Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Marty's trail of breadcrumbs over on LinkedIn continues to give very strong pointers to ongoing FEED activity by the company.....and that means development news is nigh.
In the 30th April RNS Marty emphasised, '..the upcoming FEED phase will not only seek to validate and enhance our technical confidence but critically, develop Zanaga's management plans around environment, community, training, health, water, mine wastes and ultimate closure...'
Yesterday Marty 'liked' a MEC Mining's post on LinkedIn. 'When you select MEC to partner with you on your project ..'
MEC offer these services, which dovetail very neatly with Marty's comments (above and in the RNS):
'MEC Mining is a global technical consulting firm specialising in mining services capabilities across the project life cycle from early-stage exploration through development, mine planning, onsite management to mine closure and rehabilitation.'
https://www.mecmining.com.au/
ps://fr.linkedin.com/in/marty-knauth-49992235
https://au.linkedin.com/company/mec-mining
Huge numbers being tossed about here, including for Gulf 'green steel'.
UAE AND OMAN AGREE ON A $32 BILLION GREEN MEGAPROJECT
The project includes renewable energy initiatives and green steel production capacity..
https://gmk.center/en/news/uae-and-oman-agree-on-a-32-billion-green-megaproject/
Interesting. When even The Express starts talking 'high grade' you know the MSM is receptive to Zanaga news. Simandou's grade is 65.5% compared to Zanaga's 66% for Stage 1, 68.5% Stage 2 for a blended 67.5% .
The rag describes Simandou as, '..the world’s largest and highest-grade new iron ore mine.'
Marty Knauth says, 'Here, hold my beer'.
Our hard, development news is going to be explosive.
19:51, Fri, May 3, 2024 | UPDATED: 19:57, Fri, May 3, 2024
Incredible £5bn mega-project to build 235 bridges and 15 miles of tunnels in tiny country
To transport the iron ore, a new railway line will be constructed connecting the mountainous region to the coast.
A mega rail project in Africa has been given the green light and will provide much-needed investment.
Plans to develop a huge new iron ore mine have been given the go-ahead by authorities in Guinea.
Discovered back in the 1990s, iron ore deposits in the country's Simandou mountains will now be extracted after a deal was struck between Rio Tinto and the Singapore company Winning Consortium Simandou (WCS) - both of which hold majority stakes in the mining complex.
Simandou is poised to become the world’s largest and highest-grade new iron ore mine.
https://www.express.co.uk/news/world/1895485/train-line-tunnels-project-africa-Guinea
No smoke without fire? Banking analysts and media speculate that Glencore could bid for Anglo American, with some making the connection into iron ore marketing.
> We forget, but our 46% shareholder Glencore are very well motivated to see Zanaga developed. This will help them to a dominant position in marketing high grade iron ore for green steel.
Those analysts will catch up eventually, and when they do....
"Unlike BHP, Glencore could benefit from keeping Kumba and marketing iron ore, and Glencore may face less political pushback in South Africa..." Jefferies analyst Christopher LaFemina said in a research note on April 29, where he assessed different takeover scenarios for Anglo American.
https://www.reuters.com/markets/commodities/glencore-studying-an-approach-anglo-american-sources-say-2024-05-02/
The MSM and industry press has yet to join the dots from Green Steel to Zanaga, but when the spotlight does finally shine on Zanaga the resulting SP rise will be truly spectacular.
What will be the trigger? Just a snippet of news that connects any of the Strategics will do it - Baosteel, PIF/MM, whoever.
Marty name-checked 'green steel' in the RNS, and I'm now certain the company are going to major on that in upcoming PR. Then the media will join the dots...
'...This clash of big dirt and high finance suggests that Anglo harbours something worth fighting over. Its big mines indeed tick all the right boxes: high quality and low cost, with the potential to expand. They are also extracting the right stuff at the right time. One of Anglo’s main products is copper, which is in high demand, particularly as tonnes of it will be needed for the electrification of transport and power in the green-energy transition; the red metal’s price has risen by 15% this year. ANOTHER IS HIGH-GRADE IRON ORE, WHICH IS IN DEMAND FOR ITS USE IN FORGING GREEN STEEL...'
https://www.economist.com/business/2024/05/02/why-does-bhp-want-anglo-american
Delayed report of larger buy:
11:15:56 500,000 shares bought at 7.843p
Wipes out the selling account - LOL
They're just being polite...what the company are really saying is that it's time to put up the money:
'The Company believes these positive results provide much greater confidence in the Project's economic feasibility in today's market and cost environment, and with this, provides a key catalyst for potential strategic investors to consider funding of the next logical Project phase, being the front end engineering and design (FEED) program ..'
