5 May 2021

ZANAGA PROJECT DEVELOPMENT COST UPDATE AND ORE RESERVE RE-STATEMENT

Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (AIM: ZIOC) is pleased to provide an update to shareholders following completion of the Zanaga Iron Ore Project ("Zanaga" or the "Project") re-costing exercise and Ore Reserve update.

Highlights

·    Zanaga Iron Ore Project (the "Project" or the "Zanaga Project") 30Mtpa staged development project (12Mtpa Stage One ("Stage One"), plus 18Mtpa Stage Two expansion ("Stage Two"))

o Initiative to update the cost estimates associated with the 12Mtpa Stage One Project, as outlined in the 2014 Feasibility Study, has been completed (the "FS Review")

o External independent technical expert engineering firms engaged by Jumelles Limited ("Jumelles"), the joint venture company between ZIOC and Glencore to oversee and provide input into the FS Review

o Objective is to ascertain the potential capital and operating costs associated with the construction of the Zanaga Project's 12Mtpa Stage One Project in the current market environment

o FS review indicates capital and operating cost estimates for the 12Mtpa Stage One development project remain approximately within the guidance levels outlined in the 2014 Feasibility Study ("FS"), specifically:

§ Capital expenditure expected to range between -2.9% and +2.5% of the 2014 Feasibility Study estimate, or to range between US$2,154m and US$2,275m. The lower range being dependent on the implementation of a number of potential savings opportunities identified by the independent technical experts.  (It needs to be noted that the potential savings opportunities so identified exclude and do not take account of any potential savings identified by the Zanaga Project Team from the implementation of a floating port solution, as announced in [XX June 2020])

§ 12Mtpa Stage One operating cost estimate estimated to be approximately in line with the estimates provided in the 2014 FS

·    Ore Reserve estimate re-statement

o The Zanaga Project's 2.1 billion tonne Ore Reserve estimate has been re-stated by SRK and updated based on market pricing as of 31 December 2020

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

"The Zanaga Project Team have worked with third party technical experts to re-assess the potential capital and operating costs that could be achieved in the current market for the 12Mpta Stage One project, as outlined in the 2014 Feasibility Study. The review of these figures indicates that the capital and operating costs estimated in 2014 remain valid in today's market environment, encouraging us to continue to pursue pathways available for development of the 30Mtpa staged development project, especially during the current high iron ore price environment."

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                                                          Scott Mathieson, Edward Thomas

Adviser and Corporate Broker                                                         +44 20 3100 2000

About us:

Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (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.

12Mtpa Stage One project cost review

The Zanaga Project Team has continually taken steps to monitor 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.

In light of the current positive market environment for high grade iron ore products, the Jumelles shareholders considered it sensible to obtain a "high level" indicative review of certain costs of the Project (including costs generated by exchange rate movements) by leading external technical consultancy firms without any re-engineering of the Project. Jumelles commissioned a report, led by Coffey Geotechnics Ltd (a Tetra Tech Company ("Tetra Tech")), to assess the potential capital and operating costs associated with Stage One of the 30mtpa staged development project outlined in the 2014 Feasibility Study ("FS"). Since the 2014 FS was produced, industry input costs dropped initially and have now returned to approximately the same levels seen in 2014. The initial review of the 2014 FS cost estimates indicates that capital and operating costs associated with the Stage One 12Mtpa project are broadly in line with the estimates provided in 2014.

The review indicates that as regards the costs of the 12 Mtpa Stage One Project, the capital cost is estimated to be between 2.5% above and 2.9% below the estimate provided in 2014. Operating costs are expected to be approximately in line with the estimate provided in 2014, with an estimated variance of + or - 2%.

It is encouraging to see that the costs estimated for the construction of the Zanaga Project remain in broad alignment with the costs outlined in the 2014 FS, especially as iron ore prices have risen substantially beyond the levels seen in 2014, ultimately providing the potential for significant improvement in the economic returns of the Project. It is important to recognise that these numbers have not yet been re-estimated to a high level of definition and are only estimates as to the potential costs of brining the project into production in the current market. 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.

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.

Overview of the process

Tetra Tech completed the high level, top-down review and update of the Zanaga Iron Ore Stage One Feasibility Study capital and operating cost estimates, dated March 2014.

The scope of the Feasibility Study and the associated estimates is the development of the Zanaga iron ore deposit, complete with infrastructure for transport to and seaborne loading. This update review looked at the capital and operating costs of the front-end engineering design (FEED) and Stage One 12Mtpa portions of the total project.

Since the March 2014 study, an increase in global and regional economic volatility, structural changes to the mining equipment supply chain, changes in the contracting market and changes in commodity consumption patterns has impacted the basis of the capital and operating cost estimates with varying effects.

