8 March 2018

ZANAGA PROJECT UPDATE

Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (AIM: ZIOC) is pleased to provide an update to shareholders on work being conducted on the Zanaga Iron Ore Project ("Zanaga" or the "Project").

Highlights

· Iron ore market

o Premiums for high quality iron ore pellet feed concentrates, and pellets, are at record highs

o These premiums are indicative of a structural shift in the pricing of iron ore products to appropriately value the benefit of higher quality ores to customers

o The Zanaga Project is well positioned due to the capability of beneficiating its iron ore into high iron content products with low impurities

o ZIOC continues to believe in the long term economic benefit of producing high quality iron ore products and continues to plan for premium quality iron ore production from all phases of the Project's development

· Early Production Project

o Progress made in assessing the opportunity for a small scale Early Production Project ("EPP")

o Preliminary test work results indicate that a small scale project is capable of producing a premium product pellet feed concentrate with an iron ore grade of 66.6% with low impurities

o Test work is ongoing as regards the feasibility of pelletising this concentrate using a polymer based process into a pellet product of sufficient quality to meet industry standards and be commercially marketable

o Logistics routes to two potential exit ports are under review

§ Road only, and combination road plus rail routes within Republic of Congo ("RoC") to the port of Pointe-Noire

§ Road and rail through Gabon to the port of Owando (Libreville)

o Glencore and ZIOC have agreed to conduct further study work on the EPP project, including assessment of EPP project feasibility, scope of operations and project economics

o Further updates on the EPP study work program are expected to be announced in Q2 2018

· 30Mtpa staged development project (12Mtpa Stage One, with 18Mtpa Stage Two expansion)

o Review of the 12Mtpa Stage One development project as outlined in the 2014 Feasibility Study

§ High level analysis of capital and operating cost estimates ("FS review") completed in May 2017 to assess potential savings achievable

§ FS review indicated significant savings achievable across both capital and operating cost estimates for the 12Mtpa Stage One development project, including:

· Capital expenditure savings potential of 8-9% (U$153-371m), reducing the 12Mtpa Stage One capital cost estimate to between U$1,797-U$2,041m

· Operating expenditure savings potential of 15-20%, reducing the 12Mtpa Stage One operating cost estimate to between U$23-24 per dry metric tonne

§ Project Team continue to evaluate the 30Mtpa staged development project. However, assessing the EPP project is a near-term priority due to the benefits of reduced upfront capital cost, and ability to derisk the larger project

o Environmental Permit

§ As announced in November 2017, Environmental Permit awarded in November 2017, covering the Stage One 12Mtpa development phase of the Zanaga Iron Ore Project as outlined in the Project's Mining Licence

o Port agreements

§ ZIOC notes that there is still discussion between the RoC Government, China EXIM Bank and China Road and Bridge Corporation (CRBC) on the financing and development plan for the new bulk materials port development north of Pointe Noire

§ Advancement of the new port development could provide a key catalyst in allowing the Zanaga 12Mtpa Stage One development project to derisk and proceed towards seeking finance

o Power agreements

§ The Zanaga Project team continue to investigate power solutions with independent power providers and equipment suppliers with an aim to seek an optimal solution to the energy requirements of the 12Mtpa Stage One mining project

· Ore sample consolidation program

o Zanaga Project ore samples consolidated into two sites in order to allow efficient response to requirements of the various test work programs

· Funding Agreement signed with Glencore for 2018 work program

o US$1.53m budget approved for 2018, which amount is funded 50% by Glencore and 50% by ZIOC

o Budget allows for funding study work on the EPP project including specific product test work on the pellet feed and pelletisation products and scoping of the EPP project's viability and economics

o US$3.8m cash on hand at ZIOC as at 28 February 2018

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

"We are pleased to announce the results of the work that has been done over the past few months. Both Glencore and ZIOC teams involved in the project have worked very well together in assessing the new options available to develop the Zanaga Project.

