A healthy, AIM-listed mining stock, you say? I’ll have some of that! Zanaga Iron Ore Company LON:ZIOC has been an outstanding performer this year.
The BVI-registered exploration company has its main asset in the north of Congo-Brazzaville (neighbour to the larger Democratic Republic of Congo) and boasts a 30 million tonne per annum (mTpa) project with a life-of-mine of 30 years.
The project will be developed in two phases. Phase one a 12mTpa operation, that scales up by another 18mTpa. Unlike many AIM-listed miners Zanaga has all its ducks already lined up, with Mining Licence, Environmental Permits and Mining Conventions already agreed with the Brazzaville authorities and is currently looking at getting into revenue quickly on a smaller-scale basis with the easier-to-access tonnage and existing infrastructure, as it builds the main mineworks and installs the necessary infrastructure.
Phased development
The company said it is building the mine on a phased basis as it offers reduced capital costs, lower execution risk, and maximised capital returns for the project.
The company saw a massive ramp in its shares last week, after a none-too-shabby year to date. As we reported Zanaga was the day’s biggest riser, up 37% on 20th June, with sharply elevated levels of trade being seen for the stock and kept its moon-bound trajectory in the days that followed. As we went to press on this article there was no official news out, but whisperings of a partial or entire takeover of the business.
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The man at the top, Cliff Elphick is an old Africa hand, having founded and led Gem Diamonds LON:GEMD the diamond exploration and mining company with operations in Lesotho and Botswana. Prior to Gem Diamonds, Elphick also gained experience with Oppenheimer & Sons, De Beers and Anglo American.
Diamond mining is somewhat different to iron ore – one needs a tinkerer’s hammer, the other a sledgehammer – but the nous and know-how of how to deal with governments, regulators, suppliers and strategic partners when mining in an African context; how to plan a successful operating mine; and how to make money from holes in the ground, are what Elphick and the team he assembled – some from Gem Diamonds, others from the bulk end of the African mining equation, bringing experience from Glencore and BHP Billiton – have brought to Zanaga. A sober, experienced, successful team that can spin a realistic story and back up words with tangible operations on the ground.
The team is planning a slurry pipeline to evacuate the iron ore to port, a cost-effective solution that mean that big, yellow truck drivers will not have to be constantly swerving to avoid Gorillas in the Mist as they ship the iron through the Congolese rainforest.
Zanaga Iron Ore still in pre-production
It’s not all gravy though, Zanaga is still pre-production and in its last interim results for the period to end-June 2022, posted in September, the firm was still in the red with regards to the P&L column, booking a USD526,000 loss, but a bit lower than the USD733,000 it lost in the year previously. The board connections did their bit and Glencore LON:GLEN ponied-up USD1.2m in debt to ensure the project was full-financed for working capital through 2023. The promise to make small-scale ore deliveries will please the bookkeepers as the company breaks into revenue.
The big news was in November, where the Glencore connections paid their way once again, by gaining the Swiss trading house’s 50% share in the project meaning that Zanaga had complete control of the Brazzaville asset.It was at that point that the share price stepped onto the escalator, having bubbled around the 2p price range for most of the year, it suddenly jumped up to 5.35p and since then the company hasn’t looked back, especially given the remarkable performance in the first half of last week.
Shares in Zanaga opened trading on 26th June at 11.55p and the company has offered a 176.92% year-to-date return, and a whopping 514.63% one-year return with its shares ranging from 1.7p to 14.5p over a 52-week period. The company has a market capitalisation of GBP74.97m and around USD300,000 in the bank as at end-June 2022.
It will be an interesting week for the Congolese miner, making the stock ‘one to watch’.
