$2 billion Congo-Brazzaville iron ore project stalled
Shares in Zanaga Iron Ore Company (LON:ZIOC) dropped 15% in London on Thursday after the company detailed its change of focus to a small-scale early production operation at its flagship Republic of Congo project.
AIM-listed Zanaga, worth $50m after today's pullback, announced a $1.5m agreement with Glencore (LON:GLEN) for a 2018 work program on the early production project at the property located close to the border with Gabon and 250km northwest of the capital Brazzaville.
According to Zanaga preliminary test work results indicate that a small scale project is capable of producing a premium product pellet feed concentrate with an iron ore grade of 66.6%.
Clifford Elphick, non-executive chairman of Zanaga said "the early production project is targeting a low capital cost operation utilising existing road and potentially rail transportation solutions as well as existing port infrastructure."
The staged 30 million tonnes per annum Zanaga mine envisaged in the company's 2014 feasibility study has been put on the backburner. The stage one 12mtpa open pit mine, which received environment permits in November, requires a capital outlay of as much as $2 billion, but operating costs could be as low as $23–24 a tonne according to company estimates.
The Steel Index benchmark price for Northern China 62% Fe ore fell 4% on Thursday to trade at $72.00 a tonne, giving up its gains for the year.