NOT FOR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN
18 November 2010
Zanaga Iron Ore Company Limited
("Zanaga" or the "Company")
First Day of Dealings and £62.1m (US$100m) Placing of New and Existing Shares
Zanaga Iron Ore Company Limited, the iron ore exploration and development company with operations in the Republic of Congo (Congo Brazzaville), is pleased to announce a placing of new and existing shares which has raised gross proceeds of £62.1m (US$100m) through the placing of 39,815,258 ordinary shares (the "Placing") at 156p each (the "Placing Price"). The Placing, which was conducted by Liberum Capital Limited, who acted as Nomad, Financial Adviser and Sole Broker to the Placing, comprised the issue by the Company of 19,907,629 new shares and the sale of 19,907,629 sale shares by certain existing shareholders. The placing of the 19,907,629 new shares by the Company will raise £31.06m ($50m), before expenses. Admission of the entire issued share capital of the Company to trading on AIM is expected to commence at 8.00am today.
Highlights:
· Admission to trading on AIM with a market capitalisation of £437m at the Placing Price
· 3.34 billion tonne Mineral Resource (reported in compliance with the terms and definitions of the JORC Code 2004) at an average grade of 32.8% FeT which includes 843 million tonnes of haematitic itabirite at an average grade of 38.5% FeT, and significant resource upside potential
· PFS funded by Xstrata option premium of up to US$106m
· PFS expected to be finalised by the end of Q1 2011 to be followed by a Feasibility Study ("FS") to bankable standards
· Xstrata have the option (Option 1) to purchase 50% plus 1 share in Jumelles Limited, an operating subsidiary of Zanaga. If Option 1 is exercised, Xstrata will fund the completion of a FS to bankable standards
· Potential to produce a high quality 65% Fe sinter product and a 67% Fe concentrate product
· Experienced Board. Operations team led by Colin Harris, previously project director of Rio Tinto's Simandou project in Guinea
Overview of Zanaga
Zanaga Iron Ore Company Limited (AIM: ZIOC), a British Virgin Islands registered company, is focused on the management, development and construction of a world class iron ore project, located in the south west of the Republic of Congo (Congo Brazzaville). Zanaga owns, through its 100% owned subsidiary Jumelles Ltd, 100% of Mining Project Development Congo S.A.U. Mining Project Development Congo owns two exclusive exploration licences, each covering 500km², the Zanaga-Madzoumou Exploration Licence and the Zanaga-Bambama Exploration Licence ("Zanaga Exploration Licences").
The Company has a large scale Mineral Resource of approximately 3.34 billion tonnes at an average grade of 32.8% FeT. This is comprised of 843 million tonnes of haematitic itabirite with an average grade of 38.5% FeT and 2.49 billion tonnes of magnetite with an average grade of 30.82% Fe. This resource has been defined as a result of drilling that has taken place on only 25km of an indicated 47km strike of magnetite mineralisation. Management therefore believes that the Zanaga Project offers significant opportunity to further expand the resource base providing substantial upside potential.
The Company is focused on developing the resource base at the Zanaga Project, with annual output targeted to be 45Mtpa of iron ore concentrate once full capacity is reached. Based on metallurgical test work to date, the Company is targeting production of two high quality products, namely: a 65% Fe sinter product and a 67% Fe concentrate product, both with low deleterious elements. It is expected that the Company's products will be transported via a 350km railway line the Company plans to construct and then exported from a new port facility the Company plans to build near Pointe Noire.
The Company has reached an advanced stage of exploration with a prefeasibility study ("PFS") on the Zanaga Project expected to be finalised by the end of Q1 2011. Following completion of the PFS, the Company aims to commence a bankable study ("FS") to further define the technical and economic viability of the Zanaga Project to international bankable standards, before moving towards construction and production.
Xstrata plc currently holds, through one of its subsidiaries ("Xstrata"), an option to purchase a 50% plus one share interest in Jumelles Ltd ("First Option"). As consideration for this First Option, Xstrata has committed up to US$106m to Jumelles Ltd, which option premium is being used to complete the PFS for the Zanaga Project. On completion of the PFS, Xstrata has 45 business days in which to exercise the First Option, the consideration for which will be to fund a FS, costing a minimum of US$100m, to be delivered in accordance with Xstrata's internal guidelines and to international best practice standards. Within 90 days of completion of the FS, Xstrata has a right to acquire the Company's remaining 49.99% interest in Jumelles Ltd and the Zanaga Project ("Second Option") at a price based on net present value, as determined in accordance with the relevant Second Option agreements. Shareholders should be aware that the exercise of this right on the Second Option is not subject to Shareholder approval.
Should Xstrata elect not to exercise its First Option, the Company intends to use the Placing proceeds to continue development of the Zanaga Project in order to fulfil its agreed work programme expenditure commitments under the Zanaga Exploration Licences and other relevant laws and regulations of the Republic of Congo, although the Company would need to source additional funds in order to complete a FS.
