30 September 2024
INTERIM
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
Zanaga Iron Ore Company
Limited ("ZIOC" or the "Company")
(AIM: ZIOC) is pleased to announce its unaudited
interim results for the six months ended 30 June 2024 and an update
on post reporting period end events to 27 September
2024.
Highlights
· 30Mtpa staged development project ("30Mtpa
Project")
o 2024
Feasibility Study update process ("2024 FS update") completed,
delivering positive results and further underlining the robust
economics of the Company's 30 Mtpa Project (including both 12Mtpa
Stage One ("Stage One"), plus 18Mtpa Stage Two expansion ("Stage
Two")).
§ 12Mtpa
Stage One
- Capital investment of US$ 1.94 billlion
- Operating cost of US$ 31.5 / dmt FOB
- Net
Present Value of US$ 3.68 billion
- Internal Rate of Return of 26.2%
§ 18Mtpa
Stage Two optional expansion
- Capital investment of US$ 1.87 billion
- Operating cost of US$ 24.9 / dmt FOB
- Total combined Net Present Value of US$ 7.36
billion
- Internal Rate of Return of 28.2%
o Chinese
iron ore technical expert engineering firm ("Chinese EPC Partner"),
engaged to lead the 2024 FS update process, now undertaking an
optimisation study on the applicability of unique technology
relating to the Zanaga 30Mtpa Project ("Optimisation Study") with
the potential to provide further capital and operating cost savings
beyond the results of the 2024 FS Update.
o FEED
phase preparation
§ Preparation for the Front End Engineering and Design (FEED)
phase of the Zanaga Project is underway, including solicitation of
cost and schedule estimates for the various workstreams associated
with the FEED phase.
o Other
strategic initiatives
§ Port
MoU: Discussions underway with large scale port development
companies interested in participating in the development of port
infrastructure for the Zanaga Project.
§ Strategic partner initiative: Approaches received from
multiple parties interested in the development of the Zanaga
Project, particularly following the completion of the 2024 FS
update. Challenging global financial conditions caused delays to
engagement, however discussions continue and the Company will
provide further updates in due course.
· Early Production Project ("EPP Project" or "EPP") remains
under investigation
o Multiple production scenarios remain under investigation on
processing facilities and suitable logistics solutions, with a
focus on an export solution through the Republic of Congo
("RoC").
Corporate and Funding
· Shard Merchant Capital Ltd ("SMC") equity subscription
agreements ("Shard ESAs")
o Second SMC equity subscription agreement (ESA) update ("2023
ESA") completed, yielding total net proceeds of
£2,266,255
o New ESA signed with SMC on 29 June 2024 ("2024
ESA")
§ Following the successful completion of the 2023 ESA, ZIOC
entered into the 2024 ESA with SMC
§ Under
the terms of the 2024 ESA the Company will issue and SMC will
subscribe for up to 36 million ordinary shares of no par value in
the Company ("Subscription Shares") in up to three tranches of up
to 12 million shares each.
§ Pursuant to the 2024 ESA, SMC has undertaken to use its
reasonable endeavours to place the relevant Subscription Shares
that it has subscribed for and to pay to ZIOC 95% of the gross
proceeds of any such sales.
o Proceeds of the Shard ESAs applied to general working
capital, including the provision of further contributions to the
Zanaga Project's operations
· SMC block sale of 14,380,953 shares completed on 1 July at a
price of 5.25 pence per share ("Trade Price") (the "SMC Block
Sale"), and simultaneous subscription through the purchase of new
ordinary shares in the Company at the Trade Price by Glencore, of
approximately US$300,000 in aggregate; and Mr Clifford Elphick of
approximately US$20,000 in aggregate
· Entirety of the Company's remaining US$744k outstanding loan
to Glencore repaid on 10 July 2024
o ZIOC remains debt free, a positive step in enabling the
advancement of further discussions with potential strategic
partners.
· Cash balance of US$0.09m as at 30 June 2024 and cash balance
of US$0.08m as at 10 September 2024.
· Appointment of Shard Capital Partners LLP as joint Corporate
Broker in March 2024
· Resignation Glencore's appointee, Denis Weinstein, from the
Board of Directors due to his departure from Glencore
· Annual General Meeting to be held in December 2024, with the
requisite notice to be sent to shareholders in due
course.
