Zanaga Iron Ore Co: Study Confirms Project Feasibility, Railway

Zanaga Iron Ore Co. Ltd. (ZIOC.LN), the joint venture partner of mining group Xstrata PLC (XTA.LN) in the Zanaga Iron Ore Project, Monday said a study has confirmed the project's economic viability and identified an alternative to a railway linking the mine to the group's proposed port.

Based in the Republic of Congo, Zanaga--which holds a 50% less-one-share stake in the project with Xstrata--said the completion of the study and its findings are an important initial stage in measuring the project's feasibility.

The study, or value engineering exercise, investigated a range of development opportunities for the project to identify the most attractive final development option.

Zanaga said the study identified a slurry pipeline producing a high-grade iron pellet feed as an alternative to the planned railway which would link the mine to the port which is 350 kilometers away.

Xstrata intends to commit to a pipeline study to determine which option will be taken to a final feasibility review.

Zanaga also said the joint venture partners are investigating whether there is another suitable strategic partner who can further enhance the long-term value of the Zanaga Project, including iron ore off-take on commercial terms, access to construction financing and construction expertise.

However, Zanaga said Xstrata intends to fully retain its interest in the project.

At 0815 GMT, Zanaga shares were flat at 93.5 pence in a slightly higher Alternative Investment Market--up 0.1%.

-By Iain Packham, Dow Jones Newswires; 44-20-7842-9269; iain.packham@dowjones.com

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