Member Info for Jiving

Sceptical Australian reaction here:

https://www.smh.com.au/business/companies/coal-mines-cast-doubt-over-260bn-rio-tinto-glencore-merger-20250119-p5l5j5.html

Ex, as both of us have noted from reading the IPO prospectus, Elphick is obsessed with securing NPV for the asset & seeks to build it into every aspect of the project he possibly can. So in the scenario: if Glen were to offer Elphick/Garbet/us a full NPV based buyout offer I see no reason why Elphick wouldn't accept that. But are Glen really going to seek control (again) rather than sale to a third party - the route they seemed to have set in motion in November 2022.

I dunno is the answer, but I do feel that in light of the groundbreaking port news we are in the best position since IPO to secure the best price from a third party, as we have de-risked the asset at a time the steelmaking industry is desperately seeking high quality iron ore supplies. Elphick is 64, he has kept this project alive for 18 years, it is surely time to cash in his chips?

Hi Extrader

I dont immediately see the rationale for Glencore to go above their current shareholding to get back to 50%+1 ownership levels. They have showed no interest that I can discern in developing/operating the mine for the last 12 years, and all the merger talk is copper, copper, copper.

Furthermore any such % change would need BOD approval - which was forthcoming last June/July after the interested parties (Elphick & Glen) recused themselves & the 2 independent directors approved their share purchases, without requiring Glen to make a full offer to all shareholders. So unless it was clearly in Elphick/ZIOCs interests to allow Glencore to increase ownership IMO it would be denied.

ATG keeping multiple bidders interested in order to secure the highest price post de-risking/re-valuation is surely THE most optimistic outcome we could hope for?

ATG how many times have we (def including me among the 'we' btw) thought the deal was sorted over the last 2 years, only to find it wasn't. For me the most important event in the company's last 12 years has been the signing of the port MOU. Before then we were essentially a stranded asset - a mine in the middle of nowhere without any operating port to get our ore to customers. With an operating port, we in AT's words become de-risked, & de-risked = re-valued & of interest to more competing bidders than we were before with no operating port. The famous June interview stressed multiple interested parties - keeping many potential bidders interested whilst you de-risk/re-value the asset means you get a better end price. Competition drives a higher realised end valuation.

Like other posters I wonder whether the 2nd January announcement was precipitated by gossip of the Glen/Rio talks reaching Elphick.

The big downside of takeover/merger talks is it freezes many corporate activities - because of course a takeover/merger is primarily about assets: so its difficult to dispose of any significant asset whilst they are taking place. And if talks get serious that could be an issue, likewise if a merger were to take place there would be an inevitable post-merger 'Strategic Review' - all of this could mean Zanaga gets put on hold for 1-2 years 'just because'. Not like its not happened before - see effect of 2013 Xstrata/Glencore merger on Zanaga & ZIOC - essentially 10+ years on ice.

So one take on the 2 Jan RNS could be Elphick sending a message to potential bidders - get on with it asap, because '**** happens'.

Whatever is going on (or not) between Glencore & RTZ it must surely cause uncertainty in the minds of unrelated third party bidders - i.e Manara, Vale, the Japanese, FMG etc. If they were taking their time assessing their bids; this is a wake up call - in the event of a Glen/RTZ merger the Zanaga asset might not be available at 'any price' on the free market. Once Zanaga is taken, there are very few undeveloped high quality iron ore assets that have been drilled let alone taken to FS level. And as Nippon Steel revealed in their JV with Champion Iron last month, you essentially can't develop 'green steel' plans without the key iron ore feedstock in place.

Thats a crazy schedule, short stops could be document collection and/or getting a VIP signature at the airport. Sometimes documents need to be signed consecutively, hence hopping from 1 destination to the next. Also this is the itinerary of one jet working from RoC so would be potentially, specifically covering the RoC's documentation needs. Of course there could be other jets doing similar schedules starting from Riyadh/Dubai/Zurich/Sao Paolo/wherever. If if things have finally clicked into place, this would be the kind of frenetic activity you would expect - here's hoping!

Guava is a Mauritius company, might there be some kind of Seychelles connection - both in the same part of the world & both 'banking destinations of the last resort'.

