Zanaga Iron Ore To Join AIM As Xstrata Considers Option

Zanaga Iron Ore Co. Ltd. said Wednesday it intends to join London's junior Alternative Investment Market on Nov. 18, ahead of a decision by Xstrata PLC (XTA.LN) on whether it wants to buy into an iron ore project Zanaga owns in the Republic of Congo.

Xstrata has an option to acquire 50% plus one share of Jumelles Ltd., a unit of Zanaga that owns two exploration licenses in the Republic of Congo's southwestern Lekoumou district that contain a resource of 3.3 billion metric tons of iron ore.

Zanaga is currently undertaking a preliminary feasibility study of the licenses and expects to complete it in the first quarter of 2011.

Xstrata has provided $106 million in funding for the study in exchange for its option, which it must exercise within 45 days of the study's completion, Zanaga said.

If Xstrata exercises its option over Jumelles Ltd. it has agreed to fund a bankable feasibility study of the iron ore licenses costing at least $100 million, Zanaga said in a regulatory filing.

Zanaga added Xstrata has the right to acquire the remainder of Jumelles and the two licenses when the bankable feasibility study is complete.

The company hasn't said how much it is seeking to raise in its admission to AIM.

Zanaga's chairman is Clifford Elphick, chief executive of Gem Diamonds Ltd. (GEMD.LN), and existing shareholders include BlackRock.

Liberum Capital is acting as Zanaga's broker and advisor.

-By Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; [e-mail]