Further details about the Company can be found on the Company's website: www.zanagairon.com
Clifford Elphick, Chairman of Zanaga Iron Ore Company commented:
"We are extremely pleased to have successfully listed on AIM with such a high level of interest from the investment community. This marks an important milestone for Zanaga at a critical point in the Company's development as we look to advance the project through a feasibility study to bankable standards. We now have a strong financial base and an elevated profile from which to move the world class Zanaga Iron Ore Project forward to production.
We have built an extremely strong management team, with a great depth of expertise in developing large scale iron ore exploration projects in Africa. Together with a potential major mining company partner of Xstrata's standing that is committed to building an iron ore division, we believe that we are now extremely well placed to create significant value for our shareholders."
Enquiries:
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Zanaga Iron Ore Company Limited Andrew Trahar
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020 7399 1105 |
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Liberum Capital Limited Nominated Adviser, Financial Adviser and Sole Broker Chris Bowman, Ellen Francis and Christopher Britton
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020 3100 2000 |
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Pelham Bell Pottinger Financial PR Charles Vivian, James MacFarlane
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020 7861 3232 |
Important Notice
The Competent Person who has reviewed the Mineral Resources as reported by the Company is Dr John Arthur, CEng, FGS, MIMMM, PhD, who is an employee of SRK. He is a Member of the Institute of Materials, Metals and Mining ("IMMM") which is a 'Recognised Overseas Professional Organisation' ("ROPO") included in a list promulgated by the Australian Stock Exchange from time to time. Dr John Arthur is a mining geologist with 21 years experience in the mining industry and has been involved in the reporting of Mineral Resources on various properties internationally during the past five years. The Mineral Resources as reported above are reproduced from a technical report prepared by SRK Consulting (UK) Limited entitled "An independent competent persons' report on the mineral assets of Zanaga Iron Ore Company Limited" which was published in the Company's AIM Admission Document dated 17 November 2010.
This announcement has been issued by, and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Liberum Capital Limited or by any of its affiliates or agents as to or in relation to, the accuracy or completeness of this announcement, or any other written or oral information made available to or publicly available to any prospective investor or its advisers, and any liability therefore is hereby expressly disclaimed.
Liberum Capital Limited is acting for the Company and no one else in connection with the Placing and Admission and will not be responsible to any other person for providing the protections afforded to their respective clients, or for providing advice in relation to the Placing or in relation to the contents of this announcement or any other transaction, arrangement or matter referred to herein.
This document does not constitute or form a part of any offer for sale or subscription or any offer to buy or subscribe for any securities and neither this document nor any part of it forms the basis of or may be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.
The information contained herein is not for publication or distribution, directly or indirectly, in or into the United States, Canada, Australia, the Republic of South Africa or Japan or any jurisdiction in which such publication or distribution would be unlawful. No public offering of securities of the Company is being made in the United Kingdom, the United States or elsewhere.
The information contained herein is not for publication or distribution in or into the United States. The information contained herein is for informational purposes only and does not constitute an offer of securities for sale in the United States, nor may the securities be offered or sold in the United States absent registration or an exemption from registration as provided in the U.S. Securities Act of 1933, as amended, and the rules and regulations thereunder. There is no intention to register any portion of the offering in the United States of America or to conduct a public offering of securities in the United States of America. The securities mentioned herein (the "Securities") have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or the laws of any state. The Securities may not be offered or sold in the United States or to or for the account or benefit of US Persons (as such term is defined in Regulation S under the Securities Act) absent registration or an applicable exemption from the registration requirements of the Securities Act. No money, securities or other consideration is being solicited and, if sent in response to the information contained in this document, will not be accepted.
Any forward-looking statements in this announcement reflect the Company's current view (assuming Admission has occurred) with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Group's operations and growth strategy. Subject to the requirements of the AIM Rules, the Company undertakes no obligation publicly to release the result of any revisions of any forward-looking statements in this announcement that may occur due to any change in the Company's expectations or to reflect events or circumstances after the date of this announcement.
Glossary
Bankable Standards a feasibility study in which technical feasibility and economic viability has been demonstrated to a sufficient level to enable project financing with limited conditions precedent
Concentrate the clean product recovered through the beneficiation processes
Fe iron
FeT total iron ore
Fe2O3 iron oxide (ferric)
Fe3O4 iron - magnetite
Feasibility Study a technical and economic study which demonstrates the technical and economic viability of a mining project to within a range of accuracy of 15% and to an appropriate degree of detail such that a decision for proceeding to the project development stage may be made without substantive revision to either scope or scale
Haematite an oxidised mineral of iron (Fe2O3)
Itabirite metamorphosed banded iron formation
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
Magnetite a magnetic greyish black iron mineral (Fe2O4)
Metallurgical testwork laboratory testwork undertaken to determine the most appropriate process route for the economic recovery of valuable minerals/metals
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
Pre-feasibility study a technical and economic study which demonstrates the technical and economic viability of a mining project to within a range of accuracy of 25% and to an appropriate degree of detail such that a decision for proceeding to the project development stage may be made without substantive revision to either scope or scale
Sinter an aggregate which is normally produced from relatively coarser iron ore fines which is used as an input/raw material in blast furnaces
Strike the course or bearing of the outcrop of an inclined bed, vein, or fault plane on a level surface; the direction of a horizontal line perpendicular to the direction of the dip