Very interesting timing for MBS to be speaking directly with Lula - given the Manara/Vale combination has been the main contender for buyout/buy-in for the last 2 years. With specific regard to timing we have always felt the Saudis would love to announce a major deal during the FMF & here we are on the first day.

Vis Glencore its has always been odd that they didn't simply not want to fund Stage 1 but it appears they do not want to act as senior developer/operator - the role Xstrata was specifically going to undertake (with ZIOC as junior development/operating partner). When folks assess the cost of any strategic investor kickstarting Stage 1, it is useful to appreciate that of the some $2 billion Stage 1 costs - debt in the form of project finance (+ export credits etc) will meet some 60-70% of Stage 1, meaning the equity contribution would be only some $600-800m. The financial agreements the Saudis signed with the Chinese development banks last summer, are exactly the type of macro agreements you would put in place prior to arranging project finance for Chinese contractors.

ForFXSake. Thats what concerns me, that having highlighted the need for Orphan status at the end of February 2024, we are now in mid-January 2025 submitting: "....a draft application document in advance of a pre-submission meeting". What happened in the last 11 months, have we had to undertake further tests (or what?) to get to this very preliminary stage?

I note this from the RNS of 16 October:

"It should be noted the Prospectus states that if no out-licence deal or option agreement is concluded by the end of March 2025, or the revenue generated by such deal does not provide sufficient working capital to meet the Company's strategy for the full 12-month period from the date of this announcement, a working capital shortfall of £300,000 will arise at that time for the Group's requirements for the remainder of the 12 months from the date of this announcement. The shortfall of £300,000 would be required to provide working capital in line with the Company's strategy to fund corporate and operational overheads and to fund further studies during the that 12 month period to secure an out-licensing transaction."

Excellent summary Extrader. It puts everything that has happened over the last 2 years into perspective - & shows that in January 2025 we are finalising the strategic investor decision - just when multiple parties are actively seeking our quality product. The best backdrop this company/share has had since IPO over 14 years ago.

Don't complicate things, all I ordered was - 1 Prawn Crackers.

A Japan/Korea consortium is a very definite possibility for a strategic investor bid for Zanaga. Not least because they have actively collaborated in the past in both iron ore & other mining ventures.

As far back as 2008 a consortium consisting of POSCO of Korea, trading house Itochu & 5 Japanese steelmakers - JFE Steel, Nippon Steel, Sumitomo Metal Industries, Kobe Steel and Nisshin Steel - paid $3b for a 40% stake in Brazilian iron ore miner Namisa.

https://www.nipponsteel.com/en/news/old_smi/2008/news2008-10-17.html

In 2011 a similar consortium including POSCO, Nippon Steel, JFE & others paid $1.8b for a 15% stake in a Brazilian rare earth miner CBMM:

https://www.reuters.com/article/markets/commodities/japanese-korean-firms-in-18-bln-deal-for-brazil-rare-metal-firm-idUSL3E7E3071/

As recently as 2024 POSCO collaborated with Nippon Steel to take a minority stake in Teck's coking coal interests during the Glencore takeover of the majority stake. All substantial big ticket deals, that shows the firepower the Japanese/Koreans can bring to the table when working together in a consortium - a structure they are clearly comfortable with & can make work.

Hi Extrader, thanks fascinating stuff. Staffing problems may relate to the impossible position local staff are put in; in between the needs/demands of a foreign miner & the needs/demands of their own government. The change of regime in Gabon had a big effect on this project, just as the change of government in Mali has created huge problems for Barrick's massive gold mine.

Interesting they want an expensive long railway built, exactly what Forrest turned down in his bid for Simandou in 2019. Does this mean he is in the market for another high quality West African iron ore project or has he had enough of Africa already?

