Member Info for Jiving

2. Possible ZIOC 2023 Timetable

This is obviously extremely speculative, and is really based around my theoretical 40% strategic investor coming in at an NPV based share price of a fiver. How would that work in corporate approval terms & what would the likely timetable look like. If an investor is just in for 20% from a primary transaction from the company that is covered by the authority granted via the AGM alone for a pre-emptive excluded offer. But if its a transaction involving over 30% of the equity to a single party or group acting together then theoretically as in 2022, there may be a need for a follow up EGM being called ie like in 2022.

At present this is what we have

27.11.23 RNS Notice of AGM

14.12.23 RNS on CEO. (Announcement delayed 2-6 weeks from actual appointment date in Marty’s LinkedIn)

19.12.23 AGM

If we had the big news of a strategic investor investing in a way that required a second EGM the timetable could look like this.

27.11.23 RNS Notice of AGM

14.12.23 RNS on CEO. (Announcement delayed 2-6 weeks from actual appointment date in Marty’s LinkedIn)

18.12.23 RNS Strategic investor announcement

19.12.23 AGM

20.12.23 RNS Results of AGM

20.12.23 RNS Notice of GM

04-05.01.24 RNS GM Results

08-09.01.24 RNS Completion of transaction

3. Possible Strategic Investors Timetable

The Saudi Future Minerals Forum kicks off on 9 January 2024. If you to work backwards from that date, ie reverse chronically, & assume both a ZIOC AGM & EGM were needed before a major investment could be approved, then the last dates to begin that process (notice of AGM) would be 27-28 November.

All interesting points Ex, Driving & Ab'man. But I need to 'mull' them over. Two things are stopping me from a follow up today:

1. I have been working on a Fantasy Timetable to match my Fantasy Strategic Investors funding. (see next)

2. The first pre-Xmas mulled wine is on the stove & its time to start.

Interesting activity, and no sign of the Earl & Ria & the PnG gang.

I have my doubts its leak related (NFX is a pretty tight ship these days), maybe positioning for 2024?

I hope you keep posting Bear, longstanding (& suffering) shareholders have every right to feel disgruntled. As I have set out in recent posts I believe we are due life changing news shortly but I may be completely wrong and we end the year below 10p.

I am hoping for news next week, and who knows what it will be, all our speculations might have been wrong?

The key issue that I see is how do we get from a market value of around $65m to our pre-development project valuation of somewhere in the region $2-5 billion? Our problem is: raising serious development funds around our current mkt cap produces either negligible capital: 100m shares at 8p = under $10m, or vast dilution ie $100m = 1b+ shares. My take, as I set out Friday, is that a strategic investor enters at a share price based on NPV & then everything falls into place (Stage 1 financed in one) & the investment becomes self fulfilling ie the share price will move to the new NPV based value over time (helped by a funded share buyback programme?). A strategic investors buys a 40% stake at $1.6b, valuing the project at $4b - here is where it is self-fulfilling - but it is no longer a pre-development project but now has all the equity capital needed to fund Stage 1. What is $1.6b say to the PFI (7-8 overpriced footballers?), and at 30m tons pa & current ore price/premium, they would receive their stake back as dividend flow every year AND secure critical offtake for their new green steel industry. If someone has an alternative structure explaining how a strategic investor invests into Zanaga in practice & we raise capital, please spell it out.

Driving interested to see your Glencore theory, which is sensible & might indeed be how it pans out on a lower scale. The whole period since 2018-9 has seen the emphasis on an EPP, but that suddenly changed after the Glencore deal last year, and surely that in turn was due to the drastic changes taking place in the global steel industry. The move to green steel means old steel producers (China, Japan, Korea) and new (Saudis, UAE etc) will all need high quality iron ore feed for their new multi-billion dollar plants & infrastructure - and there currently is not enough available or even planned for say 5 years time. Solution, you need to create your own supply by taking an oven-ready pre-development project & bringing it on stream rapidly - time to think & act outside the box.

I see Glencore as sellers of equity over time, & believe their main interest is in retaining offtake rights to part of the overall offtake (or swap offtake rights for a royalty as envisaged in the 2022 agreement). Strategic investors with green steel plans (Saudis, UAE, Chinese, Vale) will all need their % if offtake as part of the deal, & to get their crucial investment IMO Glencore will agree - potentially that could still leave them with the balance ie if a strategic investor takes 40%, Glen are left with 60%. Better marketing 60% of the offtake of an actual producing mine than 100% of nothing.