The early production project ("EPP") is targeting a low capital cost operation utilising existing road and potentially rail transportation solutions as well as existing port infrastructure. If we are successful in developing this low capital cost solution, we expect the Project would be attractive for third party financing. Furthermore, this strategy is aligned with a desire to implement the Project's initial production phase and derisk the operation in advance of preparing for financing of the larger 12Mtpa Stage One project.

The Project Team have also conducted initial studies both internally and with third parties to assess the potential capital and operating costs savings that could be achieved for the 12Mpta initial phase of the staged development project, as outlined in the Feasibility Study completed in 2014. The initial review of these figures has indicated potential for major capital and operating cost savings that encourages us to continue to pursue pathways available for development of this much larger development phase, simultaneously with the EPP option currently under review.

It is important to highlight to our investors the extent to which dynamics in global iron ore markets have seen positive change over the past two years, and the last few months in particular. We continue to see better than expected iron ore demand fundamentals and have been particularly pleased to see pricing for higher quality products achieving record premiums. This is substantially driven by China's determination to reduce pollution levels, improve efficiency in transforming iron ore into steel, and supports the need for more iron ore production from assets like Zanaga with high iron content characteristics and particularly low impurity levels.

The Zanaga Project Team continues to investigate logistics and product options for the EPP project as well as its scope of operations and project economics and we intend to provide more details about this workstream during Q2 2018."

For further information, please contact:

Zanaga Iron Ore

Corporate Development and Andrew Trahar

Investor Relations Manager +44 20 7399 1105

Liberum Capital Limited

Nominated Adviser, Financial Neil Elliot and Richard Crawley

Adviser and Corporate Broker

+44 20 3100 2000

About us:

Zanaga Iron Ore Company Limited (AIM ticker: ZIOC) is the owner of 50% less one share in the Zanaga Iron Ore Project based in the Republic of Congo ("RoC") through its investment in its associate Jumelles. 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.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

1. Introduction

Following the completion of the Zanaga Project Feasibility Study in 2014, commodity prices suffered significant reductions in pricing and investor sentiment towards large greenfield projects diminished off the back of concerns of oversupply in the seaborne iron ore market. The benchmark iron ore price fell below US$50/t and a number of iron ore projects were terminated or paused. In response to the fall in benchmark iron ore prices, the Zanaga Project Team took measures to reduce costs to ensure that work continued on assessing the viability of various options to progress the Project while monitoring the continuously evolving market dynamics.

Since then, a number of factors have shifted to the Project's benefit, including (a) robust iron ore demand in China and increased pricing for benchmark 62% Fe iron ore which is currently trading within a range of approximately US$70-80/t; (b) record price premiums for high quality iron ore products; (c) available rail and road infrastructure across the border in Gabon; (d) reductions in third party contractor pricing in the mining industry globally; and (e) reduced energy costs.

The Zanaga Project Team has continually taken steps to factor these evolving improvements into its strategy for assessing the options available for the development of the Zanaga Project. The Project Team has maintained its view that high quality products will continue to achieve significant price premiums in the future, and has sought to lock in this additional revenue benefit into the Project's development plan.

Since early 2017 the focus of the Project Team has been to accelerate investigations into determining a viable solution for an Early Production Project ("EPP").

ZIOC is pleased to announce the results of the work that has been undertaken over the past year in assessing the viability of the EPP project. The Project Team have worked to assess a number of revised scale options for the initial development of the EPP project, and critical to this work is determining a viable product and suitable logistics solution for transportation to an exit port at reasonable cost.

The EPP project is planned to be a relatively low capital cost project utilising road and potentially rail transportation solutions as well as existing port infrastructure. The Project Team are scoping this solution with the intention of preparing a scoping study report, including project economics, and submitting this to the Jumelles Joint Venture Company for further consideration. This strategy is aligned with the Jumelles Shareholders' desire to seek a low capital cost initial production phase, derisking the operation, delivering a first product into the seaborne market, and potentially assisting the objective to position the 12Mtpa Stage One project for the raising of finance from investors.

