Zanaga Iron Ore Company to acquire Glencore Projects’ controlling shareholding

LONDON, UK: Zanaga Iron Ore Company Limited (AIM: ZIOC) announced that an agreement has been reached with Glencore Projects, for the acquisition of Glencore Projects’ controlling shareholding in the Project, located in the Republic of Congo through the purchase of Glencore Projects’ 50% plus one share interest in Jumelles, an entity which indirectly holds the benefit of the Project’s mining licence, for a minority shareholding in ZIOC.

Zanaga Iron Ore Company and MPD, an indirect wholly owned subsidiary of Jumelles which holds the benefit of the Project’s mining licence, have also entered into a Marketing Agreement with Glencore International, which will take effect immediately prior to Completion, for the sale and purchase of all future iron ore production from the Project or any other of their or their Affiliates’ assets using similar infrastructure in the Republic of Congo.

Highlights

·    Proposed acquisition by ZIOC of Glencore Projects’ controlling shareholding in Jumelles, indirect owner of the Project

o Subject to ZIOC shareholder approval, the Acquisition will be concluded through the issuance of 286,340,379 new Shares to Glencore Projects, which are expected to represent a shareholding of 48.26% in ZIOC on Completion.

o Relationship Agreement to be entered into between Glencore Projects and ZIOC with effect from Completion to ensure that the Company can carry on its business independently of Glencore Projects.

o Glencore Projects will have the right with effect from Completion to appoint two non-executive directors to the Board of ZIOC.

o Glencore Projects has agreed that it will not dispose of any of the Consideration Shares in the Company in the six months following Admission without the consent of the Company (not to be unreasonably withheld or delayed) other than in certain limited circumstances and to comply with orderly market provisions in the following six months.

·    Marketing Agreement entered into between Glencore International, the Company and MPD which will take effect immediately prior to Completion

o Life-of-mine marketing agreement granting Glencore International the exclusive marketing right for all iron ore conforming to certain specifications produced by MPD, ZIOC or their respective Affiliates from the Project or in the Republic of Congo using similar infrastructure that is not subject to existing sales arrangements.

o Agreement by Glencore Projects to purchase from MPD or the Company the Product, or sell the Product on behalf of the Company on arm’s length terms.

o Glencore International to be entitled to receive a marketing fee in accordance with the detailed provisions of the Marketing Agreement.

·    Funding agreement

o In order to fund the Project’s continuing work programme and budget, as well as the working capital requirements of ZIOC, until 31 December 2023, Glencore Projects has agreed to amend the terms of the Loan Agreement as follows:

§ increase in loan quantum from US$1.2 million to US$1.8 million;

§ extension of loan repayment date to 31 December 2023.

§ Jumelles may utilise up to US$200,000 of the loan facility to advance loans to ZIOC to fund its working capital.

·    General Meeting

o A notice of a general meeting to be convened for on or around 13 December 2022 will be sent to Shareholders shortly to seek authority for the directors to: (i) issue 286,340,379 Shares pursuant to the Acquisition; and (ii) not require Glencore Projects to make a takeover offer in accordance with Regulation 33 of the Articles in connection with the Acquisition.

Clifford Elphick, Non-Executive Chairman of ZIOC, commented: “The acquisition of Glencore Projects’ shareholding in the Project is a key milestone for ZIOC’s shareholders, demonstrating to third party investors that the Project is now represented by a single entity and management strategy. The Acquisition is value accretive to Shareholders and increases effective equity ownership of the Project by existing Shareholders, enhancing their look-through ownership of the Project and securing control of the Project without paying any premium for such interest.

Furthermore, entering into the Marketing Agreement with Glencore International now provides comfort to investors and financiers that the Project’s future production is underpinned by one of the largest iron ore traders globally.”