---ADDS BROKER COMMENT---
Zanaga Iron (LON:ZIOC) played down the impact of weak iron ore prices on its flagship project in the Republic of Congo, saying it would still be attractive at US$80 per tonne.
Iron ore prices have tumbled to between US$90/t to US$100/t recently but chairman Cifford Elphick said its high profit margins will enable it to compete on a benchmark 62% iron ore price equivalent basis with some of the lowest cost mining operations in Australia and Brazil.
Zanaga wants to finance the first stage of the project through a combination of equity and debt and had received a high level of interest it said.
"A number of attractive opportunities have been identified in the debt market, such as debt-backed infrastructure agreements as well as export-credit finance, which could be linked to proposals from EPC contractors."
The group, which is partnered on the project by Glencore (LON:GLEN), recently submitted its mining and environmental permit applications, while talks are underway with the government over the fiscal regime.
The company expects shortly to start talks with contractors over the engineering and design contracts.
The Stage One development is for a stand alone operation producing 12Mtpa of premium quality 66% Fe content iron ore pellets at a forecast operating cost of US$32/t FOB including royalty.
The Stage Two expansion of 18Mtpa will increase the project's total production capacity to 30Mtpa.
Zanaga, which had cash of US$24mln at the year-end, posted a net loss in 2013 of US$6.75mln (US$5.73mln).
Broker Investec noted that, with the company still in the pre-development stage, the announcement focused on the previously announced revision of the scope of the Zanaga project, now entailing a lower capital staged development approach.
In the broker's view, this revision should enhance the ability to finance the project, or attract third part debt equity finance, or both.
"While the revised start-up capex of US$2.5-3.0bn is still demanding for a 12mtpa [million tonnes per annum] operation, presenting financing risk, it does offer value under our base assumptions of a US$95/t iron ore price," the broker said.
"In our view ZIOC remains very much reliant on the actions of its JV partner, Glencore," it added.