The Project Team have simultaneously conducted initial studies both internally and with third parties to assess the potential capital and operating cost savings that could be achieved for the 12 Mtpa Stage One of the 30mtpa staged development project, outlined in the Feasibility Study completed in 2014. The initial review of these figures indicates potential for major capital and operating cost savings with the potential to alter the dynamic of developing and financing the 12Mtpa Stage One project. This has encouraged the Project Team to continue to pursue preparatory pathways (power and port solutions for example) for development of this much larger project in tandem with the EPP option under investigation.

The Project Team intend to provide more details on its study work in Q2 2018 as milestones are achieved.

2. Early Production Project

As reported by the Company on 28 June 2017, the Zanaga Project Team commenced a process in early 2017 of actively investigating the potential for the development of an Early Production Project (EPP) which would entail a small-scale, low capital cost operation utilising road and potentially rail transportation solutions as well as existing port infrastructure.

The EPP project is envisaged to produce a pellet feed concentrate product, similar to the product envisaged to be produced by the larger 30Mtpa project outlined in the 2014 Feasibility Study, but utilising existing transportation infrastructure for export. Simultaneously the Project Team initiated studies into the possibility of going a step further, by considering the potential to convert the pellet feed concentrate into a pellet, which would secure additional revenue benefit from its high value characteristics.

This announcement serves as the first detailed announcement of the work that has been conducted by the Zanaga Project Team to date to assess an EPP development option. The Company intends to provide further updates on the assessment process of the EPP project during Q2 2018.

2.1 Objectives

The objectives of the Zanaga Project Team are to determine the feasibility of the following project:

a) A viable Early Production Project that demonstrates attractive economics in the current, and long term, iron ore price environment by producing a high quality iron ore product

b) Produce a pellet feed iron concentrate from the enriched near surface, hematite dominated Zanaga ores with a target final grade of minimum 65% Iron, approximately 5% combined silica plus alumina, and <0.05% phosphorus that can attract price premiums similar to those being achieved by similar products from other mining companies.

c) Seek to secure additional margin by establishing the viability of producing pellets from the Zanaga pellet feed concentrate using polymer based binders ("Cold Pelletisation"), to produce pellets with physical and chemical properties that will be attractive to global iron ore markets, attract price premiums similar to those being achieved by conventional pellets, and be produced at a low cost

2.2 Pellet feed concentrate test work

Pellet feed concentrate is a finely ground, typically high quality iron ore product, currently consumed by steel mills in pelletisation plants to create pellets for their steel furnaces. The pellet feed concentrate market is a well-established market that has experienced high growth in demand in recent years. The market is dominated by high quality iron ore products due to the finely ground nature of the material allowing for greater liberation of iron (resulting in higher iron grades) and improved ability to remove impurities. This pellet feed concentrate product is what the Zanaga Project would produce from its 30Mtpa larger project, but was not previously considered as a viable solution for a small scale operation until the Project Team began its investigations in 2017.

Due to the high quality nature of dominant pellet feed concentrate products, demand has increased significantly resulting in the achievement of the significant price premiums (see section on "Product Pricing and Demand"). The Zanaga Project Team believe the EPP has the potential (if the EPP operating costs can be kept low) to demonstrate attractive economics purely by producing a pellet feed concentrate for export into the seaborne iron ore market, similar to other existing large producers.

In order to determine the potential process route required for a small scale pellet feed concentrate operation the Project Team commissioned an independent process engineering firm in the United Kingdom to conduct product test work on samples from Zanaga's upper ore layers. The proposed solution for the small scale EPP operation is different from that envisaged for the larger 30Mtpa operation in that the scale of the operation and focus on the ore from the upper layers requires different processing with different associated costs.