Correction: 99's post was 13.12.23

CEO. Marty’s LinkedIn states he was appointed as CEO in November, so he might have been in situ up to 6 weeks already. Noteworthy that the news was released on 14 December & not when it seems to have actually occurred in November. Is Elphick preparing for a week of news, that has been held back as it was before last year's AGM?

Board. A new CEO at such a critical time should be immediately be on the BOD. I expect he will be soon, but we might be waiting for a different BOD with at least one representative from the new strategic investor & possibly one less Glencore director. At present the agreement with Glencore as set out in RNS of 23.11.22 is that provided Glen hold 25% or more they get 2 BOD seats; between 10-25% they get 1 seat; under 10% none. If Glen sell part or all of their ZIOC holding to one or more strategic investors their representation may change to reflect their lower %.

JV vs Buyout. The appointment of a CEO could indicate that the project is proceeding as a JV & we should not therefore expect a buyout bid - unless perhaps a competing, losing strategic investor should decide to make one.

Structure. The Glencore transaction last year concentrated ownership of the Zanaga holding company Jumelles, 100% in ZIOC. It was always possible that strategic investor (s) would take a direct stake in Jumelles - ie an unlisted stake for a fixed price paid to ZIOC based around NPV. Leaving ZIOC with the remainder of Jumelles (a bit like the pre 2022 ZIOC arrangement with Glen). But now it seems possible, even likely, that strategic investors will join the project via ZIOC share transactions - secondary, primary or both.

Secondary/Primary. Potentially strategic investors could enter the project via a secondary purchase of all or part of Glencore’s stake. This would be mean all the monies passing to Glencore and not ZIOC & we would suffer no dilution. The BOD at the AGM is seeking authority to issue 20% or 126.6m new primary shares (with no pre-emptive rights) to a shareholder (s). This primary transaction would involve both funds flowing into the company & of course dilution. It is quite possible a strategic investor (s) would undertake both transactions - getting say, a 40% stake via a secondary purchase of 20+% from Glencore and a 20% primary issue from ZIOC.

Price. The last 13 months of negotiations & particularly the decision to seek new estimates from the Chinese EPC partner suggests to me there could have been prolonged haggling over terms & particularly pricing with strategic investor (s). An ‘NPV based share price’ for a secondary/primary transaction would be substantially higher than the current share price.

The 2019 Presentation (P20 graph) gave the crucial NPV estimates for Stage 1 @ 12m & Stage 1+ 2 @ 30m outputs based on the 2014 FS & a 65% Fe concentrate price at $110. The Stage 1, 12m NPV was just over $2b & the Stage 1+2, 30m NPV was just under $4b. The lower Chinese EPC costings & favourable changes in the iron ore market will have changed those estimates significantly upwards. Of course even if all parties agree on an NPV a strategic investor can still demand a discount to NPV.

An NPV based share price. To use very simple approximations (key variables apart from NPV being FX & ZIOC share count). But currently a $1b NPV equates approx to a share price of 125p. So the old range of NPV as above from $2-4b would mean a 250-500p NPV based share price. Optimistically taking a 500p NPV based share price, a primary sale of 126.6m shares would net ZIOC £633m or $808m at todays FX.

Gearing. The 2014 estimate of $2.2b was to have been funded by a mixture of equity and debt/project finance. Edison in their research report in 2014 suggested the proportions: “We believe that the overall equity cheque will be US$0.8-1.0bn, with the remaining funds coming in the form of infrastructure and EPCM related debt such as export credit financing. The company expects to source credit finance from multiple jurisdictions on attractive terms that normally pertain to infrastructure backed funding.“

99 in a post 13.11.23 suggested the equity:debt/project finance might be even more favourable ie needing less equity finance! Quote from 99: "With a Chinese builder you probably will get 70% of the build financed by Chinese banks, then you need someone to put up the remaining 30% in return for shares in the project (The Strategic Partner)"

With significantly lower costings expected from the 2023 Chinese EPC it is likely the equity component for Stage 1 @12mtpa would be at or lower than the $800m suggested by Edison. In conclusion, if ZIOC/Glen are able to find a strategic investor (s) willing to pay an NPV based share price of £5 (Zanaga NPV of $4b), the sale of the 20% primary stake would generate sufficient equity capital to finance Stage 1 of the project, the balance coming from debt/project finance.

If a ex-Glencore CEO has been appointed, I guess that means aJV & not a buyout!

No point in appointing a CEO otherwise.

Similarly we must be due funding/deal news soon - maybe next week, before AGM - just like last year?