Spotted another FMG article behind a paywall:Fortescue quietly pushes $3.2b Nyidinghu iron ore project down its list of priorities | The West Australian

https://thewest.com.au/business/mining/fortescue-quietly-pushes-32b-nyidinghu-iron-ore-project-down-its-list-of-priorities-c-17270973

As above FMG and other lower quality iron ore miners, must surely be questioning the viability of investing in low grade ore projects in 2025, which will only add surplus supply to what is quite likely to be an oversupplied market. All they would be doing in practice, is actually driving the price of their existing ore further down! The recent Nippon Steel-Champion Iron investment shows that the smart steelmakers are actively analysing the existing high quality ore projects to lock them down before competitors move in. Some at least of the major ore producers must have read the room by now?

And now the Bid has moved just north of 10p - not seen that for a while!

Interesting comments on MK, I see him as playing a critical role since his appointment, as essentially the sole 'token miner' among our tiny management team. We are top heavy with financiers who work in the mining industry - Elphick & AT being prime examples - and further back Michael Haworth & the Garbet team were largely composed of the JP Morgan investment banking mining team.

In order to get the 2024 FS credibly done we needed an actual senior miner to see the process through internally, & more importantly externally with contractors/sub contractors. Similarly we needed a senior miner on the May/June marketing trip to key strategics able to explain how/why the 2024FS worked & answer practical issues that are likely to have been raised. Finally, he possibly played a role in getting the game-changing port deal done with Arise - he has a lot of senior African contacts/connections, and again having real practical knowledge of the Zanaga mine's requirements could have been crucial in getting it over the line.

He is not a IR/PR guy & it was a mistake to have put him in that role, but similarly AT is not a miner's miner with practical hands-on experience of developing & operating major mines in Africa. We needed both on board, but 'horses for courses'.

Yep thanks Extrader indeed referring to yesterdays RNS of 2025!

I suspect like many LTH, the day the strategic partner RNS arrives cant be too soon, I will take whatever cash is on offer (if there is a choice) as I want to move on from ZIOC & everything/everyone involved with it as asap.

The RNS dated 7.11.23 set out this:

"...seeks to advance key milestones and objectives through to the end of Q1 2024, including:

...Strategic partner initiative - Q1 2024 (Memorandum of Understanding)"

So with that RNS they were clear, they 'sought' ie hoped, to announce an actual strategic partner MOU by that date.

The RNS of 02.01.24 states "..the Company intends to provide an update to shareholders on the Company's strategic partner process .....".

The key word here is process which the online dictionary defines as "...a series of actions or steps taken in order to achieve a particular end." So are they intending to give us what we want - a named strategic investor - or are they going to set out the 'process' they are undertaking to secure a strategic investor? I put the issue to Copilot:

Does process mean identifying the actual strategic partner ?

The term "process" in this context refers to the overall series of actions and steps the company is taking to find, evaluate, and potentially collaborate with strategic partners. It includes identifying potential partners, engaging in discussions, conducting due diligence, and finalizing agreements. So, yes, part of this process involves identifying the actual strategic partner, but it also encompasses everything else that happens from start to finish in establishing those partnerships.

Yep I saw the pre-paywall summary of that WSJ article & wondered if it referred to the Mining Convention that FMG signed with the Gabon govt in 2023. Then there was a military coup by the military & possibly FMG are finding it difficult to get them to play along?

https://im-mining.com/2023/02/08/fortescue-signs-mining-convention-for-belinga-paving-way-for-first-mining-in-h2-2023/

Interesting sentence in that article:

"This will open growth opportunities for Fortescue Metals and Fortescue Future Industries throughout Africa, according to the ASX-listed company."

From The Australian:

"What’s really going on with Fortescue’s ‘remarkable’ African mine

Touted as a ‘remarkable’ project that would be the envy of its peers, sources close to Fortescue’s iron ore mine in Gabon say staff have been stood down. So other than a token first shipment, what’s happening at the $320m project?"

The rest is behind a paywall on The Australian: https://www.theaustralian.com.au/business/mining-energy/fortescue-says-it-is-still-committed-to-its-iron-ore-mine-in-gabon/news-story/aebc10a060dbec6309c50276b9fcee65

If so, it may well put Fortescue back in the market for West African high quality ore. Back in 2019 Fortescue failed in a bid for Simandou & the Gabon venture was seen as a substitute. Now that also appears to be failing, perhaps they will be pursuing another West African alternative.