5 April 2011

 

Zanaga Iron Ore Company Limited

 

 

("Zanaga" or the "Company")

 

 

Zanaga Project Update

 

 

Zanaga (AIM:ZIOC), the iron ore exploration and development company with a significant interest in the Zanaga Iron Ore Project (the "Zanaga Project") in the Republic of Congo (Congo Brazzaville), is pleased to announce the following Mineral Resource update and recent developments at the Company and the Zanaga Project since Xstrata exercised its call option to acquire a 50 per cent. plus one share interest in Jumelles Limited in February 2011.

 

Highlights

 

·      Mineral Resource and Project Update

o  Total iron ore Mineral Resource at the Zanaga Project has grown to 4.0 billion tonnes from 3.3 billion tonnes with an increase in average grade to 33.9% Fe from 32.8% Fe, as reported in accordance with the JORC Code (2004)

o  Total of 91,155 metres drilled to date; 67,432 metres included in updated JORC statement

o  Mineral Resources derived from only 25km of the 47km orebody trend

 

·      Xstrata has taken management control of the Zanaga Project

 

·      Value Engineering Exercise ("VEE") underway - VEE results and pre-feasibility study ("PFS") results expected to be announced in Q3 2011

 

 

Zanaga Iron Ore Project Mineral Resource Grows to 4.0 billion tonnes at 33.9% Fe

 

Mineral Resource Statement

 

 

Classification	Tonnes (Mt)	Fe (%)	SiO2 (%)	P (%)	Al2O3 (%)	Mn (%)	LOI (%)
Measured	-	-	-	-	-	-	-
Indicated	1,720	36.3	41.4	0.046	2.70	0.10	1.20
Inferred	2,300	32.0	45.3	0.047	3.80	0.11	1.50
Total	4,020	33.9	43.6	0.047	3.30	0.11	1.40

Reported at a 0% Fe cut-off grade within an optimised Whittle shell representing a metal price of 120 USc/dmtu.

 

 

The Mineral Resource statement set out above is reported in accordance with the terms and definitions set out in the JORC Code (2004) and is reported as at 01 January 2011. As at this date, the total Mineral Resources constrained within an optimised Life of Mine (LoM) pit shell, determined using a long term price of USc120/dmtu, so as to constrain the Mineral Resource to material that has reasonable prospects of eventual economic extraction, amounts to some 4.0 Bt grading 33.9% Fe, 43.6% SiO2, 0.047% P, 3.3% Al2O3, 0.11% Mn and 1.4% LOI.  The table above presents the Indicated Mineral Resource, the Inferred Mineral Resource and the total Indicated plus Inferred Mineral Resource as at 01 January 2011 as estimated by SRK in March 2011, based on drilling to 24 November 2010. The Competent Person, Dr John Arthur of SRK, has given his permission for the publication of this information in the form and context within which it appears.

 

Geological Summary

 

The north-south oriented greenstone belt which hosts the Zanaga deposit has been defined by an airborne geophysical survey over 47 km in length, and is typically between 0.5 and 3.0 km in width.

 

The iron bearing lithologies within the Zanaga deposit are itabirites/BIF, interbedded with basic lavas. Typically, the itabirites consist of layers of iron-rich and quartz rich meta-sediments which alternate on a millimetre to centimetre scale and which have been crosscut by late intrusions and dolerite dykes.

 

The weathered itabirite units which overlie un-weathered ore are typical of iron ore deposits and characterised by an enrichment in iron due to a mass reduction and associated leaching of the silicate layers.

 

 

Further Drilling Progress

 

The updated JORC Mineral Resource is estimated on drilling completed on the Zanaga Project up until 24 November 2010 and includes an additional 24,726 metres to the drilling carried out for the Competent Person's Report published in the Company's AIM Admission Document last November. Please see the table below for an update on drilling completed to date.