ZIOC is pleased to announce that the results of the pellet feed concentrate test work carried out by independent third party experts has demonstrated:

Simple gravity based processing of the friable enriched, hematite dominated, near surface Zanaga iron ore can produce a high quality pellet feed iron ore concentrate product with a grade of 66.6% iron, combined silica plus alumina of 5.7%, and 0.03% phosphorus (see table below)

Zanaga Iron Ore - Pellet Feed Concentrate Test Results

Component	Fe	CaO	SiO₂	Mn₃O₄	Al₂O₃	MgO	P	K₂O	TiO₂	Na₂O	Cr₂O₃	V₂O₅	BaO	ZrO₂	ZnO	SrO
Unit	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
Grade	66.63	<0.05	3.98	0.15	1.73	<0.05	0.03	<0.05	0.09	<0.05	<0.05	<0.05	<0.05	<0.05	<0.05	<0.05

Source : AMG Metallics, 26 January 2018

· The ore would be crushed/ground to approximately 50 microns to maximise liberation of the material and improve iron quality grades which also results in an ideal grind size for pellet feed.

· The Zanaga iron ore deposit has resources in excess of 200Mt million tons of near surface, rippable, enriched ores with a <0.5 strip ratio (waste:ore) capable of feeding the EPP operation in order to produce the desired material described above

This is a very positive result and the Project Team are encouraged by the opportunity to continue assessing the viability of extracting this ore as a pure pellet feed concentrate operation. The ability of the Project to deliver low impurity high iron content product is a key advantage of the asset and could (if the EPP operating costs are kept low) provide helpful additional economic margin to the business.

2.3 Pelletisation test work investigations

Taking the process a step further, the Project Team have simultaneously been investigating whether Zanaga's high quality pellet feed concentrate product could be converted into pellets at a low operating cost.

Conventional pellets are typically manufactured in plants that require high capital cost which is not normally viable for smaller scale operations. However, the Project Team have been working with a technology company which is seeking to achieve an alternative solution of pelletising iron ore concentrate by utilising a polymer binding agent capable of converting pellet feed into a pellet (Cold Pelletisation) at lower cost than conventional pelletisation processes.

The objective of this exploratory work is to ascertain the viability of utilising this technology to produce pellets from Zanaga pellet feed and the viability of incorporating a Cold Pelletisation process into the Zanaga EPP. To assist with the process, the Project Team appointed an independent process engineering firm (referred to above) to assist with the product test work program on this potential Cold Pelletisation solution, supplementing their test work on Zanaga's pellet feed concentrate product.

2.3.1 Cold Pelletisation overview

Cold Pelletisation is a relatively new technology that has been enabled by advancements in the development of industrial polymers.

The viability of Cold Pelletisation in relation to the development of any significant iron ore prospect or any operating iron ore mine has still to be demonstrated and tested. The process is still being developed as a concept and is dependent upon funding being made available for that purpose. Whether Cold Pelletisation will emerge as a real competitor to, and advance on, conventional pelletisation is still unknown. The advocates of Cold Pelletisation will need to demonstrate to steel mills and end users that pellets produced by this novel process can successfully achieve, and if possible surpass, the specifications and performance of pellets produced by conventional methods. In particular, the advocates of this process would need to show on a consistent basis by reference to operations of a reasonable scale that polymer bound pellets are able to demonstrate the potential for strong physical characteristics which would result in minimal degradation resulting from road, rail and shipping transport (assessed using tumble, drop and cold crush strength tests), while also meeting the performance requirements of a steel mill customer.

The perceived potential benefits of Cold Pelletisation, as advocated by the technology providers are low capital cost, low incremental operating costs and low environmental footprint. The extent to which the proposed benefits are achievable is still to be tested and established. The application of Cold Pelletisation techniques to actual commercial operations are still in the early stages of development.

2.3.2 Results of Zanaga cold pelletisation testwork

Independent technical experts were commissioned to conduct a series of trial tests on various batches of Zanaga pellets, produced by the technology provider using Zanaga pellet feed concentrate. It needs to be borne in mind that Cold Pelletisation using polymer binders is not a "one size fits all" solution and test work has been required on various chemical compositions of the polymers in order to identify the optimum polymer formula for the ore being processed.