Clifford Elphick, Non-Executive
Chairman of ZIOC, commented:
"During the first half of 2024,
ZIOC completed a successful technical evaluation process with its
Chinese EPC Partner to secure Chinese contractor pricing and to
update the cost estimates of the 30Mtpa Feasibility Study. This is
a completely different exercise to the study work conducted by
consulting firms in the past, as the Chinese EPC Partner is a
constructor and developer of iron ore mining projects, with
specific expertise in slurry pipelines and pellet feed concentrate
processing. We were delighted with the results and are pleased to
have demonstrated the continued robust economics of the Zanaga
Project.
Furthermore, port infrastructure
discussions continue, and strategic partners remain interested in
the Project. Volatile financial markets have delayed our engagement
with these entities but we continue to remain positive on the
potential to secure interest in the project in due
course.
Following the repayment of
Glencore's loan I am delighted that ZIOC is debt free. This is key
to supporting management's engagement with strategic partners, and
I look forward to the management team progressing the next phase of
this initiative."
Copies of the unaudited interim
results for the six months ended 30 June 2024 are available on the
Company's website at www.zanagairon.com
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
Panmure Liberum Limited
Nominated Adviser,
Financial
Scott Mathieson, John More
Adviser and Joint Corporate Broker
+44 20
3100 2000
Shard Capital Partners LLP
Corporate Broker
Damon Heath
+44 207 186 9952
About us:
Zanaga Iron Ore Company Limited (AIM
ticker: ZIOC) is an iron ore exploration and development company,
with the Company's flagship asset being its 100% owned Zanaga Iron
Ore Project located in the Republic of Congo, for which the
Government Mining Licence, Environmental Permit and Mining
Convention are all in place.
Business Review -
Operations
Iron Ore Market
The iron ore market has seen
volatility of late, with a significant reduction in benchmark
pricing due to concerns over growth in China. However, recent
stimulus from the Chinese government has renewed iron ore pricing
to the same levels to which we have become accustomed. China
continues to consume significant quantities of iron ore to feed its
substantial steel industry and initiatives to produce lower carbon
emission 'green steel' provide further support for premium pricing
related to high grade iron ore products. This provides further
impetus for the development of high grade iron ore projects such as
the Zanaga Project.
2024 FS update process
In 2023 the Company partnered with
a Chinese iron ore technical expert engineering firm ("Chinese EPC
Partner") as part of a process to update the economic evaluation of
the Zanaga 30 Mtpa staged development project.
Using the 2014 Feasibility Study's
("2014 FS") infrastructure designs, flowsheets and material take
off lists, direct and indirect cost estimates were updated to
current market pricing using Chinese major equipment and contractor
pricing for both phases of 12 Mtpa Stage One haematite ("Stage
One"), plus 18 Mtpa Stage Two magnetite expansion ("Stage Two")
projects, inclusive of buried concentrate pipeline and port
infrastructure.
A second phase of optimisation
work ("Optimisation Study") is under consideration and involves
investigating the potential to apply proprietary iron ore
processing technology that the Chinese EPC Partner possesses, with
the potential to provide further capital and operating cost savings
beyond the results of the 2024 FS Update.
The 2024 FS update was completed
to a (+/- 20% accuracy) full feasibility study level of definition,
with the following positive results:
§ 12Mtpa
Stage One
- Capital investment of US$ 1.94 billlion
- Operating cost of US$ 31.5 / dmt FOB
- Net
Present Value of US$ 3.68 billion
- Internal Rate of Return of 26.2%
§ 18Mtpa
Stage Two optional expansion
- Capital investment of US$ 1.87 billion
- Operating cost of US$ 24.9 / dmt FOB
- Total combined Net Present Value of US$ 7.36
billion
- Internal Rate of Return of 28.2%
The Company believes these
positive results provide much greater confidence in the Project's
economic feasibility in today's market and cost environment, and
with this, provides a key catalyst for potential strategic
investors to consider funding of the next logical Project phase,
being the front end engineering and design (FEED) program to
further define the Project's physical elements and risk abatement
strategies.
Port infrastructure discussions underway
Discussions are in progress with a
large port infrastructure development firm to investigate
opportunities to align the Zanaga Project with their planned port
infrastructure facilities in Pointe-Noire. Consideration is being
given to both of the following port infrastructure
initiatives:
·
Opportunity for expansion of the existing port of Pointe-Noire,
potentially enabling a larger solution for the EPP Project.
