30 August 2019
Management Incentivisation Scheme
Zanaga Iron Ore Company ("ZIOC" or the "Company") (AIM:ZIOC) announces that the Board of ZIOC has approved an incentivisation scheme for members of the ZIOC management team (excluding the directors).
In July 2014, following the completion of the Zanaga 2014 Feasibility Study (2014 FS), the Company introduced a 'one-off' incentivisation scheme for certain directors and management. Subsequently, there occurred a very significant downturn in the global iron ore market. As part of its reaction to this worsening economic climate, the Company introduced a streamlining and cost-savings policy in 2016 which impacted on the arrangements between the Company and the ZIOC management team.
In view of the significant work being undertaken on the Zanaga Project by the ZIOC management team in relation to investigations into the potential for delivery of an early production project (EPP) solution as well as options for enhancement of the 30Mtpa staged development Project, the ZIOC Board has concluded that it is important to establish an appropriate incentivisation package for the ZIOC management team. The Company's aim is to provide a fee structure which closely aligns the interests of the management team with those of shareholders; complements the strategic goals and performance of the Company; and is competitive by market standards.
The incentivisation scheme for three members of the management team (the "Team Members"), approved by the ZIOC Board, comprises two components: (a) a milestone based Long Term Incentive Scheme (LTIP) for share options; and (b) a short term retention fee package. These are described in more detail below:
A. Long Term Incentive Scheme
The Board has approved the grant of 13,633,335 share options over ordinary shares of no par value in the Company ("Ordinary Shares") to the Team Members ("Share Options") to incentivise them to achieve certain new performance targets. The Share Options are being made by way of individual share option agreements.
The Share Options have the following vesting terms and exercise prices:
· Discrete packages of the Share Options will vest on the achievement of performance targets relating to any of the following: (a) the approval by Jumelles of the Early Production Project (EPP), including its potential technical and financial feasibility, as the basis for advancing the development of the Zanaga Project ; (b) raising finance either for ZIOC or separately for the development phase of the Zanaga Project; or (c) the completion of a significant merger or acquisition involving ZIOC or any member of the Jumelles Group acquiring a material interest (as determined by the ZIOC board) in a third party or a third party acquiring a material interest (as determined by the ZIOC board) in ZIOC or a member of the Jumelles Group.
· Where a performance target is achieved, 50% of the relevant Share Options will vest and the remaining 50% will vest one year after.
· All the Share Options have an exercise price of 0.01p (one hundredth of one penny) per Ordinary Share.
· All unvested Share Options will vest on the occurrence of certain events, such as a change of control of ZIOC.
· All of the Share Options, once vested, are exercisable within seven years of the date of award.
Total Shares Under Option
Following the award as disclosed in this announcement, in aggregate the newly issued Share Options and existing unexercised share options will represent 6.44% of the Company's current issued share capital.
B. Retention Fee Package
The Board has also approved a retention fee package as an additional part of the overall fee structure agreed between the Company and the Team Members. This consists of an additional amount (the "Retention Fee") to be determined on a one-off basis in both October 2019 and December 2020. The Retention Fee for 2019 will be calculated on the basis of a number of potential new Ordinary Shares in ZIOC ("Reference Shares") which are notionally attributed to the Team Member concerned.
· The calculation of the Retention Fee for each Team Member in respect of the 2019 calendar year is due to take place in October 2019.
· Each Team Member has agreed with ZIOC that he will use the Retention Fee due to him in October 2019 to subscribe for new Ordinary Shares in ZIOC at the market price of such shares at the relevant time. The number of the new Ordinary Shares so subscribed will be equal to the number of Reference Shares notionally attributed to him for the calendar year 2019. If such Retention Fee does not become payable to the Team Member, the subscription for new Ordinary Shares in ZIOC by him described above will not take place.
· The total number of new ZIOC shares which could be issued in 2019 in respect of the arrangements described above is 2,833,334 Ordinary Shares, representing approximately 1.00% of the Company's current issued share capital. A further announcement will be made upon the issuance of these Ordinary Shares.
· The arrangements for the payment of a Retention Fee for 2020 are broadly similar to those for 2019 described above, except that the amount of such Retention Fee will reduce pro rata if the Team Member's arrangement with the Company ceases before or during 2020. The total number of new ZIOC shares which could be issued in 2020 is yet to be determined and further announcements will be made at the relevant time.
Clifford Elphick, Non-Executive Chairman of ZIOC, commented:
"It is important that the Company's management team are appropriately incentivised to secure the milestones and objectives established by the ZIOC Board and to align their interests closely to those of shareholders. We are pleased with the work being undertaken by the ZIOC management team as well as the opportunity for this work to advance the potential development phase of the Zanaga Project."
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The Zanaga Iron Ore Company Limited LEI number is 21380085XNXEX6NL6L23.
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 Andrew Godber
Adviser and Corporate Broker and Edward Thomas
+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 (Congo Brazzaville) through its investment in its associate Jumelles Limited. 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.