The test work is continuing but the results to date have not yet confirmed whether the Zanaga EPP project pellet feed concentrate has the potential to be pelletised using a Cold Pelletisation process. The purpose of these tests is to establish whether a pellet could be produced, using this process, that would withstand the duress of transportation and be deemed attractive for purchase by a steel mill. These tests include satisfaction of long distance transport and multiple handling requirements, and subsequent demonstration of good performance in the steel mill's furnace.

The Project Team intend to provide further updates on the outcomes of these tests in Q2 2018.

2.4 Product pricing and Demand

Iron ore products are not homogenous in nature and product pricing is affected significantly as a result of iron content as well as impurity levels. Because of the low impurity nature of the Zanaga Project mineral resource, and relative ease of upgrading iron content to a premium level, the Zanaga Project Team has always focused on a development plan aimed at the production of high quality products with both high levels of iron content and low levels of impurities, as this would be highly beneficial in pricing of the material when sold.

Recent developments in the global iron market have underlined the importance of projects with ores capable of producing premium products at costs that result in the achievement of high margins. These developments include the crackdown by the Chinese government on the level of pollution resulting from the domestic steel production process. A number of inefficient and high polluting Chinese steel producers have been forced to close. This has led to a reduction in the overall supply of steel products, a rise in steel prices, and improved profitability of China's remaining steel production base. This has allowed Chinese steel producers to afford higher grade iron ore products that would result in greater production levels without expanding the processing capacity of their existing operations. At the same time, Chinese steel producers have been faced with higher prices for coking coal and have sought to increase production efficiencies from their existing operations while achieving lower pollution levels.

All of these factors have led to a substantial increase in prices of high quality iron ore products, with high iron content itself (improving yield in a steel plant) and lower impurity levels, requiring less coking coal and having a significantly reduced environmental impact.

The scale of the price premiums being paid for these high quality iron ore products has significantly exceeded market expectations. An example is the price being paid for high grade pellet feed concentrate products which are currently achieving US$23/t in price premium over and above the US$76/t Benchmark 62% Fe iron ore product CFR China (see table below). This results in a total price achieved of US$100/t, equating to a premium of approximately 30% for the higher quality characteristics of this product.

Taking a step further in the beneficiation chain, by converting high grade pellet feed concentrate into a pellet product, one should also note that the premiums being paid for conventional 65% Fe pellets have now increased to US$140/t resulting in the large iron ore pellet producers achieving a premium of 84% (US$64/t) above the benchmark iron ore price.

The reason for conducting the current product test work is to establish whether the EPP is capable of producing products which have the potential to secure premium prices reflecting their high quality characteristics, as outlined by the Table below ("Product Pricing for benchmark iron ore products (Delivered to North China Port) ").

It is important for shareholders to understand that there is a difference between the products that the Project Team is considering. Based upon test work carried out so far, the planned Zanaga pellet feed concentrate product would be a traditional product of a kind which is regularly provided by mining companies today. By contrast, the polymer based pellet that would be envisaged to be produced as part of the EPP initiative, is a novel product that has very little track record in the marketplace. Ascertaining the acceptability of this polymer pellet product with steel mills is key to determining the viability of incorporating this solution into any development plans for the EPP project. In fact it may be the case that the EPP project is considered best suited to a pure pellet feed concentrate production scenario until such time as polymer pelletisation is developed to an acceptable degree of market acceptance.

Product Pricing for benchmark iron ore products (Delivered to North China Port)

The following Table sets out the prices which iron ore products currently achieve and illustrates the premiums that are available by beneficiating Zanaga iron ore so as to produce a high grade pellet feed concentrate. The Table also illustrates the prices and premiums that can be achieved by converting high grade pellet feed concentrate into pellets, using conventional pelletisation processes.

