is this a haematite or magnetite deposit ?

A : Both, primarily magnetite. See https://www.zanagairon.com/project/strengths-of-the-zanaga-project/

A read through the last presentation (Nov 2023) and subsequent RNS's (plus a skim through both BBs) should cover a lot of ground.

Happy reading!

.."Glen with circa 43% voting rights in ZIOC would vote in favour of a Rio t/o, job done .."

Well, the whole point of the Acquisition was to deprive GLEN of its then controlling shareholding, so not necessarily 'job done'.

And its interests in this scenario wouldn't necessarily be aligned with ours, because GLEN's value in merger (or acquisition by Rio, which would be ironic, given how GLEN itself picked up ZIOC) would be for its portfolio of assets/revenue streams (not just one asset - us) and would take account of the value of its (not our) Marketing Rights/royalty stream. At least, that how I would negotiate, from GLEN's point of view.

So it might accept less than Elphick (as proxy for 'us') would be happy with.

Now, if GLEN + Guava/Garbet-connected have a 'commanding' 75% (which was the consensus view, I think, around the last Subscription event), then by the same token, Guava/Garbet have (75-44 =) 31%, which would for some purposes be a 'blocking' 25%.

So maybe GLEN would have to buy US out, to have a 'clean' asset for RTZ to take on.....

And that's before we consider what the 'competition authorities ' might have to say about such a concentration of resources......and what, if anything, the Chinese would think about it?

'It's complicated'.

GLA

Quite! Esp as Vale is incentivised to spoil any strengthening of RTZ's ore portfolio, which would threaten its own position.

Both produce about 330m tpa, 60% of Rio's revenue vs 77% of Vale's, Vale's Fe grades being somewhat higher (per Co-pilot).

Tangentially related.

GLEN has 44% of ZIOC.

ZIOC has told the market to expect a string of news items 'early in the New Year'.

Interesting move out of left field.

May explain the 'rushed out' announcement mid-session on 2nd Jan and somewhat opaque RNS contents...

"...2 Jan 2025 2:55 pm

Announcement of Planned Corporate Update and London Investor Event

Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (AIM: ZIOC) is pleased to announce that the Company intends to provide an update to shareholders on the Company's strategic partner process whilst also providing further information on the Zanaga Iron Ore Project's development plans.

As a result of the planned corporate update the Company will be hosting an event in London on Tuesday 11 February 2025 to provide a briefing to its shareholders (the "Investor Event").

More detailed information on the Investor Event will be announced shortly...."

Today 16th Jan :

Rio Tinto, Glencore in early-stage merger talks, Bloomberg News reports | Reuters

BB exchange :

.."Up to 50mpta at 67.5%Fe of DR super grade. No way would that be allowed to slip away. No way..."

Esp given that Rio has

(a) just today acknowledged the limitations of its Pilbara Blend; and

(b) by extension, increased its dependency/risk on a successful Simandou outcome.

FMG's recent Belinga Gabon experience, where an incoming Government has reminded the industry of 'country risk' , may well have increased the incentives for an 'insurance' policy...."

NAI, DYOR etc etc

GLA and ATB

Latest nuances, 7 mins ago :

.."A source familiar with the matter told Reuters that Glencore approached Rio late last year, but the talks were brief and no longer active....

...The latest discussions come as iron ore demand in China, the world's largest consumer of the commodity, takes a hit from a slowdown in the country's debt-laden property sector....

Consolidation has also picked up in the mining industry as companies race to secure supplies of metals essential for electric-vehicle batteries and the clean energy transition.

Still, Rio Tinto faces challenges with depleting primary mines and is resorting to increased production of lower-grade iron ore to maintain output levels....

These challenges have hit Rio Tinto's performance, with the company reporting its lowest annual iron ore shipments in two years on Thursday...."

Coincidence that the story breaks the same day Rio confirms that it has 'an issue'?

Maybe GLEN is stirring the pot/or 'lobbying' a bit ?

In any event, the Pilbara Blend issue is now front and centre. It'll be interesting to see how the Oz authorities address this pretty hot potato.

GLA

GLA

Do.

See today's news re GLEN/RTZ possible tie-up.

No more from me on this board.

ATB

.."Up to 50mpta at 67.5%Fe of DR super grade. No way would that be allowed to slip away. No way..."

Esp given that Rio has

(a) just acknowledged the limitations of Pilbara Blend; and

(b) by extension, increased its dependency/risk on a successful Simandou outcome.

FMG's recent Belinga experience, where an incoming Government has reminded the industry of 'country risk' , may well have increased the incentives for an 'insurance' policy.

AFAICS

Or this, maybe..

https://www.reuters.com/markets/deals/rio-tinto-glencore-are-said-discuss-potential-merger-bloomberg-news-reports-2025-01-16/

GLA

.." perhaps awaiting something 'in practice' to be able to complete. Perhaps a kicker is that the Strategics need to agree something between themselves as well..."

Sounds plausible.

Could be something as banal as Trump's (uneventful) inauguration, which some see as an 'inflexion point' in its own right.