ZANAGA Iron Ore Company has signed a binding term sheet with Red Arc Minerals for a staged investment worth up to $150m in its namesake iron ore project in the Republic of Congo, according to media reports earlier this week.
The agreement provides for an initial investment of up to $25m, to be paid in five equal tranches, earning Red Arc a 20% interest in Jumelles, Zanaga’s subsidiary which owns the project. The funding will advance engineering and other pre-production work towards a final investment decision, the reports said.
A second tranche grants Red Arc an option, exercisable within 18 months of completing the first stage, to invest $125m for an additional 67.5% fully diluted stake in Jumelles, lifting total ownership to 87.5%. Should this option be exercised, Zanaga would retain a 1% net sales revenue royalty on iron ore concentrate sales, with Red Arc able to buy back half for $50m.
Zanaga Iron Ore CEO Martin Knauth said the transaction represents a major acceleration enabled by non-dilutive capital that allows the project to progress through pre-production towards a final investment decision.
Red Arc Minerals, a private investment group backed by mining veteran Mick Davis and Heeney Capital, will gain board representation rights upon closing.
The transaction remains subject to due diligence, definitive agreements, and shareholder and regulatory approvals. Zanaga retains the right to require Red Arc to exchange its Jumelles shares for Zanaga shares at 15 pence a piece if tranches are not completed within defined periods.