	Total Realised Price	Premium (above 62% Fe Benchmark Iron Ore Product)
62% Fe CFR Benchmark Iron Ore Product	US$75.95	-
65% Fe CFR Pellet Feed Premium	US$98.60	US$22.65
Pellet Premium (65% Fe)	US$139.61	US$63.66

Source: Beijing CU Steel, 6 March 2018

2.5 Transportation and Logistics

The Zanaga Project Team has been evaluating potential road and rail routes from the Zanaga mine site to an exit port either in Pointe-Noire, RoC or Libreville, Gabon which would be used for the EPP project. A number of service providers have been approached to ascertain the cost of exporting via these routes.

A solution via Gabon would entail trucking approximately 170km from Zanaga to the rail siding in Franceville, Gabon. From there the ore would be loaded into wagons and sent by rail to the port of Libreville for export.

In RoC the Project Team are evaluating the viability of trucking material from the mine site to the Port of Pointe-Noire, or pursuing a combination of transportation solutions including road transportation to the railway line in Mossendjo, whereby it would be taken by rail to the port of Pointe-Noire.

Port access remains a key consideration for the Project Team. Preliminary discussions have taken place with both authorities at the Port of Libreville in Gabon and Port of Pointe Noire in Congo but additional work and discussions are required to establish a conclusive outcome. Key to the assessment of the solution will be the ability to secure port access and ensure capacity of the road and rail routes.

The Project Team continue to evaluate the options available and intend on reaching a conclusive decision on the best transportation route to market during Q2 2018.

2.6 Next steps

The Project Team has outlined a number of next steps. These are outlined below:

a) Complete the extensive product test work program in relation to the pellet feed concentrate

b) Continue the product test work program to assess the viability of using a Cold Pelletisation process to produce a pellet product using Zanaga pellet feed concentrate

c) Advance study work on mining, process, power and logistics solutions in order to define capital and operating cost elements of the EPP project

d) Conduct preliminary assessment of the marketing of the product

e) Present the outcomes to the Jumelles Board and to the shareholders of Jumelles, ZIOC and Glencore for further consideration

The purpose of these steps is to establish whether the EPP project is a viable proposition. If the Jumelles Board and the shareholders of Jumelles (ZIOC and Glencore) conclude that the EPP is a viable proposition, and support taking the EPP initiative forward, that would enable the Project Team to then engage with governmental bodies, regulators and contractors as to the permitting process and contractual structures. At the same time, the Zanaga project would then be in a position to commence discussions with various parties on potential financing solutions for the development of the EPP project.

3. Sample consolidation program

The Project Team intend to conduct further tests on (a) production of high grade pellet feed concentrate for the EPP project, (b) Cold Pelletisation test work, and (c) potentially bulk-scale pellet production to allow testing of Zanaga pellet feed concentrate or pellets (depending on the outcome of the test work) with global steel mills. As part of this mineral test work program, the Zanaga Project Team has consolidated the various samples from the Zanaga orebody into two main storage locations. This allows for efficient management and reduced delivery times of representative ore samples to the various test work programs underway.

Approximately 23 tonnes of representative samples from all layers of the Zanaga orebody have been assembled in the United Kingdom, with another 14 tonnes of material assembled at the Zanaga Project's camp at Lefoutou in the RoC, available to be sent to the laboratories where test work is being conducted.

4. 30Mtpa staged development project

4.1 Feasibility Study Review

Since the 2014 Feasibility Study ("FS") was produced, based on a 12Mtpa Stage One Project, industry input costs have dropped significantly. During 2015 and 2016 the Project Team, and the Jumelles shareholders, considered it premature to consider a re-costing of the FS. However, in light of developments in the market, it was considered sensible to obtain a "high level" indicative review of certain costs of the Project (including costs generated by exchange rate movements) by an external consultancy firm.

As a result, a decision was taken by Jumelles to commission an internationally recognised technical consulting group, to carry out a "high level" capex and opex review with no re-engineering. The review, which was considered in detail by the Jumelles Board in May 2017 indicated that as regards the costs of the 12 Mtpa Stage One Project, there was potential scope for capital cost savings of between 8% and 19% ($153m to $371m) and for operating cost savings of between 15% and 20%. This outcome was driven by potential reductions in costs of steel, oil, labour, contractor rates, freight, and weaker forex rates for our key input cost items versus the US Dollar.

