What's Happening?
Zanaga Iron Ore Company, an AIM-listed entity, has announced a strategic transaction with Red Arc Minerals (RAM), a private investment company. This transaction focuses on the development of high-grade iron-ore assets in Congo-Brazzaville. Zanaga and its subsidiary, Jumelles, have signed a binding term sheet for RAM's proposed investment in the Zanaga iron-ore project. The investment aims to complete essential technical work to advance the project towards a final investment decision (FID). The transaction is structured in two tranches: the first involves a $25 million investment to advance the project and acquire a 20% interest in Jumelles, while the second tranche, at RAM's option, involves a $125 million investment to acquire an additional
67.5% ownership. The transaction also includes a royalty agreement for Zanaga on iron-ore concentrate sales.
Why It's Important?
This strategic investment is significant as it provides the necessary capital to advance the Zanaga iron-ore project, potentially increasing its value for shareholders. The transaction is designed to be non-dilutive, preserving shareholder equity while securing a pathway to production. The involvement of RAM, backed by industry leaders, underscores confidence in the project's potential. This development could enhance the economic landscape in Congo-Brazzaville by advancing a major mining project, potentially creating jobs and contributing to local economic growth. For Zanaga, the transaction represents a major step in its growth strategy, offering a clear path to retaining a strategic ownership stake and securing a royalty interest in a world-class asset.
What's Next?
The transaction is subject to due diligence, definitive document conclusion, and shareholder and regulatory approvals. If successful, RAM will gain representation on the Jumelles board and, upon reaching majority ownership, will have the right to majority board representation. The completion of the first tranche is expected to advance the project to a final investment decision, while the second tranche, if exercised, will significantly increase RAM's ownership stake. The project's progress will be closely watched by stakeholders, including local communities and industry observers, as it moves towards production.