He is Marty Knauth at Linkedin. looks like he was actually appointed in Nov. Ex Glencore..interesting are they staying on board?

https://fr.linkedin.com/in/marty-knauth-49992235

Chief Executive Officer

"Zanaga Iron Ore Co LtdZanaga Iron Ore Co Ltd

Nov 2023 - Present · 2 mosNov 2023 - Present · 2 mos

Advancing the 100% owned Zanaga Iron Ore Project located in the Republic of Congo, one of the largest and highest grade resources yet to be developed. We envision Zanaga becoming the most respected iron ore project in Africa, focusing on creating a mining based future for the people of the Republic of Congo, whilst providing the world with high grade feed for low emission steel production."

"Glencore

1 yr 2 mos1 yr 2 mos

Head of Strategic Projects - Africa

Jan 2022 - Sep 2022 · 9 mosJan 2022 - Sep 2022 · 9 mos

Establishment of strategic project definitions, estimates, leadership and controls for KCC and Mutanda to achieve their full potential.Establishment of strategic project definitions, estimates, leadership and controls for KCC and Mutanda to achieve their full potential."

Couple of big sells hitting the bid side late in the day: 2m @ 0.2515 & 1m @ .026.

Friday also saw 2m @ 0.2615 & 1m @ 0.28.

You always wonder whats going on?

Mitch, China is clearly still a contender for ZIOC & other undeveloped iron ore mines. The November presentation was heavily focussed on presenting China as a likely strategic investor as well as prime contractor. Indeed it was so heavily China-focussed it looked like a ploy to draw in non-Chinese investors! They surely must remain a serious contender, particularly as the use of Chinese contractors to build the slurry pipes etc, effectively re-cycles a large part of the Chinese investment back into China.

The Chinese Govt has repeatedly stated it wants to diversify imports away from Australia & increase the % of iron ore mines owned by Chinese interests. Chinese ownership of a large chunk of Simandou & interests in other mines go some way to meet that aim, but they they still have a long way to go. Baowu Steel alone aims to produce 200m of steel by 2025, and like everyone they need higher quality ore to move to green steel. There are few significant mines with proven resources & all the licences, conventions etc already in place - we are 'oven ready', that has to count!

All credit to the Nguesso's, they have spent the last year systematically putting/renewing crucial bilateral political/economic 'infrastructure' with all the major likely players - Saudis, UAE, Brazil, China & recently Japan. They are pretty much prepared for any any strategic investor or combination/consortium that emerges to develop Zanaga & other mines in RoC. Now enhancing that coverage to multilateral institutions - it all looks like they are preparing for 'something'.

100% gossip from another big ZIOC investor about 3 years ago. So hearsay squared!

Marcus an NPV of around $4b seems quite a likely figure for Zanaga's undeveloped valuation, once the new Chinese EPC figures are included, & allowance made for higher revenue from a processed product. That equates to more like £5 a share, which just happens to be Elphick's rumoured target price.

The key Simandou IRR figures: 11-13%. (Valuation based on: 65% plus premium for DR)

Latest 2019 IRR for Zanaga based on 2014 FS: 23-24% (Valuation based on: 65% concentrate @ $110)

This is before the Chinese EPC that will reduce Capex, Opex & increase revenue due to processing.

My current hope re-timing now focuses on the Future Minerals Forum in Riyadh 9-11 January 2024. MBS must surely want big positive 'green' mining news before then to set the tone for the forum.

Shaun, I go to any LSE forum to read & respond to posts as I see fit - subject to the same rules as everybody else. I come to read all the posts on a forum not those from one particular poster, & will continue to do so. MM suggests I come to this forum for his posts & the simple reality is I don't, because I no longer find 95%+ of his posts relevant to where ZIOC is in December 2023. Its simple the moment he stops these ridiculous suggestions is the time I stop responding to them.

Note, I don't suggest to MM, you or anybody, how or whether they should post or respond on this forum or any other - because its not my place or business on a third party forum - just like its not yours.

To put you straight once again on how forums work. It seems your egocentric view of this forum supposes LSE forum members who visit this forum do so to read your posts & not those of all other contributors. Actually I tend to scroll rapidly past your posts & rarely follow any links, IMO 95% of what you post is simply not relevant to the circumstances ZIOC is in, in December 2023. You will find I rarely make any comment on the vast majority of your posts as I am simply not interested enough to spare the time or effort - but again if you & others find them useful, good luck to you.

If you genuinely think your 'free' posts have value why don't you test the market & start a paid subscription service. My hunch is you would get maybe 2-3 subscribers, but hey why not give it a twirl.

For years I have visited the 'free' LSE & other forums for information & comment MM, & I certainly don't find much of value in 95%+ of your Google links. But if others do, good luck to you & them.