For the past several months, a number of analysts have had their eyes on Zanaga Iron Ore Company Limited (LON: ZIOC), an eight year old, iron ore exploration and development company that’s based out of the British Virgin Islands. The company’s most important asset is the 50% (less one share) interest it has in the Zananga Iron Ore Project located in the Republic of Congo. The owner of the controlling 50% (plus one share) is Glencore plc, a Swiss commodity trading and mining company worth £47 billion.
The Zanaga Project has the potential to become a leading iron ore producer since it’s based in one of the largest iron ore deposits in all of Africa. It’s been designed to work on a staged development basis in order to reduce costs, lower risk, and maximize returns. Unfortunately, any development at all has been on hold for the last several years because they didn’t have the proper environmental permits to begin work. But the wheels began turning late last year when the Ministry of Environment of the Republic of Congo granted an environmental permit to the Zanaga Project.
In addition to this hopeful news, positive product test results were received this past July, confirming that there is potential for a premium-grade product being produced – haematitic iron ore pellets with a grade of 67.4% and few impurities. These test results, as well as initial strength testing results, were touted on Zanaga Iron Ore’s Twitter account. The cold produced pellets are currently being tested by a world class steel mill to see whether they reach commercial acceptability. If testing goes well it should act as a major catalyst for Zanaga’s share price.
What’s more, the circumstances surrounding this iron ore means that this project could be one of the lowest opex per tonne iron ore mines in the world. And with steps being made toward the development of a new bulk mineral port at Pointe-Indienne, Republic of Congo, there’s the potential for exporting directly to China with minimal hassle and cost.
The stock jumped earlier this year after the Republic of Congo granted the environmental permit. Since then, shares have traded somewhat poorly but since the beginning of July, things have begun looking up. It seems as though investors are finally waking up to the incredible potential lying under the African dirt. The stock has risen around 80% just since the begining of July.
When Zanaga went public in 2010, it IPO’d at £1.56 and reached as high as £2.12. With all of the recent good news that they’ve been getting – and the potential for creating a premium product with high demand – if things go to plan a retrace to the IPO level or possibly even new highs could be on the cards for this stock. Keep your eyes on it.