 

Drilling programme summary

 

Drilling completed	Metres
at 30 Jun 2010 (IPO JORC resource)	42,706
30 Jun 2010 - 24 Nov 2010 (New JORC resource)	24,726
24 Nov 2010 to 2 April 2011	23,723
Total to date	91,155

 

 

Xstrata now managing the Zanaga Project

 

Following the exercise of its option in February 2011, Xstrata has taken management and shareholder control of the Zanaga Project. ZIOC is pleased to report that this has been achieved with no serious disruption to the testing/drilling programme at the Zanaga Project.

 

 

PFS and Value Engineering Exercise

 

On 8 February 2011, Xstrata and ZIOC jointly announced that work would commence on the Feasibility Study (FS), the first part of which would be a Value Engineering Exercise (VEE) building on the pre-feasibility work undertaken by Jumelles Limited.  A team of internal and external experts has now been assembled to conduct the VEE and investigate a broader range of long-term development opportunities for the Zanaga resource before the final option and scope for the full FS are finalised. 

 

The VEE commenced on 16th March 2011 and the initial workshops have generated and prioritised specific ideas and opportunities for the Zanaga Project, which have potential to impact positively on NPV, either through added value or reduced risk. These initiatives are being taken forward for further consideration.

 

In view of these plans, ZIOC now expects to be able to publish the completed PFS and VEE in Q3 2011.

 

 

About Zanaga Iron Ore Company Ltd

 

Zanaga Iron Ore Company Ltd (AIM: ZIOC), is a BVI registered company which has been focused on managing, developing and constructing a world class iron ore project capable of mining, processing, transporting and exporting iron ore concentrate from the Republic of Congo at full production.

 

Following the exercise of a call option to acquire a 50% plus one share interest in the Zanaga Project by Xstrata in February 2011, the principal business of ZIOC has now become the management of its interest in the Zanaga Project, which is now controlled by Xstrata at both a shareholder and director level, and monitoring the Feasibility Study which includes as a first phase the Value Engineering Exercise.

 

 

Further details about the Company can be found on the Company's website: www.zanagairon.com

 

Media contacts

 

ZIOC                                                                                                     

Corporate Development and                                                                                                      Andrew Trahar
Investor Relations Manager                                                                                                            020 7399 1105

                                               

 

Liberum Capital Limited

Nominated Adviser, Financial                                                             Chris Bowman, Christopher Britton
Adviser and Sole Broker                                                                                           and Christopher Kololian

                                                                                                                                                              020 3100 2000

 

Pelham Bell Pottinger

Financial PR                                                                                                  Charles Vivian James MacFarlane
                                                                                                                                                and Philippe Polman

                                                                                                                                                               020 7861 3232

 

 

Important Notice

 

The Competent Person who has reviewed the Mineral Resources as reported by the Company is Dr John Arthur (CEng MIMMM, CGeol FGS), who is an employee of SRK Consulting.  Dr Arthur is a Member of the Geological Society of London (CGeol) and of the Institute of Materials, Minerals and Mining (CEng) 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 "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves"(JORC Code 2004 Edition) and is a "Qualified Person" under National Instrument 43-101 - 'Standards of Disclosure for Mineral Projects'.

 

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include, but are not limited to, statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial position, liquidity, prospects, growth, strategies and expectations.

 

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the development of the markets and the industry in which the Group operates, may differ materially from those described in, or suggested by, the forward-looking statements contained in this Announcement. In addition, even if the development of the markets and the industry in which the Group operates are consistent with the forward-looking statements contained in this announcement, those developments may not be indicative of developments in subsequent periods. A number of factors could cause developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, changes in regulation or government, changes in its business strategy, political and economic uncertainty and other factors.

 

Any forward-looking statements in this announcement reflect the Company's current view 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 for Companies or applicable law, 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

 

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 averaging 30%Fe.
Concentrate	the clean product recovered through the beneficiation processes
Fe	Iron
Feasibility Study ("FS")	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
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
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
Pre-feasibility study ("PFS")	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
SiO2	Silica