·
Potential development solutions for a large bulk mineral port
terminal capable of supporting the Zanaga 30Mtpa staged development
project.
EPP
Project
Whilst ZIOC's focus during 2023
was on advancing the 2024 FS update process, the Project Team
continued to undertake a process to evaluate the potential
development of an EPP Project that would be quicker to construct
than the larger 30Mtpa staged development project and would utilise
existing road, rail and port infrastructure.
The Project Team continued to
advance efforts to develop optionality relating to the viability of
the EPP Project. The Project Team has continued to evaluate the
potential for the EPP Project to operate as a standalone project,
or as an initial pathway to production during the construction
period of the flagship 30Mtpa Staged Development
Project.
Subscription Agreement with Shard Merchant Capital
Ltd
The Company has been pleased with
the success of the 2020 and 2023 ESA with SMC which has provided
the Company with access to funding through a relatively low cost
structure that minimised dilution to shareholders.
The proceeds received by the
Company from SMC pursuant to the Subscription Agreement have been
applied to general working capital, including the provision of
further contributions to the Zanaga Project's
operations.
As a result, the Company has
entered into a new 2024 ESA with SMC on 1 July 2024, post period
end. An overview of the two ESAs is provided below:
1) 2023
ESA
a. On 1 July
2023 ZIOC announced that the Company had entered into a
Subscription Agreement with SMC, a financial services
provider.
b. Under the
Subscription Agreement, the Company agreed to issue and SMC agreed
to subscribe for up to 36 million ordinary shares of no par value
in the Company ("Subscription Shares") in three tranches of 12
million shares each
c. Total
net proceeds of £2,266,255 were received from the
facility
2) 2024
ESA
a. As announced
by the Company, on 1 July 2024 the Company entered into a new
Subscription Agreement (the 2024 ESA) with SMC.
b.
Under the Subscription Agreement, the Company
will issue and SMC will subscribe for 36 million ordinary shares of
no par value in the Company ("Subscription Shares") in three
tranches of 12 million shares each (the First tranche was issued
immediately on 1 July 2024).
On 1 July, SMC completed a block
sale of 14,380,953 shares at a price of 5.25 pence per share
("Trade Price") (the "SMC Block Sale"), and simultaneously the
Company completed subscriptions of new ordinary shares at the Trade
Price with Glencore, of approximately US$ 300,000 in aggregate; and
Mr Clifford Elphick of approximately US$ 20,000 in aggregate. The
entirety of the Company's remaining US$744k outstanding loan to
Glencore at the time was repaid on 10 July 2024 as a result of this
receipt of funding. ZIOC remains debt free, a positive step in
enabling the advancement of further discussions with potential
strategic partners.
Appointment of joint Corporate Broker
In March 2024 ZIOC appointed Shard
Capital Partners LLP ("SCP") as Joint Corporate Broker, alongside
Panmure Liberum Limited, who are also the Company's Nominated
Advisor and Joint Broker. The addition of SCP to ZIOC's advisory
team provides further support to the Company, and additional
resources as the Company looks to advance to the next stage of
development on the Zanaga Project.
Director resignation
Following Denis Weinstein's
departure from Glencore, with effect from 29 September 2024, he
will cease to be a director of the Company. Glencore will consider
its right to appoint a replacement director to the Board of ZIOC in
due course.
Cash Reserves and Project Funding
As at 29 June 2024, ZIOC has
outlined a 2024 Project Work Programme and Budget as outlined
below.
At 30 June 2024 the Company had cash
reserves of US$0.09m The Company had cash reserves of US$0.08m as
at 10th September 2024.
