Zanaga Iron Ore Share Discussion Threads

[temmujin] 29/9/2017 06:34

abit easier to read..

RKBeekeeper Investment Case: Zanaga Iron Ore Company (ZIOC)
Wednesday, Sep 06 2017 by Ash Deans 0 comments
3
Every now and then I come across a share that I was not expecting to find and that I’ve never heard anything about before, this is a classic example of one of those shares.

Yesterday Zanaga Iron Ore Company popped up on my radar due to a very strange action in the share price and some very large trades moving through a stock that typically sees very few trades per day.

This much un-loved stock may actually prove to be one of AIMs biggest movers this year!

Let’s start with the fundementals

Shares in issue: 279m
Free Float: Approx: 75m (27%)
Current MCap: £17m
52 Week High: 212p
52 Week Low: 4.6p
All-time High: 212p (No dilution since this high!)
All-time Low: 1.35p
Cash in Bank: Approx $4.5m

Zanaga Project Details

The bare fact is that the company sits with a mineral resource situated in the Republic of Congo that is one of the world’s largest with up to 6.9bn tonnes and of which 2.1bn is iron ore at a 66% fe. These figures have been produced in compliance with the key JORC code and the iron ore NPV (after financing and net of production and transportation) has been valued at anywhere up to $966m net to ZIOC based upon the current iron price of approx $55/tonne. (If the price of Iron Ore moves back closer to the $80 range then this puts the value up to $1.4bn!!)

The project is a 50/50 collaboration with Glencore ($40bn Mcap), with Glencore hold 1 share more than Zanaga to give them control of the project.

Zanaga management have been playing the long game this last two years, steadily progressing the project through, in the most important instance, the ratification of its Mining Convention and the lodging of the Environmental Permit that is now VERY OVERDUE and that will be another potential major milestone in the progress towards exploitation of this world class ore resource.

Next Catalyst

This project is waiting on the Environmental Permit to be obtained, this was expected at the end of the 2016 fiscal year which means it is now several months overdue and can land any day now!

Once the permit has been agreed this could spark a chain of events that will send this share price on a crazy journey.

With the permit in place I would expect ZIOC to look at selling their stake in the project and due to Glencore’s huge success over the past couple of years they are now in a cash rich position and according to their chairman they are looking to buy out projects that they already have a stake in.

“We are looking for opportunities around,” he said, adding Glencore was particularly interested in assets where it already had stakes or partnerships.

This would put ZIOC firmly on their radar, the only outstanding issue being the Environmental Permit which should land very soon.

My View: What happens next

Based on my research I strongly believe that once the Environmental Permit has been obtained ZIOC will look to sell their half of the project, either to their partner Glencore or to another party, potentially a Chinese interest as there have been rumours of interest from China in the past.

This is backed up by the share transfer announced on the 3rd April 2017, which I believe was to get everything ready for the sale of the asset.

I also see the directors holding a huge percentage of the shares in issue here which is a sign of confidence in my mind that they know what is coming.

It would not surprise me if the deal is already in place and the permit being obtained is the catalyst to finalise it.

In regards to the price for the sale of the asset, based on it being one of the world’s leading iron ore assets I would be surprised if it were to sell for less than $100m (fire sale price), with my estimate being somewhere between $200m-$300m.

When you compare this to the current Mcap of £17m you can see the huge value here!

The Mcap appears to only be this low as it is so far off people’s radars at the moment and the overdue nature of the Environmental Permit.

Downsides?

Are there any risks here? Of course, as with all shares there is a potential risk here that there will be further delay in the Environmental Permit, or that it might not be granted. However, given that all other permits and licenses have been obtained I see this as extremely unlikely.

The risk to reward here is huge in my mind. Very low risk, massive reward.

Targets

The movement in the share price here is going to be driven by the Environmental Permit being obtained… On that news I would expect the share price to move to around 50p per share (600%+ Rise)

I would then expect the share price to continue to rise up to the point of the asset sale, which would likely be over £1 per share (1300%+ Rise)

Due to the Very Low free float in this share it moves incredibly quickly which will make it very difficult to by once the RNS lands so this is one you want to be in before the news lands.

If you wish to check the figures here in this post then I suggest you take a look at the most recent investor presentation here to get an understanding of the size of this asset:

hxxp://www.zanagairon.com/pdfs/ZIOC-Investor-Presentation_21-Sept-2016.pdf

The share price at the time of writing this post was 6.125p

Note: I have emailed the company to obtain answers to a couple of outstanding questions. I will update this post once I get a reply.

