Zanaga Iron Ore Share Discussion Threads

[extrader] 10/2/2014 21:20

Hi KnockKnock,


....(an) article, that quite frankly is rather drab to say the least. is a bit curmudgeonly, dont'cha think , KK ?

It was, after all an attempt to 'put some (considered) meat on the bones' in response to a contribution : ' Nice turn upwards !' that does little to 'amuse, educate or enrich ' (TMF mission statement)

ATB

[extrader] 10/2/2014 17:47

Hi all,

Uptick probably in response to a good write-up in t'other place.....

Quote
A bit late I know but here is a write-up on my NFSC entry - Zanaga Iron Ore (ZIOC). But on the positive side there is a better entry price now so my tardiness may imprive your returns should you choose to invest.

Zanaga Iron Ore (ZIOC) – Iron plated investment or rust bucket – you decide

Let's start with some numbers:

SP: Jan 1st 19.75p
SP: today 17p
Market Cap: £45.5m
Enterprise Value: £24.1m
Net Cash £35m


What Do They Do?
Ummm – not a lot really; they just own 50% (minus 1 share) of what is basically a large deposit of rust in the ground in the Republic of Congo. At present it is not being mined and so there is no income and therefore no profits. What makes this interesting is that this deposit of iron ore is huge, of very high quality and easy to get at, which would make it one of the most desirable sources of iron ore on the planet.

So why isn't it being developed?

Well it was; ZIOC had a JV with Xtrata, who had invested about $300m in the project, when they were approached by Glencore who subsequently took them over. At this point the ZIOC share price slid steadily down to around 11p because Glencore are known to dislike large greenfield projects and the associated high level of investment required. The Xtrata plans were for a very large capital investment (around $7.5b) to develop power supplies, a pipeline to the port and the port facilities themselves. The shares seemed to be priced as if Glencore would abandon the project. But why would they do that? They may not want to develop the site themselves (at least not on their own) but surely they could either sell it on or attract other investors, and ZIOC have tag-along rights on any deal. In fact Glencore have developed a plan to start mining sooner, albeit at a lower level and with a much smaller initial capital cost ($2.5m). The JV deal with ZIOC has been modified to enable the new plan to be delivered and ZIOC have committed $17m to the development (to December 2014) this somewhat less than half their current cash. To my mind these changes make the project a much more attractive proposition for investment or sale and Mr Market agreed taking the share price from 10p to 30p shortly after the Glencore announcement; but since then the share price has drifted back down to 16p-17p on no news.

I am sure that Glencore and ZIOC are looking for an investor/buyer and that negotiations are underway with interested parties including the Chinese; in the meantime development of the site is underway and production due to start in 2015. There is unlikely to be any news until a deal is agreed and on that announcement I would expect the share price to move significantly. To give some idea of the potential the share price reached 200p early in 2011 before starting the long drift down. I'm not saying the share price would rise to these levels, making it a 12 bagger from today's price, but I do believe there is multi-bagging potential and that the deal that would trigger this rerating is likely to be announced this year.

If all that's true why is share price languishing around 16p?

Intelligent question – you're brighter than I thought. Possible reasons could be:

1. Potential investors are waiting for some signs that a deal is imminent. Dangerous in my view as the share price may move very quickly once news gets out of a deal.

2. Junior resource companies, especially those with no production (and therefore no cash coming in) are out of favour. But ZIOC has limited expenses and plenty of cash to see it through to a deal/production so this shouldn't be an issue.

3. Demand and the price for iron ore is falling. This may be true for the moment (although iron ore prices have held up quite well) but this is 30+ year resource and short-term demand and pricing are not that significant. Also this would be one of the lowest cost producers of high quality ore, able to make good profits even at very low ore prices.

4. Investors believe that a buyer will not be found, or at least one willing to pay anything like its true value. Well both Xtrata and now Glencore clearly believe this project has significant value and my money is on Glencore extracting the maximum value from the opportunity ($1b+?).

5. A mining license will not be granted (application due in Q2 '14). Possible, but why wouldn't the government grant Glencore a license? They want the site developed and relationships are good. Delays would just slow down the income that the government desperately needs.

6. Glencore will find a way to screw ZIOC and keep the lion's share for themselves. Well I know the big resource companies can play dirty but the ZIOC team have played a good game so far (and are significant shareholders) and as far as I can see have covered all the angles both in their original deal with Xtrata and the modified one with Glencore.

7. Something I haven't thought of....


In Summary

ZIOC own 50% of a valuable resource. Two major mining companies have agreed that it is valuable. Glencore (who really don't like greenfield sites) have put a new development plan together and are marketing the project to potential investors. ZIOC's share of the value is way in excess of 17p per share, maybe over 10x more. I have a significant investment (for me) here and will just sit tight and wait for developments, so my money is where my mouth is. But infallibility is definitely not one of my traits (just ask Mrs Dinocras) so DYOR and see if you agree that ZIOC is an iron plated investment and not just a rust bucket.

Other sources of information:






Happy investing

Terry

Unquote

Couldn't have put it better myself (which is one reason I haven't - BIG hat-tip to Dinocras !)

ATB

[knocknock] 10/2/2014 15:57

Nice turn upwards!

[katylied] 01/2/2014 20:46

Beijing Urges Steelmakers to Pursue Overseas Iron-Ore Assets

[katylied] 29/1/2014 14:41

In so far as getting any news out of ZIOC is like blood from a stone, that was a welcome interview. He didn't really say much though. The FS and mining licence milestones re-confirmed. Lots of warm projection about GlenStrata and potential interest in the project, but overall not much said...

[drewz] 29/1/2014 10:01

Executive Interview - Zanaga Iron Ore Company

Zanaga Iron Ore Company is a JV partner (50% less one share) in the Zanaga project, a large-scale iron ore project in Congo (Brazzaville), which is managed by Glencore Xstrata.

