4 September 2012

Substantial Increase and Upgrade in Zanaga Project Mineral Resource

Zanaga Iron Ore Company Limited ("ZIOC" or the "Company")(AIM:ZIOC) is pleased to announce a substantial increase and resource classification upgrade in the Zanaga Iron Ore Project (the "Zanaga Project") Mineral Resource, reported in accordance with the JORC Code, in the Republic of Congo (Congo Brazzaville).

Highlights

· 57% increase in the overall Mineral Resource to 6.8 billion tonnes at an average grade of 32.0% Fe

· 74% increase in Measured and Indicated resource category to 4.69 billion tonnes with an average grade of 32.5% Fe

· Ratio of Measured, Indicated and Inferred Resources has improved to 35%:34%:31% respectively, a significant upgrade from the previous estimate announced on 26 October 2011 of 3%:59%:38%

· Total of 176,109 metres drilled, drilling to an average of 145m included in revised 2012 JORC statement

· Mineral Resource defined from only 25km of the 47km orebody identified

Clifford Elphick, Non-Executive Chairman of ZIOC, commented:

"The major increase in the resource announced today is exciting as it confirms the Zanaga Iron Ore Project has the potential to become a very significant iron ore producer with one of the largest iron ore resources in Africa. The systematic methodology applied to the large scale drilling programme continues to increase our understanding and confidence in the orebody, of which just over 50% has been drilled to date"

Revised Mineral Resource Statement

Classification	Tonnes (Mt)	Fe (%)	SiO₂ (%)	Al₂O₃ (%)	P (%)	Mn (%)	LOI (%)
Measured	2,400	34.0	43.0	3.3	0.048	0.106	1.403
Indicated	2,290	30.8	46.6	3.0	0.052	0.116	0.701
Inferred	2,100	31	46	3	0.05	0.12	0.90
Total	6,800	32	45	3	0.05	0.11	1.01

Reported at a 0% Fe cut-off grade within an optimised Whittle shell representing a metal price of 130 USc/dmtu.

The Resource was estimated as a block model within constraining wireframes based upon logged geological boundaries. Tonnages and grades have been rounded to reflect appropriate confidence levels and for this reason may not sum to totals stated.

The Mineral Resource statement set out above is reported in accordance with the terms and definitions included in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2004 edition) as at 29 August 2012. The information in this Report that relates to Mineral Resources is based on information compiled by Malcolm Titley, BSc MAusIMM MAIG, of CSA Global (UK) Ltd. Malcolm Titley takes overall responsibility for the Report as Competent Person. He is a Member of the Australasian Institute of Mining and Metallurgy (AUSIMM) and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as a Competent Person in terms of the JORC Code. The Competent Person, Mr Malcolm Titley, has reviewed this Mineral Resource statement and given his permission for the publication of this information in the form and context within which it appears.

Drilling programme summary

Data used in the preparation of the Mineral Resource Estimate was sourced from all available information from diamond and RC drilling completed at the Zanaga Project, to a cut-off date of 15 July 2012. This includes an additional 49,125 metres (39% increase) of drilling carried out for the previous resource statement announced on 26 October 2011. A total 176,109 metres (1,213 holes) have been drilled to date, with 79,288 assays (XRF analyses and Niton analyses) used to model the mineral resource. Please see the table below for an update on drilling completed.

Drilling completed	Metres
At 26 Aug 2011 (previous resource estimate, announced 26 Oct 2011)	126,984
26 Aug 2011 - 15 July 2012 (cut-off for updated resource estimate, announced 4 Sept 2012)	49,125
Total to date	176,109

Geological Summary

The Zanaga Iron Ore deposit is located within a North-South oriented (metamorphic) Precambrian greenstone belt in the eastern part of the Chaillu Massif in South Western Congo. From airborne geophysical survey work, and morphologically, the mineralised trend constitutes a complex elongation in the North-South direction, of about 48 km length and 0.5 to 3 km width.

The ferruginous beds are part of a metamorphosed, volcano-sedimentary Itabirite/BIF and are inter-bedded with amphibolites and mafic schists. It exhibits faulted and sheared contacts with the crystalline basement. As a result of prolonged tropical weathering the BIF has developed a distinctive supergene iron enrichment profile.

At surface there is sometimes present a high grade (+60% Fe) canga of apparently limited thickness (<5m) capping a discontinuous, soft, high grade, iron supergene zone of structure-less hematite/goethite of limited thickness (<7m). The base of the high grade supergene iron zone grades quickly at depth into a relatively thick, leached, well-weathered to moderately weathered friable hematite Itabirite with an average thickness of approximately 25 metres and grading 45-55% Fe.

The base of the friable Itabirite zone appears to correlate with the moderately weathered/weakly weathered BIF boundary, and fresh BIF comprises bands of chert and magnetite/grunerite layers.

For further information please contact:

Zanaga UK Services Limited

Corporate Development and Andrew Trahar
Investor Relations Manager +44 20 7399 1105

Liberum Capital Limited

Nominated Adviser, Financial Chris Bowman, Christopher Britton
Adviser and Joint Corporate Broker and Christopher Kololian

+44 20 3100 2000

Citigroup Global Markets Limited

Joint Corporate Broker Alex Carter

+44 20 7986 4000

Pelham Bell Pottinger

Financial PR James MacFarlane
and Daniel Thole

+44 20 7861 3232

About us:

Zanaga Iron Ore Company Limited is listed on AIM, ticker: ZIOC and is the owner of 50% less one share interest in the Zanaga Iron Ore Project based in the Republic of Congo (Congo Brazzaville) through its joint venture partnership with Xstrata plc. The Zanaga Iron Ore Project is one of the largest iron ore deposits in Africa and has the potential to become a world-class iron ore producer.

Glossary

AL₂O₃	Alumina (Aluminium Oxide)
BIF	Banded Iron Formation is the fresh, hard, un-oxidised, banded, magnetite itabirite and consists of magnetite, silica and occasional amphibolite. At Zanaga the BIF has a total iron grade range of 10% Fe to 47% Fe, with an average 30% Fe.
Fe	Iron
Itabirite	metamorphosed BIF
JORC Code	the 2004 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves as published by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia
LOI	Loss on ignition
Magnetite	a magnetic greyish black iron mineral (Fe₂O₄)
Mineral Resource	a concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories
Mn	Manganese
P	Phosphorus
SiO₂	Silica