Zanaga Iron Ore : Annual Report and Accounts 2021

Zanaga Iron Ore Company Limited - 2021 Annual Report and Accounts

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TABLE OF CONTENTS
BUSINESS OVERVIEW .............................................................................................................................	2
2021 HIGHLIGHTS AND POST REPORTING PERIOD END EVENTS TO JUNE 2022...........................................................	2
CHAIRMAN'S STATEMENT.............................................................................................................................	4
STRATEGIC REPORT ................................................................................................................................	7
FINANCIAL REVIEW .....................................................................................................................................	9
RESERVES & RESOURCE STATEMENT .............................................................................................................	11
PRINCIPAL RISKS & UNCERTAINTIES ..............................................................................................................	13
CORPORATE SOCIAL RESPONSIBILITY .............................................................................................................	19
CORPORATE GOVERNANCE ..................................................................................................................	23
BOARD OF DIRECTORS ...............................................................................................................................	23
DIRECTORS' REPORT .................................................................................................................................	24
CORPORATE GOVERNANCE REPORT ..............................................................................................................	27
REMUNERATION REPORT............................................................................................................................	33
STATEMENT OF DIRECTORS' RESPONSIBILITIES.................................................................................................	36
AUDITOR'S REPORT..............................................................................................................................	37
GLOSSARY ..............................................................................................................................................	66
RESOURCE APPENDIX ...........................................................................................................................	67
RESERVE APPENDIX..............................................................................................................................	82
ADVISORS ............................................................................................................................................	91

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Business Overview

30 June 2022

2021 Highlights and post reporting period end events to June 2022

• Zanaga Iron Ore Project (the "Project" or the "Zanaga Project") 30Mtpa staged development project (12Mtpa Stage One ("Stage One"), plus 18Mtpa Stage Two expansion ("Stage Two"))

1. Initiative completed to update the cost estimates associated with Stage One, as outlined in the 2014
   Feasibility Study (the "FS Review"), with results announced in May 2021

1. External independent technical expert engineering firms engaged by Jumelles Limited ("Jumelles"), the joint venture company between ZIOC and Glencore, to oversee and provide input into the FS Review

1. Successfully ascertained potential capital and operating costs associated with the construction of Stage One

• 1. FS review indicated that capital and operating cost estimates for Stage One remained approximately within the guidance levels outlined in the 2014 Feasibility Study ("2014 FS")
• Early Production Project ("EPP Project" or "EPP")
  o Multiple production scenarios remain under investigation on processing facilities and suitable logistics solutions, with a particular focus on an export solution through the Republic of Congo ("RoC")
  o Increased engagement underway with other mining project developers in RoC to explore potential collaboration opportunities, especially in relation to logistics solutions and alternatives for upgrades to existing infrastructure
• Ore Reserve estimate re-statement
• 1. The Zanaga Project's updated 2.1 billion tonne Ore Reserve estimate, announced in May 2021, re- stated by SRK and updated based on market pricing as of 31 December 2020, and remains based on the 30Mtpa Feasibility Study and 6.9 billion tonne Mineral Resource
• Work programme and budget for 2022, and $1.2m Jumelles Ltd working capital loan facilty, agreed with
  Glencore Projects Pty Ltd ("Glencore"), a subsidiary of Glencore plc

Corporate

• Funding update - Shard Merchant Capital Ltd ("SMC") equity subscription agreement
  o In 2021 SMC subscribed for 14 million shares of no par value in ZIOC, as part of the 21 million ordinary share facility signed in 2020
  o Proceeds of £1,141,574.94 received to date, following 18,000,000 shares being placed by SMC, with a further 3,000,000 ordinary shares remaining to be placed
  o Proceeds applied to general working capital, including the provision of further contributions to the
  Zanaga Project's operations
• Cash balance of US$0.4m as at 31 December 2021 and a cash balance of US$0.3m as at 29 June 2022
• Outbreak of COVID-19 has not had a material impact upon the Group although the continuing prevalence of the pandemic constrains a number of commercial activities

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Clifford Elphick, Non-Executive Chairman of ZIOC, commented:

"During 2021 it was pleasing to conclude an updated costing exercise, using independent technical experts to evaluate the Stage One development costs. Furthermore, an update exercise was undertaken to evaluate the Ore Reserve for the Project. This resulted in the reconfirmation of the Zanaga Ore Reserve - which remains one of the largest ore reserves globally.

