Aim-listed Zanaga Iron Ore Company has announced an equity fundraise for gross proceeds of $21.5-million, with the potential to upsize to $23-million, conducted by way of subscriptions to a group of investors with significant experience in the mining industry, and project and infrastructure development, as well as strong relationships in Congo-Brazzaville.

The company said on March 3 that the participation of experienced investor and advisory groups would bring world-class expertise in large-scale iron-ore development, financing and project execution into its wheelhouse.

The company said this involvement would significantly derisk its Zanaga iron-ore project, supporting the company’s path to a final construction decision and ensuring a structured approach to funding and development.

The fundraise will be completed in two tranches.

The company also announced that it had entered into an agreement with Glencore to repurchase its equity shareholding in Zanaga, the completion of which will result in the cancellation of the existing relationship agreement between Zanaga and Glencore, including the resignation of Glencore’s director appointee from the Zanaga board and the cancellation of the existing offtake agreement between the company, the company’s wholly owned subsidiary MPD Congo, and Glencore International over marketing rights to iron-ore products from the Zanaga project.

Zanaga also announced its intention to appoint Zanaga CEO Martin Knauth and Aura Energy chairperson Philip Mitchell to the Zanaga board of directors. $15-million of the gross proceeds will be used to buy back and subsequently cancel Glencore’s entire current 43% equity shareholding in Zanaga, resulting in the termination of Glencore’s offtake agreement and relationship agreement with the company.

The additional proceeds will provide the company with more than 12 months of corporate and project-level working capital expenditure.

This will enable the advancement of key project initiatives aimed at further enhancing the Zanaga project’s economics and iron-ore product and the start a formal bid process aimed at establishing a construction consortium for the Zanaga project – a globally significant 30-million-tonne-a-year staged development project with a $5.7-billion net present value.

“By securing the support of highly credible investors, we are now able to drive forward toward a construction decision, with a world-class team, aligned stakeholders, and a clear roadmap to delivering a high-grade, low-cost iron-ore mining operation. We will now launch a formal process aimed at assembling a project funding and execution consortium,” Knauth said.

The company has entered into subscriptions with a number of new and existing shareholders to subscribe for an aggregate of 416.8-million ordinary shares at a price of $0.0516 a share. This includes agreements with Greymont Bay through two strategic investment vehicles established by a consortium of mining investors, which will be investing $10.85-million for a 26.2% post-buyback transaction ownership in Zanaga.

Further, Greymont Bay will also have the right, at its sole election, to invest an additional $1.5-million in the second tranche at the issue price. If Greymont Bay elects to make the additional subscription, the gross proceeds of the fundraise undertaken by the company, including the subscriptions, would amount to $23.01-million, and Greymont Bay would have a 28.8% post-buyback transaction ownership in Zanaga.

Greymont Bay’s investors and advisers include former Anglo American CEO and current Vale Base Metals chairperson Mark Cutifani, former Anglo American CEO and current Vision Blue Resources strategic adviser Tony Trahar, global independent advisory firm Odin co-founder and Royal Academy of Engineering fellow Tony O’Neill, Mitchell and New York-based private capital firm Heeney Capital Resource Partners.

Arise founder and CEO Gagan Gupta is also involved, investing $4-million through an investment vehicle for a post-buyback transaction ownership of 9.7% before any additional Greymont Bay subscription. Arise is developing the special economic zone (SEZ) and its related infrastructure facilities in Pointe-Noire, Congo-Brazzaville.

On December 11 last year, Zanaga and MPD signed a memorandum of understanding (MoU) with Arise to advance the development of the Zanaga project's onshore and offshore port infrastructure within the SEZ.

Another investor is Vision Blue founder and managing partner Sir Mick Davis.

Other investors include the founder of a Saudi Arabian investment fund focused on developing downstream processing plants in the Kingdom of Saudi Arabia, and significant investments from Zanaga’s management team, namely Knauth and corporate development and investor relations manager Andrew Trahar.

As part of the transaction and as a condition of Greymont Bay’s cornerstone subscription, marketing rights over 20% of the iron-ore products from the Zanaga project will be allocated to Gulf Iron and Steel (GIS), a consortium of strategic industry entities seeking to develop integrated steel facilities supplied by high-grade pellet feed iron-ore to the Americas and the Middle East.

The GIS offtake agreement is aimed at enhancing market access and offtake security, further derisking Zanaga’s commercialisation strategy and supporting its path to financing and construction.

The terms of the GIS offtake agreement will provide Zanaga with the flexibility to offer marketing or offtake rights over 80% of the Zanaga project’s iron-ore production to other strategic funding partners and operators. The GIS offtake agreement is conditional upon the completion of the Glencore buyback and termination of Glencore’s offtake agreement.

“Today’s transaction is a transformational milestone for Zanaga, securing investment and leadership from industry-leading mining luminaries with a strong track record of developing some of the highest quality mining assets globally. The fundraise allows us to buy back Glencore’s shareholding and fund more than a year of key workstreams that will accelerate the Zanaga project.

“This enhances our strategic flexibility, strengthens our financial position, and re-positions the project to prepare for an execution phase. The iron-ore industry has experienced a recent resurgence in merger and acquisition transactions, aimed entirely at securing iron-ore mines capable of producing high-grade iron-ore.

“This transaction enables us to capitalise on our preparatory discussions with strategic partners and assemble a construction consortium for the Zanaga project, aimed at unlocking the full potential of what we believe is the world’s most compelling undeveloped iron-ore asset globally,” Zanaga chairperson Clifford Elphick said.

Cutifani said Zanaga represented one of the most compelling undeveloped iron-ore opportunities globally, combining scale, high-grade production and a clear, cost-effective development path.

“Its low operating costs and integrated slurry pipeline logistics mirror the efficiency and infrastructure-driven advantages seen in assets like Anglo American’s Minas Rio, which successfully scaled into a leading global supplier.

“Zanaga’s high-purity iron-ore pellet feed product, grading up to 68.5% iron, is expected to be highly sought after in the shift toward low-carbon steel production, providing a distinct premium market opportunity. The straightforward phased development model and fully permitted status further de-risk execution, allowing the project to move rapidly toward construction, once financing is in place,” he said.

Gupta said Arise’s investment in Zanaga was not only a strategic entry into the iron-ore project but also synergistic with the company’s ambitions to become the leading port operator on the coast of West Africa.

“As Arise develops the SEZ and key port infrastructure in Pointe-Noire, our partnership with Zanaga and MPD creates a natural alignment between high-quality iron-ore production and efficient export logistics.

“By leveraging our expertise in unlocking development capital and infrastructure execution, we aim to accelerate the path to construction and long-term value creation for the Zanaga project and its associated ecosystem,” Gupta said.