15 August 2014

 

Mining Licence and Mining Convention Approved for Zanaga Iron Ore Project

 

Zanaga Iron Ore Company Limited ("ZIOC") (AIM:ZIOC) is pleased to announce that the Zanaga Iron Ore Project (the "Zanaga Project"), a joint venture with Glencore plc, has been granted a Mining Licence, and signed a Mining Convention ("the Convention") with the Government of the Republic of Congo ("RoC"). This follows the submission of a mining licence application in May 2014, which was supported by a positive Feasibility Study and a Social Environmental Impact Assessment ("SEIA").

 

The Zanaga Project is underpinned by one of the largest iron ore deposits in Africa, and is planned to be a low cost iron ore operation, which will be developed in two stages.

 

Stage One consists of a 12Mtpa operation, with Stage Two expanding the operation by a further 18Mtpa to produce a total 30Mtpa of high quality iron ore pellet feed product over a 30-year mine life. Transportation to port will be via a 366km slurry pipeline, where the product will be exported to the global sea-borne iron ore market.

 

The Project is expected to create widespread employment opportunities, develop substantial infrastructure, and significantly increase the GDP of the RoC economy, thereby supporting the country's objective of diversifying its economy and developing a mining sector that is sustainable over the long-term.

 

The Convention covers the proposed staged development of the Zanaga Project and sets out the fiscal and legal terms with respect to the construction and operation of the Zanaga Project pursuant to its Mining Licence. These are significant milestones as the Project advances toward development.

 

Clifford Elphick, Non-Executive Chairman of ZIOC, commented: "I am delighted that the Zanaga Project has received both its Mining Licence and Mining Convention. This is a demonstration of the Government of the Republic of Congo's firm commitment to developing the country's mining sector and testament to the Project's strong stakeholder relations, which have been established over the past six years.

 

The development of this world class iron ore project will have a significant beneficial impact on the RoC, both at the grassroots level around the Project site, as well as more broadly on the country's infrastructure and economy.

 

With the receipt of the Mining Licence, and confirmation of the Project's fiscal regime with the Mining Convention, the Zanaga Project is well positioned to advance through to the next stage of financing discussions, on which the Company plans to update shareholders in the coming months."

 

Mining Licence

 

The issue of the Mining Licence, following a Presidential Decree dated 12 August 2014, follows the submission of a mining licence application in May 2014, which was supported by a positive Feasibility Study and SEIA (announced on 8 May 2014).

 

The Mining Licence covers the proposed staged development of the Project, as described in the Feasibility Study. Under the Republic of Congo Mining Code, the holder of a mining licence has the exclusive right to mine the relevant minerals within the boundaries of the licence area for an initial period of 25 years. The mining licence may be renewed for further periods of 15 years each subject to further application.  

 

Key terms of the Convention

 

Duration of Mining Licence

·    25-year operating licence effective from the issue of the Mining Licence (August 2014) and renewable for successive terms of 15 years and in accordance with the Mining Code.

 

Royalties and Tax

·    A mining royalty of 3%

 

·    Identification of the specific taxes which will apply to the Project

 

·    A 5 year tax holiday following the construction phase and a corporate tax rate of 15%

 

Customs

·     Agreement of the customs regime which will apply to the Project, including exemptions from import duties and taxes on plant and equipment imported temporarily for project construction

 

Permitting

·     Agreement of the permitting regime which will apply to the Project

 

Land

·    Agreement of the process by which land will be made available for development of the project

 

State participation

·    The RoC will receive a non-dilutory 10% stake in the Mining Company

 

The next step is for the Congolese Parliament to approve the Convention as a law. The agreed timescale is to complete this process by 31 December 2014

 

For further information please contact:

 

 

Zanaga Iron Ore Corporate Development and Investor Relations Manager	Andrew Trahar +44 20 7399 1105
Liberum Capital Limited Nominated Adviser, Financial Adviser and Corporate Broker	Simon Atkinson and Christopher Britton +44 20 3100 2000
Bell Pottinger Financial PR	Daniel Thole and Marianna Bowes +44 20 7861 3232

 

 

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 joint venture partnership with Glencore plc. 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.