1. The FEED program has been defined as part of the CapEx for the staged development. Therefore if the FEED is underway the staged development is underway. For that the project has to be owned and hence invested in. No investment, no FEED.
p.31, ZIOC presentation Nov 2019; https://www.zanagairon.com/wp-content/uploads/2019/06/ZIOC-IP-28.03.19.pdf
2. The updated Net Present Value (NPV) has been calculated using a pretty harsh Discount Rate of 10% - (at the limit of typical 4-10% for all mining projects). That's the biggest discount Strategics are likely to get on any mining project anywhere. The Discount Rate is designed to specifically account for all the risks of a project, i.e. 'Congo'. The FEED stage of a mine development is tasked with mitigating some of these risks. A successful FEED program reduces risks, and hence the Discount Rate would be lowered, and hence the NPV rises. The Strategics would be expected to fund the FEED stage. If not then the NPV would be recalculated *AFTER* the FEED program when the Discount Rate would be lower and the NPV higher.
The company say as much in the RNS, '...the front end engineering and design (FEED) program to further define the Project's physical elements and risk abatement strategies.'
3. Thirdly, the Strategics are subject to NDAs, under which they received the full FS update not made available to us lot. If they want to continue to receive privilege information on which to base their investment decisions (info that we don't get to see) then they now need to start paying for it. After all the FEED is progressing the Staged Development via CapEx spend and risk reduction. If a Strategic doesn't want to do this then that's their choice, but then they are outside the tent and at a severe disadvantage.
Thus the company's '...to consider funding..of FEED' is just being polite in public.
Now the Strategics have to show their hands, and open their wallets.
Further to my comment .. 'AT has been communicative. I understand that all the Strategics have received the full FS report and recostings *but* under NDAs as you might well expect. Of course this makes them insiders and hence they cannot buy ZIOC shares - at least not yet...'
The quid pro quo of any potential Strategic Investor being an insider and hence, for example, receiving the full FS which has not been generally released is that they'll be expected to now fund the FEED works.
If they don't now start paying for the privileged info and works that furthers their intended investment, then they could find themselves outside the tent and hence at a major disadvantage. ZIOC do have cards to play.
It's all go in Brazzaville, and Motsepe will be needing a new mineral port for his phosphate project just 40km from Pointe Noire...
11:49 AM · May 1, 2024
Mining: the Hinda phosphate plant will be launched in May 2025
The exploitation of the deposit, which is located 40 kilometers from the Congolese coast, will allow the creation of nearly 1,000 jobs, including 500 direct jobs.
https://twitter.com/brazzanews/status/1785607397693686048
MINING: HINDA PHOSPHATE PLANT TO BE LAUNCHED IN MAY 2025
Thursday 25 April 2024 - 18:56
The investment in the phosphate mining project in Hinda, Kouilou, was at the centre of the meeting on 24 April in Brazzaville between President Denis Sassou N’Guesso and South African businessman Patrice Motsepe. The actual launch of the plant is scheduled for May next year, the South African billionaire announced.
Negotiations around the phosphate extraction plant and other fertilizers in Hinda have begun since August 2022 with meetings with the ARC management team. Located about 40 km from Pointe-Noire, the Hinda site is renowned for its high concentration of nitrogen and potassium, both of which are part of the composition of the phosphate.
https://www.adiac-congo.com/content/mines-lusine-de-phosphate-de-hinda-sera-lancee-en-mai-2025-156831
My general feeling is that the company have been working very hard on the nitty gritty of getting the Feasibility Study reworked. Also that there has been substantial behind the scenes marketing of Zanaga wrt to grade and future market demands. The company see Zanaga as being in the Top 5 global producers of high grade by 2030. That's direct.
I get the sense that we are now waiting on some externals, perhaps such as the ratification of the Congo-UAE FTA (CEPA) which would confirm investment conditions and hence AD Port going ahead with the mineral port.
If the company do go ahead with some kind of investor call this is where I would direct my questions.
It does also mean that we could be pleasantly surprised by events progressing outside of any company timeline. We shall see.
AT was on WhatsApp and fielding queries on next steps PR. Marty's preferred channel looks to be LinkedIn where he was chatting. On that score Zanaga Iron ore now have a LinkedIn profile.
Worth trying to engage AT and even Marty. They were chatty yesterday.
I understand that ZIOC plan:
An updated Corporate Presentation,
Proactive interview, and
A possible investor call to include Marty.
Yesterday's RNS produced World leading figures for Zanaga:
CapEx - down
OpEx - down
> NPV - doubled $$
> IRR - financially compelling, and then add in geostrategic imperatives for numerous Strategic Partners.
Highlights
Positive results received from the 2024 FS cost update study further underlines the robust economics of the Company's 30 Mtpa staged development Zanaga Iron Ore Project:
· 12Mtpa Stage One
o Capital investment of US$ 1.94 billlion
o Operating cost of US$ 31.5 / dmt FOB
o Net Present Value of US$ 3.68 billion
o Internal Rate of Return of 26.2%
· 18Mtpa Stage Two optional expansion
o Capital investment of US$ 1.87 billion
o Operating cost of US$ 24.9 / dmt FOB
o Total combined Net Present Value of US$ 7.36 billion
o Internal Rate of Return of 28.2%
Zanaga Iron Ore Company has announced positive results from their 2024 Feasibility Study update, showcasing strong economic potential for its Zanaga Iron Ore Project with significant Net Present Values and Internal Rates of Return for its two-stage development plan. The updated costs and partnership with a Chinese engineering firm have provided a higher confidence level in the project’s viability, setting a solid foundation for future phases and attracting potential strategic investors. The company is also progressing with other key initiatives, including hydro-electric power and mineral port investments, to further enhance the project’s prospects.
https://www.tipranks.com/news/company-announcements/zanaga-iron-ore-optimistic-on-projects-future
AT has been communicative. I understand that all the Strategics have received the full FS report and recostings *but* under NDAs as you might well expect. Of course this makes them insiders and hence they cannot buy ZIOC shares - at least not yet...
