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PrintZanaga’s (LON:ZIOC) cash resources and the funding commitment from Glencore Xstrata will be sufficient for the feasibility study on its huge iron ore project in Congo Brazaville, it said.
Glencore Xstrata's (LON:GLEN) obligation to fund the feasibility study is contained within the joint venture agreement originally signed with Xstrata.
Combined with its own US$40mln of cash, Zanaga said it does not currently foresee the need for any further funding until the feasibility study is completed.
Clifford Elphick, chairman, said significant progress had already been made over the past 18 months including a pre-feasibility study indicating Zanaga is one of the most attractive, undeveloped iron ore projects globally.
He added that the project’s mining exploration licences have been extended to August 2014 and the process of preparing the documentation needed to make application for the Exploitation Licences is “well underway.”
On iron prices, Elphick added that while the much touted "wall of supply" is now on the horizon as major mining companies look set to bring on significant volumes in 2014, the iron ore sector has a long history of underperformance in supply versus expectations.
“In addition, the majority of earnings for three of the four largest players come from iron ore, meaning incentives to delay projects are high.
“From a ZIOC [zinc, irone ore, copper] perspective, this reinforces the competitive advantage of the Zanaga Project as one of the potential lowest cost iron ore producers.”
Zanaga posted a loss of US$5.7mln (US$14.4mln) in 2012.
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