Member Info for Jiving

Extrader as you know I have been of the opinion since mid January that the 'process' mentioned in the RNS of 02 January was going to turn out to be a bidding contest. And if the shareholder meeting takes place on 11 February or another date that is what I would expect to be announced. It also seemed to me that others in the mining industry (partic the 5/6 strategics presented to be Marty) would also interpret it in that way. Which means if they want to pre-empt the bidding process & the uncertainties that involves - about both price & outcome - they have to act before that date with their best offer. Since I came to that conclusion, I have always hoped that would be the outcome & we would get a 'result' by 11 February - the longer the meeting details take to be outlined the more hope I have that IS the outcome.

The pre-emptive bidder could well emerge at a signing ceremony in Brazzaville on Monday - fingers & everything else crossed. The problem I see with announcing a bidding contest in Brazzaville is that actually none of the value of a bidding contest would go to the RoC but instead it all flows to ZIOC shareholders. Its not the Guinean situation where the Govt directly received the licensing portion of the overall Simandou bids, that included infrastructure spending as well. Here we would be selling all or part of the ZIOC owned mining concession & all the work that has gone into it, the RoC of course gets 10% whoever the owner of the other 90% is - but thats not cash up front (unless they sell). So frankly its rather rubbing their noses in it, they get jam tomorrow & the City slickers get all the loot.

My favourite for an eventual winner remains the Saudis in combination with China, Vale, & possibly UAE. My hunch is the Saudis have been chasing Zanaga since early 2022 but have continually submitted lowball bids, relative to NPV. But the bigger the consortium, the smaller the relative share of equity/offtake each party receives, so IMO a consortium likely would favour a full buyout.

Probably wishful thinking but what else we got? Even now quite honestly it looks 50:50 we hit Tuesday either rolling in cash or misery. Do you buy a bottle of vintage Champagne to celebrate your winnings or a bottle of cheap vodka to drown your sorrows? My fridge contains a bottle of Champagne, alongside a bottle of every Vietnamese farmers favourite - Hanoi Vodka.

Ha ha very true, and to think there were some who thought trying to catapult 'modern' Britain to Singapore standards was a negative, rather than an unattainable dream.

Back to Simandou. When ore is starts to flow (& I share others scepticism they are suddenly going to leap to 120m pa) then cashflow is also going to be appearing back in China, as is the actual physical Chinese owned ore. This will be vindication in Chinese state & private sector eyes of the viability of large African mining ventures & investments. The Chinese Politburo has set a strategic goal of obtaining an additional 50m tons of foreign owned iron ore in 2025-30 & the same again in 2030-35. When 'Xi who must be obeyed' sets targets folks better get results & to meet the second 5 year plan targets you likely need to start now.

Always cracks me up when total basket cases try to compare themselves to Singapore. Its quite a leap.....

There is another notable incident which suggests we are heading to a conclusion. Shaun on 2/3 February posted 2 links to releases by the key Chinese FS contractor PSEI. These actually named names in the sense, the first specifically mentioned Marty’s visit to Beijing on 23 May 2024 on behalf of Zanaga to present to a key group of ‘more than a dozen’ Chinese state & private entities. Specifically it mentioned he was presenting a Bankable Feasibility Study - the gold standard of FS. We know he also visited other groups of potential strategic investors - including arch rivals Japan.

A second release also mentions the project but not by name “At the beginning of the year, the bank-level research update and conceptual design of a large iron ore abroad were completed to inspire the confidence of the owners and help the project advance. The design of the benefaction plant and pipeline FEED will be launched in 2025. The supporting cold ball technology is also recognised by the owners. The research design of the ball factory will also be completed by PSEI.”

As well as the amazing detail, the other point is the timing of the releases - just over 2 weeks ago on 21 January 2025. So quite understandably this confidential information was NOT released for 8 months. As well as normal commercial secrecy it is doubly sensitive as it is Chinese Politburo policy to increase Chinese ownership of foreign iron ore mines & also obtain high quality ore for the future. IMO there is no way a private Chinese company would have just decided after 8 months to release this, so it is likely the order came from above - so why do that two weeks ago - is it a 'done deal'?

Shaun's links:

http://www.psei.cn/news/230.html

http://www.psei.cn/news/237.html

Thanks 4kandles good info.

Vet10 I have always thought that was a distinct possibility & that the 11 February update was intended to prompt exactly such a pre-emptive bid. Let's face it there are a whole host of possibilities, but for sure one way or another we are going to find out soon.

Driving, frankly I would wait till Friday & Monday RNS time to see if the meeting is still on or has been delayed.

One possibility is we are awaiting development news that has been delayed, which might mean in turn that the investor meeting will be delayed.

Interesting reading LTH's contrasting expectations. My position is clear, the sooner we get a deal (any deal - buy-in/buyout) the better - if that is tomorrow at the Indaba - hallelujah. But of course the driving force behind the eventual deal/price are not us PIs but Elphick/Glencore, who I suspect are way more focussed on value maximisation than timing.

