JOHANNESBURG (miningweekly.com) – The Zanaga iron-ore project, in the Republic of Congo (RoC), a joint venture (JV) between Aim-listed Zanaga Iron Ore Company (ZIOC) and diversified miner Glencore, has been granted a mining licence and its operators have entered into a mining convention with the country’s government.
The 25-year operating licence, which could be renewed for further periods of 15 years, covered the proposed staged development of the project, with Stage 1 consisting of a 12-million-ton-a-year operation.
Stage 2 would expand the operation by a further 18-million tons a year to produce 30-million tons a year of high-quality iron-ore pellet feed product over a 30-year mine life, ZIOC said in a statement to shareholders on Friday.
A 366 km slurry pipeline would transport the material to port, from where the product would be exported to the global sea-borne iron-ore market.
In terms of the mining convention, the RoC government would receive a 10% nondilutory stake in the project.
The JV would be subject to a 3% royalty, but would also receive a five-year tax holiday with a corporate tax of 15% being implemented thereafter.
The next step would be for the RoC government to approve the convention as law. This process was expected to be completed by December 31.
“I am delighted that the Zanaga project has received both its mining licence and mining convention. This is a demonstration of the government of the RoC’s firm commitment to developing the country’s mining sector and testament to the project’s strong stakeholder relations, which have been established over the past six years.
“The development of this world-class iron-ore project will have a significant beneficial impact on the RoC, both at the grassroots level around the project site, as well as more broadly on the country’s infrastructure and economy,” ZIOC chairperson Clifford Elphick commented.
He added that, with the receipt of the mining licence and the confirmation of the project’s fiscal regime through the mining convention, the project was now well positioned to advance to the next stage of financing discussions.
Analysts at Liberum Capital said the company was now in a strong position to bring on board a strategic investor, which would value the asset significantly higher than its current 18p a share.
“While we continue to see risks to iron-ore prices over the next 18 months, ZIOC represents an opportunity for a potential partner to get a strategic foothold in Africa with a tier one partner in Glencore. As such, we think this asset has attractions, despite the top-down environment,” Liberum stated.