The Zanaga Project Team have continued to progress key initiatives at the Project. Significant work is underway to evaluate options to move the Early Production Project forward in collaboration with other projects in RoC.

The iron ore market has experienced continued strong demand from China and is benefitting from sustained strong iron ore prices, despite a recent pull back from previous highs. The Project Team have been working for some time to evaluate potential avenues to bringing the project into production, and continue to make every effort to work with local stakeholders and partners in assessing these options. We hope to report soon on the Project Team's findings"

The Company will post its Annual Report and Accounts for the year ended 31 December 2021 ("2021 Annual Report and Accounts") to shareholders on approximately 9 July 2022.

The 2021 Annual Report and Accounts will be available on the Company's website www.zanagairon.com today.

For further information, please contact:
Zanaga Iron Ore
Corporate Development and	Andrew Trahar
Investor Relations Manager	[phone]
Liberum Capital Limited
Nominated Adviser, Financial	Scott Mathieson, Edward Thomas
Adviser and Corporate Broker	[phone]

About us:

Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (AIM ticker: ZIOC) is the owner of 50% less one share in the Zanaga Iron Ore Project based in the Republic of Congo (Congo Brazzaville) through its investment in its associate Jumelles Limited. The Zanaga Iron Ore Project is one of the largest iron ore deposits in Africa and has the potential to become a world-class iron ore producer.

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Chairman's Statement

Dear Shareholder,

In these challenging times globally, iron ore prices continue to hold up and we continue to progress in-country activities of the Zanaga Project Team ("Project Team"). The efforts of Jumelles, the joint venture between the Company and Glencore, have shown much promise - particularly with regard to investigations of existing logistics solutions in country and the ability to collaborate with our neighbours to unlock the potential of Zanaga's vast resource.

Iron Ore Market

The iron ore market has experienced continued strong demand from China and is benefitting from sustained strong iron ore prices, despite a recent pull back from previous highs. Product premiums remain robust, as we had preiviously forecasted, and look set to remain in place for high quality products similar to the Zanaga Project's planned production.

30Mtpa Staged Development Project

Two key activities were completed by the Project Team in 2021 in relation to the Stage One of the 30Mtpa Project.

1) FS review

The Project Team concluded an FS review process which involved an updated costing exercise, using independent technical experts to evaluate the Stage One Project development costs. This resulted in confirmation that the Project's 2014 FS cost estimates remain reliable in today's market environment.

2) Ore Reserve Statement Update

The Project Team completed a process to update the Ore Reserve estimate. The Zanaga Project's 2.1 billion tonne Ore Reserve estimate was re-stated by SRK and updated based on market pricing as of 31 December 2020, and announced in May 2021.

EPP Project

The Project Team continue to undertake a process to evaluate the potential development of an EPP Project that would be quicker to construct than the larger 30Mtpa staged development project and would utilise existing road, rail and port infrastructure. After careful consideration the team have concluded that a solution contained within the Republic of Congo would be best for the Zanaga Project and hence have dedicated significant time recently to developing a clearer cost estimate and optimised engineering solution on this basis.

Engagement with other mining project developers in RoC has been increased in order to explore potential collaboration opportunities, especially in relation to logistics solutions and alternatives for upgrades to existing infrastructure.

The Project Team continue to advance study work in an effort to improve their understanding of the viability of the EPP Project. The Project Team continue to evaluate the potential for the EPP Project to operate as a standalone project, or as an initial pathway to production during the construction period of the flagship 30Mtpa Staged Development Project.

Cash Reserves and Project Funding

At 31 December 2021 the Company had cash reserves of US$0.4m. On 29 June 2022, Glencore and ZIOC have agreed a 2022 Project Work Programme and Budget for the Project of up to US$1.3m plus US$0.1m of discretionary spend. ZIOC has agreed to contribute towards this work programme and budget an amount comprising US$0.09m; the remaining budget amount will be funded via a loan facility provided directly to Jumelles Ltd by Glencore thus requiring less funding by ZIOC over the next 12 months compared to the historical levels observed. On 29 June 2022, Glencore and the group signed a side letter to the Jumelles loan

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