TIDMZIOC
RNS Number : 4318W
Zanaga Iron Ore Company Ltd
11 December 2019
11 December 2019
Framework agreement between Jumelles Limited and China Overseas
Infrastructure Development And Investment Corporation Limited
Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (AIM:
ZIOC) is pleased to announce that a Framework Agreement ("FA") has
been entered into between China Overseas Infrastructure Development
And Investment Corporation Limited ("COIDIC") and Jumelles Limited
("Jumelles") (together the "Parties") the joint venture company
between ZIOC and Glencore, for potential cooperation between them
in respect of mining related infrastructure for the Zanaga Iron Ore
Project (the "Zanaga Project") located in the Republic of
Congo.
The FA reflects the Parties' intention to explore co-operation
opportunities for progressing the infrastructure and financing
requirements for the Zanaga Project, both in the near term and the
longer term, and its integration with objectives of the
Pointe-Noire Special Economic Zone ("SEZ") as well as other
opportunities relating to the development of the Zanaga
Project.
Highlights
-- Framework Agreement outlines the process for co-operation
between the Parties in the development of mining related
infrastructure for the Zanaga Project
-- Infrastructure to be evaluated will include rail, port,
power, processing plant, road haul, and mining activities relating
to the Zanaga Project
-- Priority initiative is to assess the option for development
of approximately 2Mtpa of iron ore production at the Zanaga Project
which will be delivered to the Pointe Noire SEZ in the Republic of
Congo in order to support the proposed development of a steel
production facility
-- The parties intend to develop a joint initiative to introduce
funding partners for the Zanaga Project and its related
infrastructure, with the aim of securing debt and equity
financing
Background
The Zanaga Project is a project for the development and
exploitation of the Zanaga iron ore resource comprising iron ore
deposits located in the Zanaga mining licence area, in the western
part of the Republic of Congo in the Lékoumou Department. It
represents one of the largest iron ore reserves in the world with
6.9 billion tonnes of iron Ore Resource and 2.1 billion tonnes of
iron Ore Reserve. The Project is planned to be divided in several
stages, namely from 1Mtpa up to 30Mtpa. The Zanaga Project is
investigating and preparing the option to commence production in
the near-term with 1-5Mtpa of iron ore being transported via
upgrades to existing road, rail and port infrastructure.
COIDIC is a company specialized in the early stage development
of energy and infrastructure projects in Africa, including
Congo-Brazzaville, and in regions of China's Belt and Road
Initiative. COIDIC's Founding shareholders include some of China's
leading institutions such as China-Africa Development Fund
(CADFund), a subsidiary of China Development Bank, as well as China
Gezhouba Group International Engineering Co. Ltd., China Civil
Engineering Construction Corporation (CCECC), China ENFI
Engineering Corporation (China ENFI) specialized in mineral and
mining, China Telecom International, Hebei Construction &
Investment Group Co Ltd. (HCIG), and Changjiang Institute of
Survey, Planning, Design and Research.
COIDIC has entered into arrangements with the Republic of Congo
regarding the development of the Pointe-Noire SEZ and its related
infrastructures facilities, including plans for the development of
a Multi-Purpose Terminal ("MPT") within the existing port of Pointe
Noire and a connecting highway between the SEZ and MPT.
Objective and scope of co-operation
COIDIC and Jumelles intend to explore developing, financing,
engineering and operations solutions regarding the Zanaga Project
and its related infrastructure projects, including logistic
solutions (such as the use of the MPT being developed by COIDIC in
Pointe-Noire), as well as the potential introduction of a steel
manufacturing plant into the SEZ and/or export of direct reduced
iron.
Priority scope
A key objective of this FA is to enable both Parties to
cooperate closely in relation to the proposed development of the
Zanaga Project, targeting from 1 to 5 million tonnes of iron ore
production annually (1-5 Mtpa) as a near-term development option.
As part of this objective and as a priority, the Parties intend to
explore the development of an initial production solution that will
involve the construction of a steel mill plant in the Pointe Noire
SEZ capable of taking delivery of approximately 2Mtpa of iron ore
from the Zanaga Project. The scope of the work to be considered
includes logistics and civil infrastructure, stockpiling facilities
for iron ore, port facilities for the export of Zanaga iron ore not
utilized locally in the SEZ area from Pointe Noire via COIDIC's
proposed MPT and logistical solutions for the export of Zanaga iron
ore to Chinese steel mill customers.