P/NAV IS THE MOST IMPORTANT MINING VALUATION METRIC, PERIOD. - Corporate Finance Institute
NPV is much more than any old 'indicative tool'.
1. The decision on the mining investment is mostly related to the NPV of the project. A financial model construction needs accurate estimations of income and costs..
https://scielo.org.za/scielo.php?script=sci_arttext&pid=S2225-62532012000500011#:~:text=The%20decision%20on%20the%20mining,and%20costs%20includes%20many%20uncertainties.
2. Why is the concept of net present value important to mine planning?
NPV is the widely accepted tool for measuring the value of a mine project. It calculates the current value of the cash flows at the required rate of return of a project compared to the initial investment.
https://thenugget.prospectorportal.com/what-is-an-npv-mining#:~:text=NPV%20is%20the%20widely%20accepted,compared%20to%20the%20initial%20investment.
3. How important is net present value?
Net present value indicates the potential profit that could be generated by a project or investment. A positive net present value means that a project is earning more than the discount rate and may be financially viable.
https://www.investopedia.com/ask/answers/033115/what-difference-between-present-value-and-net-present-value.asp#:~:text=Net%20present%20value%20indicates%20the,and%20may%20be%20financially%20viable.
and
4. Mining Asset Valuation Techniques - Overview, Formula
Corporate Finance Institute
https://corporatefinanceinstitute.com › Resources
P/NAV IS THE MOST IMPORTANT MINING VALUATION METRIC, PERIOD.
https://corporatefinanceinstitute.com/resources/valuation/mining-asset-valuation-techniques/
Extrader - that is massively and demonstrably not the case.
The NPV discounts future earnings into the present (Net Present value) at a cumulative 10% per year. That 10% per annum cumulative accrues back to the new owners as time progresses.
For example, 2030 Zanaga production is currently discounted into the NPV by 6 years of 10%pa , or something like 47%, to just 53% of the actual revenue.
Come 2030 the strategics would receive 100% of the revenue (no discount) an increase of 89% on the NPV value (53% up to 100%).
These compounding effects are even more exaggerated as we progress out along the curve.
Furthermore, and in addition to the unwinding of the discount factor, there is the very likely increase in the Reserve size (perhaps as much as 10x), and any long term rise in iron ore prices.
Thus the NPV represents a discounted bargain for the Strategics who chose to invest for the long term.
The bottom line...
Today's RNS gives NPVs of $3.681bn for Stage 1 and $7.357bn for Stage 2
At this morning's $/£ of 1.2550 and 645m shares issued we get SPs of:
**£4.55/share for Stage 1 and £9.09/share for Stage 2**
Now, we aren't told what iron ore price was used beyond, 'Note: Iron ore prices based on AME Group's long term real iron ore price forecast for 65% Fe IODEX.'
Checking the longest dated futures contact on SGX for 65%FE Fines, Dec 2026, we see = $109
https://www.sgx.com/derivatives/products/iron-ore?cc=M65F
> This is where it gets interesting. With a falling dollar, rising commodity prices, geopolitics, and reserve diversification I would expect that long term iron ore price to progressively firm.
>> If the Strategics are making the same calculations then they will want to get a shuffle on.
The FT circles Zanaga with our realising it....
WHO ARE ANGLO AMERICAN’S POSSIBLE SUITORS?
“I think there could be a lot of interloper risk,” said one large mining sector investor. “The details of Anglo are sitting on every CEO’s desk, that I can assure you.”
GLENCORE
Many of Anglo’s mines would fit better in Glencore’s portfolio than with BHP, according to analysts and market insiders. Glencore and Anglo own 44 per cent each of the prized Collahuasi copper mine in Chile, meaning a takeover would give Glencore near full control.
Whereas BHP has asked Anglo to spin off South African Kumba Iron Ore prior to any takeover, Glencore would likely integrate it into its own operations in the country. The Swiss company has coal mines in South Africa and has long toyed with building an iron ore business. The company trades the metal but does not mine it. For the same reason, it would also be attracted to Anglo’s Brazilian iron ore project, Minas-Rio.
“It is a better fit than BHP,” said Ben Davis at investment bank Liberum, adding that Glencore “seem to have endless bandwidth for corporate strategy compared to other people”.
AND, AND GET THIS:
China has huge demand for copper and iron, and controlling producing mines is a critical priority for Beijing.
“I think it’s reasonably likely that the Chinese will come in,” Meyer said. “The question is which Chinese state-owned company is best placed to do it?”
https://www.ft.com/content/884d2bb0-57e8-4d82-b4b3-db314038e2a9