My take is that they are rapidly filling in the remaining gaps in our overall development plan - defined as not just the mine but also the essential infrastructure ie port & power. Filling in those gaps massively increases the value of our asset and clearly, with the second power MOU yesterday we are well along in that process. The main outstanding item I believe is the (pelletisation) optimisation plan that PSEI were working on, which the Sept interims described as having "..the potential to provide further capital and operating cost savings beyond the results of the 2024 FS Update." Extrader's post at 02.17 yesterday gives some fairly dramatic figures regarding the benefits of this type of technology.

Now if you are a value maximiser, you would surely wait for all of these value adding additions to come in, & present then present them all as effectively the '2025 Zanaga Full Development Plan'. Go on to distribute it to interested parties and seek their bids for involvement via either a buy-in or buyout (no reason why you couldn't have 2 options). This could then proceed either informally via 1-on-1's or through a more formal bidding contest as undertaken by Simandou in 2019. This would also allow for other third party bidders to enter - as FMG did in the latter stages of Simandou & from our perspective it gives us a timetable & an end date! So this is the strategic investor process I believe could be announced alongside the development plan, once all the milestone/ announcements have been released - hopefully on the 11 February as indicated.

"No shortage of potentially interested parties, for sure."

Exactly so - the world steel industry is moving towards lower pollution 'green' steel. But it currently needs high grade/low impurity iron ore as the key feedstock. And only 3-5% of current global production meets that definition & of course most of it is under long term contract already. Such that even Vale is scrambling to meet near term ME demand from its JV's - hence its deal with Anglo on the Minas Rio development. So all green steelmakers face a critical feedstock dilemma - should they commit $10's billions on new plant & infrastructure without guaranteed DRI quality iron ore ? And the only practical solution is to secure future DRI quality offtake before you commit to your green steel plans.

Given the average time lag of mining developments from exploration to production of some 18 years, they actually need advanced projects that are preferably near or within a couple of years of FEER & production. And how many of those are there, particularly of the scale to meet say Japan's future green steel needs & in reality = one. So we likely should have interest from:

i. Sovereign driven, primarily state owned green steel mega-plans - ie Saudi, UAE, China & indirectly Japan;

ii. Major iron ore miners - who need higher quality ore for two separate purposes - to provide DRI for new green steel production & to add to low quality ore to meet existing Chinese customers minimal quality requirements;

iii. Major global steelmakers, who are well aware of the shortage come 2023 & the need to secure long term guaranteed offtake in advance, which can only be achieved via investing in new greenfield mines.

Always welcome your input IC99 here & on KP2. ZIOC/Glencore have to give up something to get this kickstarted - and its either equity or offtake or possibly both, and of course they know that. If Glencore could get this going by 'giving up' 20-30% of their 100% marketing rights , and they keep the balance & their current equity holding to get a moribund stranded asset into life - wouldn't they just do it.

Regarding a share equity based transaction, my thinking is they would likely base it around Stage 1 NPV - ie to a potential strategic they are offering them the opportunity to join the project based on the industry wide NPV formula & the necessary $600-800m is either side of a 20% dilution of our equity. Due to the concentration of ownership share price, has IMO no impact on either a buyout price or a buy-in price, and a buy-in would thus be organised as if it were for a private transaction with say Glencore & based solely around NPV.

99IC your thoughts mirror my own from 21 January, when I wrote a lengthy post entitled "Is the investor event on 11 February going to announce a bidding contest?" I also specifically noted their promise to update on the 'process' rather than necessarily name the actual strategic investor (s). If so they would clearly wait until ALL the critical parts (ie MOUs & maybe FS updates) were in place before launching an official/unofficial bidding contest.

Also I wonder whether they would actually need to even offer equity - given the extreme demand for DRI quality ore from 2030 onward - maybe they could secure the $600-800m Stage 1 equity portion via upfront offtake agreements with steelmakers alone?

Extrader, agreed they are just MOUs and they are likely essential to have in place to get the Stage 1 equity & debt investors on board. I found it noteworthy that Marty's in depth BFS presentation to the Chinese strategics in Beijing was over 8 months ago. We know he also presented to a total of 5/6, so also others definitely including the Japanese (which ones, maybe multiple although they typically form a consortium for big deals). Presumably also the Saudis, Koreans (often join Japanese consortiums), Indians maybe given Arise connections, maybe even a French/EU play given Marty's connections.

So what was the likely result - well we know how excited ZIOC was by the initial end-June response - the infamous 'insider' interview, the loan repayment, the share placing - including the mystery block buyer who may have taken the key Elphick/Glen++ holding just north of 75%+1. ** However broadly positive the initial feedback was, it is distinctly possible some of it was conditional - ie give us a practical solution to the port & your initial power needs & we can talk/deal. So hence the last 8 months whilst our guys have relentlessly pursued the power/port MOUs needed. Now we have them, we are in the best situation ever to maximise value via buy-in or buyout. So IF we have multiple potential strategics interested how do you maximise value - by an official or unofficial auction process.