In order to raise additional funding
the Company entered a Subscription Agreement with SMC (as described
above). The financing structure with SMC enables the Company to
access funding for the costs that the Company is expected to meet
in the near future. For illustrative purposes only, if the average
price at which SMC places the 36,000,000 shares was 5.49 pence
(being ZIOC's 90 day value weighted average share price as at 28
September 2023), the net proceeds received by ZIOC from such sales
would be approximately £1.98m. Based on the current cost base at
the Zanaga Project, the direct loan facility to Jumelles Ltd, the
current low corporate overheads of ZIOC, the agreed cash
preservation plan adopted by the Company (described below), the
Company's existing cash reserves and (on the basis of cautious
assumptions made by the Company in its funding model) the funds
expected to be obtained from the funding facility established by
the Subscription Agreement with SMC, the board of directors of ZIOC
(the "Board") believes that the Company will be adequately
positioned to support its operations going forward in the near
future. As the final cash amounts to be received for each tranche
of issued shares, and the timing of this receipt, are dependent on
SMC successfully selling the shares prior to transferring funds to
the Company, the Board is of the view that the going concern basis
of accounting is appropriate. However, the Board acknowledges that
there is a material uncertainty which could give rise to
significant doubt over the Company's ability to continue as a going
concern and, therefore, that the Company may be unable to realise
its assets and discharge its liabilities in the normal course of
business. Nevertheless, based on and taking into account the
foregoing factors, the Board are satisfied the Company will have
sufficient funds to meet its own working capital requirements up
to, and beyond, twelve months from the approval of these
accounts.
The Company continues to review the
costs of its operational activities with a view to conserving its
cash resources.
Financial review
Results from operations
The financial statements contain
the results for ZIOC for the first half of 2024. ZIOC made a loss
in the half-year of US$1.1m compared to a loss of US$0.4m in the
full year ended December 2023. The loss for the 2024 half-year
period comprised:
|
|
1 January to
30 June
2024
Unaudited
US$000
|
1 January to
30 June
2023
Unaudited
US$000
|
1 January to
31 December
2023
Audited
US$000
|
|
General expenses
|
(1,053)
|
(350)
|
(2,739)
|
|
Net foreign exchange
(loss)/gain
|
(5)
|
-
|
15
|
|
|
|
|
|
|
|
(Loss)/Gain before tax
|
(1,058)
|
(350)
|
(2,724)
|
|
|
|
|
|
|
Total Comprehensive
income
|
(1,058)
|
(350)
|
(2,724)
|
|
|
|
|
| |
General expenses of US$1.1m (2023:
US$0.4m), consisting of: Directors' fees of US$Nil (2023: US$Nil),
professional fees of US$0.2 (2023: US$Nil) and US$0.9m (2023:
US$0.4m) of other general operating expenses.
Financial position
ZIOC's net asset value ("NAV") of
US$84.8m is comprised of a US$85.3m exploration and evaluation
assets, US$0.7m of PPE, US$0.1m of cash balances and US$1.3m net
current liabilities.
|
|
30 June 2024
Unaudited
US$m
|
30 June 2023
Unaudited
US$m
|
31 December 2023
Audited
US$m
|
|
Exploration and
Evaluation
|
85.3
|
85.3
|
85.3
|
|
PPE
|
0.7
|
0.7
|
0.7
|
|
Cash
|
0.1
|
0.6
|
0.9
|
|
Other net current
assets/(liabilities)
|
(1.3)
|
(1.7)
|
(1.1)
|
|
Net assets
|
84.8
|
84.9
|
85.8
|
Cash flow
Cash balances have increased by
US$0.3m since 31 December 2022. Operating activities were US$0.5m
and the Glencore loan increased by US$0.8m.
|
|
30 June 2024
Unaudited
US$000
|
30 June 2023
Unaudited
US$000
|
31 December 2023
Audited
US$000
|
|
GBP Balances
|
0.1
|
0.1
|
0.6
|
|
USD value of GBP
balances
|
0.1
|
0.2
|
0.7
|
|
USD value of other
currencies
|
-
|
0.3
|
0.2
|
|
USD balances
|
-
|
0.1
|
-
|
|
Cash Total
|
0.1
|
0.6
|
0.9
|
Notes to the financial
statements
1. Business information and going
concern basis of preparation
As at 29 June 2024, ZIOC has
outlined a 2024 Project Work Programme and Budget as outlined
below.
At 30 June 2024 the Company had
cash reserves of US$0.09m The Company had cash reserves of US$0.08m
as at 10th September 2024.