[kirk 6] 28/9/2017 08:38

Looking good now wondering if the seller is finished at last. Prepare for wine big gains if so.Back above 6p by the weekend would be nice

[kirk 6] 27/9/2017 16:39

Bounce on the way?

[katylied] 26/9/2017 11:16

Yes, best not to know eh?... :o)

[katylied] 26/9/2017 08:22

Iron ore price prospects look bearish. Chinese steel production facing cutbacks due to environmental issues. Supply glut. 62% price to move to ~$55/tonne in 4th qtr...



What was the ZIOC feasibility cost/tonne. Was it $57?
No worries though, ZIOC do not produce any iron-ore,
nor are they likely to, for years to come...

[kirk 6] 23/9/2017 12:31

Oli well at. 11m mkp it's certainly worth the risk. Permit being granted alone and there is a 2-4 nagger straight off and that is potentially before year end.

[oli12] 23/9/2017 09:43

Well said MrX001 this is a sleeping giant... question is will he ever be woken up and will holders of ZIOC ever see any derived value.

Time as always will tell.

[mrx001] 23/9/2017 08:42

It's certainly a great potential Iron Ore resource, and I hold them but it is a bit of a zombie stock until someone with dosh decides to either take them out or farm in. That commitment unfortunately is a huge one.

[kirk 6] 22/9/2017 09:21

And most importantly the cash burn is almost non existent the management team have done a great job according to today's news. Monumental upside here and I will be adding over the coming months

[kirk 6] 22/9/2017 09:19

Long wait a maximum of 3 months as they are confident the permit will be issued BEFORE year end! This has he potential to fly well above 10p in the next 3 months so 200% upside and very minimal downside. Excellent punt now in my opinion. Even before permit 50% gains should be achievable

[topazfrenzy] 22/9/2017 09:06

yes looks like a long wait, if it goes to 1p or 2p I am filling my boots

[katylied] 22/9/2017 08:15

Looks like a sharp drop to sub 3p from here.
Yet another failed pumper+dumper thread...

[keya5000] 22/9/2017 07:45

Not much in the report to create interest, the EIA may give it a boost, think it's a sit hold play in case Glencore or another try and take ZIOC stake on the cheap.

Glencore can be very patient though I guess, but comes a time when for a few million $$$ it's worth buying out junior!

GLTA

[comedy] 22/9/2017 07:45

Kirk6 better to miss the first 10 to 20 % gain and come in when news arrives...this will continue i.e. to fall...i rode last wave up but didn't hold to max gain...chart tells u same happening again...learnt hard way...most stocks better to get in on news than jump gun..as usually delay on news and ends up being negative anyway...mms go short and usually win.hope it works out for you.

[pugugly] 22/9/2017 07:41

Agreed minimal cash burn but also limited progress - Very much a "may be progress tomorrow or tomorrow or tomorrow" Pellets good but major caution about new seaborne supplies coming onto the market and build up of stocks of IO in China - (imo) A binary play with risk to downside - See also FT Analysis Commodities yesterday

[kirk 6] 22/9/2017 07:38

Stocks like this are a waiting game do nothing or go down for months on months and then In a few days will treble. Comedy your track record on stocks is bar none.Surely you have been bust more times than a gambling tramp

[kirk 6] 22/9/2017 07:35

Not really got a massive portfolio and would recommend these to anyone as once the permit is signed these will double or treble and before year end as wellCash burn virtually non existent read the rns today

[comedy] 18/9/2017 14:05

oh dear kirk6 you under water??

keep up the good working encouraging people to buy:)

[kirk 6] 17/9/2017 20:55

At the moment and below 5p this is extremely oversold territory and no news and seller complete this will fly back to double figures

[pugugly] 17/9/2017 19:29

robizm: A sane voice at last - What you say is only too true -

[tadtech] 17/9/2017 16:50

The only reason this is dropping is because a fund is selling, at times like this it sometimes offers retail investors an opportunity.

At the last count they had 10m remaining BUT they are late declarers and could be under 5m by now. As everyone knows this has the ability to add 3p-4p in a day or two.

[robizm] 17/9/2017 16:30

There is currently too much iron ore so until that changes nobody is going to develop this. Why would you. China might be heading for the a mighty fall so who in their right mind would build a new io mine. There are plenty that when bust thst can be restarted like like the two in sierra leone and a few in australia and canda. Demand must rise loads before this gets developed