To have better defined these potential savings to feasibility study levels of confidence, using cost estimates from the full suite of technical consultants who were engaged on the 2014 FS, would have cost an estimated US$180,000. The possibility of proceeding with such a workstream is kept under review as an option. Various inputs would of course have changed since Q2 2017, so the outcomes would be different from those referred to above. Any decision to proceed with such FS re-costing is largely dependent on whether industry sentiment is conducive to new partner investors entering into a serious dialogue on financing the 12Mtpa Stage One Project.

While encouraging to see the potential positive impact on the Zanaga Project's FS, and ultimately the potential improvement in the economic returns of the Project, it is important to recognise that these numbers are not yet costed to a high level of definition and are high level estimates that only indicate potential savings. In order to better define these estimates the Project Team would require further work to be conducted ahead of considering a full re-estimate of the 2014 Feasibility Study to updated feasibility study level. It is also important to be reminded that the quantum of capital required for the development of the Zanaga Project, even if significantly reduced, is still a significant financing challenge and requires a substantial level of conviction in the stability of long term iron ore prices.

As a result, the Project Team believe there are significant advantages available to the larger project by first pursuing the potential development of the EPP project and establishing its viability. Delivering a viable EPP project would result in benefits such as:

a) Derisking of a number of logistical matters which are required for the larger project, including export and import solutions

b) Establishment of product acceptance in the iron ore industry

c) Operating cash flows, some of which might be available for financing part of the equity component of the Stage One mining project

d) Development of operating skills and a larger operating presence at the Zanaga mine site

Furthermore, The Project Team will continue to engage in activity to ascertain opportunities for optimisation and improvement of the 30Mtpa staged development project and will update the market as these improvements develop.

4.2 Permitting status

In November 2017 ZIOC announced that the Zanaga Project had been awarded an Environmental Permit ("the Environmental Permit") by the Ministry of Environment of the RoC.

The Environmental Permit covers the Zanaga Project's first phase of development pursuant to its Mining Licence granted in August 2014, as outlined in the Zanaga Project's Feasibility Study ("Feasibility Study").

The receipt of the Environmental Permit was a significant milestone in the advancement of the Zanaga Project, together with the Zanaga Project's Mining Licence granted in August 2014, and Mining Convention (promulgated as a law of the RoC, following ratification by the Parliament of the RoC and publication in the Official Gazette in May 2016).

4.3 New Port development update

ZIOC notes that there is still discussion between the RoC Government, China EXIM Bank and China Road and Bridge Corporation (CRBC) on the financing and development plan for the new bulk materials port development north of Pointe Noire.

Advancement of the new port development could provide a key catalyst in allowing the Zanaga 12Mtpa Stage One development project to derisk and proceed towards seeking finance.

4.4 Next steps

The Project Team remains encouraged by improving iron ore market conditions for premium products alongside the potential reductions to capital and operating costs of the 30Mtpa staged development project. However, any development of the 12Mtpa initial Stage One remains dependent upon significant financing being secured. While financing for large greenfield projects has improved, the intention is to focus on achieving a viable EPP project as a key derisking opportunity for the Project. Subsequent financing of the larger project will be substantially improved if the Project can demonstrate existing operations in Republic of Congo and establish a presence for its iron ore products in the seaborne iron ore market.

5. Outlook

The global iron ore market continues to demonstrate better than expected fundamentals from a demand perspective, particularly in relation to pricing for higher quality products. The Zanaga Project Team remains encouraged by this and have received approval from Glencore and ZIOC and, now that the Funding Agreement for 2018 has been signed and is in force, additional funding to continue with work on the EPP project options with the intention of determining a pathway forward for the project.

We look forward to providing further information to shareholders as further milestones are achieved.