In order to raise additional
funding the Company entered a Subscription Agreement with SMC (as
described above). The financing structure with SMC enables the
Company to access funding for the costs that the Company is
expected to meet in the near future. For illustrative purposes
only, if the average price at which SMC places the 36,000,000
shares was 5.49 pence (being ZIOC's 90 day value weighted average
share price as at 28 September 2023), the net proceeds received by
ZIOC from such sales would be approximately £1.98m. Based on the
current cost base at the Zanaga Project, the direct loan facility
to Jumelles Ltd, the current low corporate overheads of ZIOC, the
agreed cash preservation plan adopted by the Company (described
below), the Company's existing cash reserves and (on the basis of
cautious assumptions made by the Company in its funding model) the
funds expected to be obtained from the funding facility established
by the Subscription Agreement with SMC, the board of directors of
ZIOC (the "Board") believes that the Company will be adequately
positioned to support its operations going forward in the near
future. As the final cash amounts to be received for each tranche
of issued shares, and the timing of this receipt, are dependent on
SMC successfully selling the shares prior to transferring funds to
the Company, the Board is of the view that the going concern basis
of accounting is appropriate. However, the Board acknowledges that
there is a material uncertainty which could give rise to
significant doubt over the Company's ability to continue as a going
concern and, therefore, that the Company may be unable to realise
its assets and discharge its liabilities in the normal course of
business. Nevertheless, based on and taking into account the
foregoing factors, the Board are satisfied the Company will have
sufficient funds to meet its own working capital requirements up
to, and beyond, twelve months from the approval of these
accounts.
The Company continues to review
the costs of its operational activities with a view to conserving
its cash resources.
2. Accounting policies
The principal accounting policies
applied in the preparation of these financial statements are set
out below. These policies have been consistently applied to all the
periods presented, unless otherwise stated.
3. Basis of preparation
The condensed set of financial
statements has been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU.
In accordance with the AIM Rules
for Companies, the condensed set of financial statements has been
prepared in applying the accounting policies and presentation that
were applied in the preparation of the Company's published
consolidated financial statements for the year ended 31 December
2023. The comparative figures for the financial year ended 31
December 2023 are not the Company's statutory accounts for that
financial year. The 2023 accounts have been reported on by the
Company's auditors. The report of the auditors was (i) unqualified
and (ii) did not include a reference to any matter to which the
auditors drew attention by way of emphasis without qualifying their
report.
4. Segmental reporting
The Company has one operating
segment, being its investment in the Zanaga Project, held through
Jumelles.
5. Taxation
The Company is exempt from most
forms of taxation in the British Virgin Islands ("BVI"), provided
the Company does not trade in the BVI and does not have any
employees working in the BVI. All dividends, interest, rents,
royalties and other expense amounts paid by the Company, and
capital gains realised with respect to any shares, debt obligations
or other securities of the Company, are exempt from taxation in the
BVI.
The effective tax rate for the
Group is 0.00% (December 2023: 0.00%).
|
6. Loss per share
|
30 June
2024
Unaudited
US$000
|
30 June
2023
Unaudited
US$000
|
31 December 2023
Audited
US$000
|
|
Profit/(Loss) (Basic and diluted)
(US$000)
|
(1,058)
|
(350)
|
(2,724)
|
|
Weighted average number of shares
(thousands)
|
|
|
|
|
Basic and diluted
|
|
|
|
|
Issued shares at beginning of
period
|
644,989
|
593,374
|
593,374
|
|
Shares issued during the
year
|
-
|
-
|
51,615
|
|
Weighted average of new shares
issued
|
-
|
-
|
-
|
|
Weighted average number of shares
at end of period - basic
|
644,989
|
593,374
|
644,989
|
|
(Loss)/Earnings per share
(Cents)
|
|
|
|
|
Basic
|
(0.1)
|
(0.1)
|
(0.4)
|
|
Diluted
|
(0.1)
|
(0.1)
|
(0.4)
|
7. Related parties
The following transactions occurred
with related parties during the period:
|
|
|
Transactions for the period
|
|
|
Closing
balance
|
|
|
30 June
2024
Unaudited
|
30 June
2023
Unaudited
|
31 December
2023
Audited
|
|
30 June
2024
Unaudited
|
30 June
2023
Unaudited
|
31 December
2023
Audited
|
|
|
US$000
|
US$000
|
US$000
|
|
US$000
|
US$000
|
US$000
|
|
Funding:
Loan from Glencore to Jumelles
Ltd *
|
(1,163)
|
800
|
1,300
|
|
779
|
1,185
|
1,685
|
* Repayable on 17 July
2024