The update relied on wide reading and a variety of information sources to define trends expressed as factored cost drivers. In some cases, direct re-pricing of major line items were indicated.  The estimate is expressed in US dollars (USD), but was significantly influenced by the exchange rate movements of the past decade, including impacts of the Central African franc (XAF), euro (EUR) and South African Rand (ZAR) rates of exchange to the USD.

The updated estimate is thus qualified and strongly impacted by global economic insights and relative cost movements rather than being a re-priced estimate. In 2017 Tetra Tech completed a similar cost estimate update. Instead of extrapolating that exercise to the current date, it was considered more prudent to return to the base estimate of 2014 as datum and avoid ambiguous composite updates.

Capital Cost

Capital expenditure is expected to range between -2.9% and +2.5% of the 2014 Feasibility Study estimate, or to range between US$2,154m and US$2,275m.

The lower estimate includes adjustments to the cost estimates for particular items which were viewed to be overstated in the 2014 FS, or possible to reduce based on optimised procurement and contracting to find lower costs without compromising quality. Furthermore, the piping estimate for the process plant had been factorised and appears significantly overstated, for which a further adjustment of 40% reduction was made. The other adjustments were limited to 80% of the adjustment percentage that was made in a review conducted in 2017, since the 2020 review already includes some consideration of the current market conditions.

Once the opportunity adjustments are applied, the estimate is that there would be a 2.9% reduction in the capital cost estimate provided by the 2014 FS.

It should be noted that any potential savings identified by the Project Team through the implementation of a floating port solution, as announced in [XX June 2020], have not been factored into the lower estimate provided above.

Operating Cost

The outcome of Tetra Tech's analysis showed that overall operating cost is likely to fall within the range of -2% to +2% when compared to the March 2014 estimate. As such, Jumelles regards the operating costs of the 12Mtpa Stage One project to be approximately in line with the estimate provided in the 2014 FS.

Reserves & Resource Statement

The Zanaga Project has defined a 6.9bn tonne Mineral Resource and a 2.1bn tonne Ore Reserve, reported in accordance with the JORC Code (2012), and defined from only 25km of the 47km strike length of the orebody so far identified.

Introduction

SRK Consulting (UK) Limited ("SRK") was appointed to provide consent to the re-statement of Ore Reserves for the Zanaga Project. The restatement confirms that the Ore Reserves as reported herein are reported in accordance with the terms and definitions of the JORC Code (as defined below) and are restated to be so with an effective date of 31 December 2020.

In rendering its opinion as expressed herein, SRK concluded:

·    That the 2014 Ore Reserves are reported in accordance with the terms and definitions of the "The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves published by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia, as amended (the "JORC Code (2012)"): www.jorc.org)";

·    That the 2014 Ore Reserves remain valid as of 31 December 2020

Ore Reserve Statement

This Ore Reserve estimate was prepared by independent consultants, SRK Consulting (UK) Ltd ("SRK") and is based on the 30Mtpa (product) Feasibility Study (announced by the Company on 8 May 2014, hereinafter the "2014 FS".

As stipulated by the JORC Code, Proven and Probable Ore Reserves are of sufficient quality to serve as the basis for a decision on the development of the deposit. Based on the studies performed, the mine plan as reported in the 2014 FS was reassessed in respect of the updated sales revenue, operating expenditure and capital expenditures and confirmed as at 31 December 2020 to be technically feasible and economically viable.

2020 Ore Reserves for the Zanaga Iron Ore Project

Notes:

Long term price assumptions are based on a CFR IODEX 65%Fe forecast of US$90tdry (USc138/dmtu) with adjustments for quality, deleterious elements, moisture and freight.

Discount Rate 10% applied on an ungeared 100% equity basis

Mining dilution ranging between 5% and 6%

Mining losses ranging between 1% and 5%

Note: The full Ore Reserve Statement is available on the Company's website (www.zanagairon.com)

Mineral Resource

Reported at a 0% Fe cut-off grade within an optimised Whittle shell representing a metal price of 130 USc/dmtu. Mineral Resources are inclusive of Reserves. A revised Mineral Resource, prepared in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2012 Edition) was announced on 8 May 2014 and is available on the Company's website (www.zanagairon.com).

Note: The figures shown are rounded; they may not sum to the subtotals shown due to the rounding used.

The Mineral 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.

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 47 km length and 0.5 to 3 km width.

The ferruginous beds are part of a metamorphosed, volcano-sedimentary Itabirite/banded iron formation ("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 ore (+60% Fe), classified as 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.

Competent Persons

The statement in this announcement relating to Ore Reserves is based on information compiled by Dr Iestyn Humphreys, FIMM, AIME, PhD who is a Corporate Consultant, and Practice Leader with SRK. He has sufficient experience 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 as defined in the JORC Code (2012). The Competent Person, Dr Iestyn Humphreys, confirms that the Ore Reserve Estimate is accurately reproduced in this announcement and has given his consent to the inclusion in the report of the matters based on his information in the form and context within which it appears.

The information in the 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.

Definition of JORC Code

The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012) 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.