Zanaga completes re-costing and ore reserve update

Zanaga Iron Ore Company updated shareholders following completion of the re-costing exercise and ore reserve update on the Zanaga Iron Ore Project on Wednesday.

The AIM-traded firm said the Zanaga project consisted of a 30 million tonnes per annum staged development project, including an 18 million tonnes per annum second stage expansion.

It said an initiative to update the cost estimates associated with the first stage, as outlined in the 2014 feasibility study, had been completed, with external independent technical expert engineering firms engaged by Jumelles - the joint venture company between Zanaga and Glencore - to oversee and provide input into the feasibility study review.

The objective was to ascertain the potential capital and operating costs associated with the construction of the Zanaga project's 12 million tonnes per annum first stage project in the current market environment.

It said the feasibility study review indicated capital and operating cost estimates for the first stage development project remained approximately within the guidance levels outlined in the 2014 study.

Specifically, it said capital expenditure was expected to range between -2.9% and +2.5% of the 2014 feasibility study estimate, or between $2.15bn (£1.54bn) and $2.28bn.

The lower range would depend on the implementation of a number of potential savings opportunities identified by the independent technical experts.

Operating cost estimates were also estimated to be approximately in line with the estimates provided in the 2014 study.

Looking at the ore reserve estimate re-statement, the company said the Zanaga project's 2.1 billion tonne ore reserve estimate had been re-stated by SRK, and updated based on market pricing as at 31 December.

“The Zanaga project team has worked with third party technical experts to re-assess the potential capital and operating costs that could be achieved in the current market for the 12 million tonnes per annum stage one project, as outlined in the 2014 feasibility study,” said non-executive chairman Clifford Elphick.

“The review of these figures indicates that the capital and operating costs estimated in 2014 remain valid in today's market environment, encouraging us to continue to pursue pathways available for development of the 30Mtpa staged development project, especially during the current high iron ore price environment.”

At 1509 BST, shares in Zanaga Iron Ore Company were down 17.66% at 7.67p.