Long Term Scope
Construction and operation: the Parties also intend to explore
specific aspects of the 30Mtpa staged development of the Zanaga
Project, comprising Stage One production of 12Mtpa and subsequent
expansion to 30Mtpa. These aspects include mining and processing
the Zanaga orebody, logistics and civil infrastructure (including
the pipeline, port, rail (where applicable) and roads) and power
infrastructure (including COIDIC's planned SEZ natural gas power
plant as well as hydro power solutions under development or being
planned by COIDIC's partners).
It is the intention of the Parties mutually to utilize the
expertise of COIDIC's shareholders acquired in delivering large
scale infrastructure projects in an accelerated manner, with the
aim of significantly reducing the investment needs of the Zanaga
Project and shortening the construction duration of the
Project.
Equity and Debt financing: it is the intention that with
COIDIC's assistance, seeking and obtaining equity and debt
financing for the Zanaga Project could be facilitated. The parties
intend to develop a joint initiative to introduce funding partners
for the Zanaga Project and its related infrastructure, with the aim
of securing debt and equity financing.
Aspects of the cooperation
The Parties envisage that if discussions progress in a mutually
beneficial way, there is the opportunity for them to agree and
enter into a number of agreements, including separate Joint
Development Agreements, for specific aspects of the relevant area
of the Zanaga Project and also a capacity agreement with MPT
(including tariff provisions and usage of port facilities).
The cooperation could also include the generation of technical
and other studies for the development of the Zanaga Project and its
infrastructure needs and developing an investment model for the
Project.
General
Save in limited circumstance, the term of the FA is for two
years and this can be extended by agreement of the Parties. With
the exception of certain provisions relating to, for example, the
duration and termination of the FA and the process of interfacing
with COIDIC and its shareholders, the FA is not legally
binding.
Early Production Project
As a result of the appraisal work being undertaken on the EPP
Project, significant progress has been made in taking steps towards
potentially repositioning the Zanaga Project to be developed
initially on the basis of a smaller start-up with a relatively low
capital cost investment requirement. This appraisal work, including
an assessment of the economic viability of the EPP, is ongoing and
is subject to the review of the Jumelles board. The objective is to
establish a viable way of bringing the Zanaga resource into
production at an early date.
As a result of the process underway with COIDIC for the
advancement of infrastructure projects in the Republic of Congo,
including the Pointe Noire SEZ, the Zanaga Project Team have been
assessing the opportunities that might arise in relation to these
initiatives in the context of the advancement of the infrastructure
needed in relation to the Zanaga Project.
The EPP Project, if utilising an export route through Gabon, has
typically been constrained by maximum available tonnage of 1Mtpa on
the Transgabonais railway line. However, the COIDIC initiative has
the potential to unlock larger logistics transportation capacity
within Republic of Congo and as a result the Zanaga Project team
are working to adjust the EPP Project's economics in light of the
potential for greater production scale and potentially lower
operating costs through a Congo logistics solution.
In light of the engagement with COIDIC on a Congo logistics
route for the Zanaga Project, the Company intends to provide an
update to shareholders in Q1 2020 on the progress relating to these
discussions and the options being evaluated.
Clifford Elphick, Non-Executive Chairman of ZIOC, commented:
"We are delighted to announce that a process is underway with
China Overseas Infrastructure Development And Investment
Corporation Limited to advance the Zanaga Iron Ore Project.
COIDIC is undertaking a transformational initiative by
developing the Pointe Noire Special Economic Zone, which has the
potential to provide critical infrastructure to the Republic of
Congo.
The Zanaga Project Team is impressed with the extensive
experience that COIDIC and its shareholders have in developing
large scale infrastructure projects in Africa including railways,
process plants, power plants, ports, and transshipping
operations.
The discussions to be undertaken with COIDIC could potentially
substantially improve the development prospects of both the EPP
Project as well as the 30Mtpa staged development project through
debt and equity financing solutions, accelerated development
timeframes for key logistics infrastructure, and collaboration on
power and port alternatives associated with the Zanaga Project.
We look forward to updating our shareholders on these exciting
developments as they progress."
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
Liberum Capital Limited
Nominated Adviser Andrew Godber, Edward Thomas
and Corporate Broker +44 20 3100 2000
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 investment in its
associate Jumelles Limited. 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.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
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END
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