** I had initially interpreted the possibility that Elphick/Glen potentially going over 75%+1 with the placing, had assertive intentions ie they intended to use that power to swiftly fast-track a deal at an EGM. But now 7 months later it was possibly more likely done for defensive reasons - to stop any third party from building a blocking vote of 25%+1 & spoiling any future post-MOU deal.

Starbright I am reacting in real time to an RNS with positive news not putting forward a detailed defence before Kings Counsel. It clearly further de-risks the project by potentially providing us with immediate power for construction as suggested by Shaun. The previous Power MOU for new facilities may relate to later stages in the mine's development. At some stage the project becomes de-risked enough to maximise the number of potentially interested parties & move to finalise the key Stage 1 financing - it looks to me like that time is now.

ATG we don't know - they might be, they might not be. These are only MOU's & companies spend vast amounts chasing deals that never come to fruition - all around the world, in multiple industries including mining.

But regardless of whether a strategic investor is yet in place (flip a coin on that one) the Zanaga project is receiving serious attention from key infrastructure companies that helps to de-risk the project & potentially spur competing offers from strategic partners or secure better terms. For me I welcome anything that gets us the highest price per share even if we have to wait a couple more weeks, but as ever others may see it differently.

Thanks Darkhors an interesting ChatGPT summary. Cherry picking some of those points actually summarises my view on where we are:

- Companies often **sequence RNS releases*

- A potential partner might have required these MoUs as a **precondition** for committing capital.

- The company might be **signalling progress** to attract further interest before revealing a major deal.

### **Conclusion**

- This RNS **makes a major strategic partnership announcement more likely**, but **not inevitable**.

- If a deal is imminent, it could come **next week or within the next few weeks**.

- If no announcement happens next week, it may indicate negotiations are still ongoing.

And Marty's comment links this announcement with the previous Port MOU, to state we are now de-risked in our two key areas:

Martin Knauth, CEO of ZIOC commented:

"Together with the recent partnership with Arise to develop bulk mineral export facilities, the partnership with CEC to develop a range of power solutions supports a pathway to further de-risk the Zanaga Project from the two largest development challenges, being the availability of adequate power and port infrastructure.

Power MoU signed with CEC

Zanaga Iron Ore Company Limited ("ZIOC") is pleased to announced that ZIOC, and its 100% subsidiary MPD Congo, have today signed a memorandum of understanding with Centrale Électrique du Congo (CEC) SA to evaluate potential solutions to supply the Zanaga Iron Ore Project's power demand, leveraging CEC's existing assets.

CEC is a private power producer based in the Republic of Congo, owned by the Government of the Republic of Congo (80%) and Eni Congo (20%). With an installed capacity of 484 MW from its assets located in Côte Matève and Point-Noire, CEC currently supplies more than 70% of the country's electricity demand, benefitting from the vast gas resources developed by Eni Congo.

Under the terms of the memorandum, the parties will assess the technical, economic, and legal aspects required for power generation and distribution for the Zanaga Project's needs for its Stage One operations, allowing it to reach a production capacity of 12 millions tons per annum of iron ore with a view to further expansions.

https://www.londonstockexchange.com/news-article/ZIOC/power-solutions-mou/16880480

And Extrader I see from your research back in July that PSEI via a Hong Kong subsidiary are also 10% shareholders in Binding Solutions. So substantial direct links between the parties.

I also note that although the key Beijing BFS meeting/presentation between Marty, PSEI & major Chinese project financiers took place on 23 May, in fact PSEI till not release this info until 2 weeks ago (timing, why??):

"Release time: 2025-01-21"

And Binding Solutions would be the relationship link between the Trahar family (via Dad's early involvement), PSEI as prime FS contractor & Zanaga.

Binding Solutions 'Strategic Investors' include Champion Iron (just announced an DRI quality ore investment from Nippon Steel) & Mitsui & Co the giant Japanese trading house that scours the earth for offtake for Japanese industry & just outbid Manara for a stake in a Zambian copper mine:

https://www.miningsee.eu/mitsui-co-outbids-manara-minerals-for-stake-in-first-quantums-zambian-copper-mines/

And even better, better Extrader, are the implications of this sentence:

"As the lead designer, Perth has completed the project bank-level research."

Presumably "bank-level" refers specifically to a Bankable Feasibility Study (BFS) ie the highest level FS that is typically the basis to secure direct equity/debt finance for a project. So this again would strongly point to a 'buy-in', although of course until any actual deal is announced & signed a 'buyout' offer could still win through. Short explanation by Ian Lyall:

"The Bankable Feasibility Study (BFS) is often considered the gold standard in the evaluation of a mining exploration project.......For investors, a well-executed BFS can provide a high level of confidence in the project, serving as a critical tool for risk mitigation, project valuation, and due diligence."

https://www.proactiveinvestors.co.uk/companies/news/1031424/mining-101-unpacking-the-bankable-feasibility-study-a-comprehensive-guide-for-investors-1031424.html

Momentum or what?