Andrew Trahar (head of corporate development) discusses how the Zanaga project is now at the cusp of a critical milestone – delivering the feasibility study and moving into the mining licensing phase. He mentions the advantageous 2013 merger with Glencore Xstrata, one of the largest mining companies in the world and an experienced operator in Africa, which now manages the project. Moving into 2014, he highlights that the key short-term catalysts and value drivers for investors are the completion of the feasibility study, the granting of a mining licence and further progress on strategic partner negotiations.


All reports published by Edison are available to download free of charge from its website www.edisoninvestmentresearch.com.

[katylied] 13/1/2014 13:36

Knocknock (1678) - "Stinger you say you have a holding but worried about scale of finance to get project going. Did you not have the same fears when you bought in here?"

That struck me as a rather strange comment. On 2013/09/13 (RNS) the terms of the deal with GlenStrata changed dramatically. Prior to that, ZIOC had a chance for a decent exit (for the more recent shareholders anyway), via the buyout option. That has since been surrendered (no doubt Ivan's wish) and ZIOC will now definitely need to fund its part of the project. I (for one) never looked to buyback here, precisely because the terms had changed that way. A bigger potential prize perhaps, but frankly, the funding clock is now ticking. Meanwhile, I personally don't see Ivan's 'real' intentions here, any clearer now than they were before the terms changed.

Still, it will be an amazing project if it
ever does get off the ground. Good-Luck...

[knocknock] 12/1/2014 21:49

I agree, however, I am just pointing out the fact that the points you are raising are known and have been known since the day the prospect was first pegged.

Try discussing the positive facts, the same positive facts that drove you to invest here.

Don't get me wrong I am fully aware of the potential pitfalls along the way, however, I remain invested and continue to add because nothing has changed with regards risk v reward, on the contrary, I think the risk v reward is favoured towards the reward at present.

Probably wrong though and go bust by Easter. Lol!


Enjoy the remainder of the evening. ;;-)

[the stinger] 12/1/2014 21:26

Knocknock - Pi's can not dictate the price/SP of ZIOC,,,ramp or deramp. Just discussing some facts here thats all.

[knocknock] 12/1/2014 21:17

However, if you're partial to swinging both ways, you could indeed guide potential investors to the stellar performance of BLV, once again there are one or two involved here who are also involved there.

;;-)

[knocknock] 12/1/2014 21:13

Im in no rush and I doubt others are either.

I can understand the subtle deramp Stinger and if you are invested here (long)then you are either looking to add or average down, the alternative is you are short.

Bit too transparent mate and don't really think there's a need for it on this board.


I mean if you really wanted to put people off here you'd get them to take a look at FDI and see how decimated the share price is there with one or two responsible for the demise being involved here.

;;-)

[the stinger] 12/1/2014 21:01

Just updated my last post Knocknock - Dont get me wrong here, the potential is outstanding however it seems we are a very very long way off.. was hoping to here some more positive news on a partner by now.

[knocknock] 12/1/2014 21:01

In truth I'd be as happy to see the share price drop to 10p as I would to see it at at 60p

[knocknock] 12/1/2014 20:58

Stinger, I know you have and no disrespect intended , my point is you are pointing out points that have always been applicable here so I ask myself what are you trying to gain by labouring a point that is already known?

As for big players being put off............. Hang on a minute. Are we not in bed with the biggest player in the game?

[the stinger] 12/1/2014 20:53

Knocknock, been here (in and out) quite a while if you look back over..my point is that the capex required for full steam ahead may just be putting the big players off.

'Glencore and ZIOC are to jointly explore funding options with a view to attracting third party debt and equity financing' - ZIOC were trying this long before Glencore came on the scene with no success (to date).

The $4 billion price tag on development comes with all kinds of issues, delays, overruns, infrastructure (greenfield site) increase in costs, price of IO, demand etc etc.

[the stinger] 12/1/2014 13:03

KatyLied- Yes, previously looked at and definitely has good prospects however its one of those thats still a fair way from definite de-risk finance deals etc etc.

Thats what attracts me further to NCCL, they are very close to securing financial close. In any event i have a feeling all the battered SA commodity stocks which have good prospects and no debt will soon regain favour.

[katylied] 12/1/2014 12:44

The Stinger - re iron ore, have you ever
looked at Bushveld Minerals (BMN)?..

[the stinger] 12/1/2014 12:37

Still have a holding here however getting worried on the scale of finance required to get the project started,, also in NCCL (same as the bod here) which seems to be more on track and very close to power purchasing deals etc. Getting very tempted to transfer my holdings here to NCCL..thoughts anyone?

[andrbea] 30/12/2013 14:12

A mention of the Zanaga project:

The most important mineral reserves, however, will likely prove to be iron ore. Seven mine sites have been identified in the north and west of the country, with a variety of international companies heading exploration. Three of the mines are expected to enter production by 2014, including the Zanaga mine, operated by the Swiss Xstrata company, which is thought to have ore reserves enough to be the world's third-largest iron ore mine. The President's plans also call for new lead, zinc, and copper concessions. Agricultural revitalization is also a cornerstone of this modernization plan, with the government recently signing a lease deal for over 100,000 hectares of farmland with a consortium of South African farmers to grow a variety of vegetables and grains. Currently, the American non-governmental organization International Partnership for Human Development (IPHD) operates the largest agricultural venture in the country, a 1,000-hectare corn farm in the southwest.

hxxp://globaledge.msu.edu/countries/republic-of-congo/economy

[blueball] 30/12/2013 09:36

Hoping for a stady rise next year.

[drunken monkey] 20/12/2013 08:41

Mine have a habit of going down in a straight line....