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Zanaga Iron Ore shares soar after buying Glencore project in Congo

The Zanaga project is located in the south west of the Republic of Congo, close to the border with Gabon. (Image courtesy of Zanaga Iron Ore.)

Shares in Zanaga Iron Ore (LON: ZIOC) soared on Thursday after the miner announced it had reached a deal with Glencore’s (LON: GLEN) subsidiary Glencore Projects to take a 100% interest in the Zanaga iron project in the Republic of Congo.

The agreement, subject to shareholder approval, will see Zanaga acquire 50%-plus one-share interest in Jumelles. This entity indirectly holds the benefit of the project’s mining licence.

In exchange, Glencore Project will receive a 48% minority stake in Zanaga Iron Ore.

Zanaga and MPD, an indirect wholly owned subsidiary of Jumelles, have also entered into a marketing agreement with Glencore International for the sale and purchase of all future iron-ore production from the project or any other of its or its affiliates’ assets using similar infrastructure in the country.

“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,” non-executive chairman Clifford Elphick, said in the statement.

Glencore Projects has also agreed to changes to the loan term agreement with ZOIC, increasing it to $1.8 million from $1.2 million, with repayment extended to the end of 2023.

Zanaga Iron Ore’s shares climbed on the news, trading 34% higher on Thursday afternoon at 5.3 pence each. That gives ZOIC a market capitalization of £16.3 million ($19.7m).

Iron ore prices have been gathering steam in the past weeks as confidence over the outlook for China’s steel demand increases. This is outweighing bearish factors, such as potential winter production curbs and India lowering iron ore export taxes.

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