Zanaga Iron Ore Co Ltd told investors it has signed a binding term sheet with Red Arc Minerals for a staged investment that could inject up to $25 million to push its flagship Zanaga iron ore project in the Republic of Congo through engineering work and towards a final investment decision.
Under the proposed structure, RAM would subscribe for up to 20% of project-holding subsidiary Jumelles BVI through five $5 million sub-tranches, with the funding earmarked to cover Front End Engineering Design and related pre-FID work.
ZIOC framed the deal as non-dilutive at the listed company level, with chief executive Martin Knauth calling it “a major acceleration” enabled by “the non-dilutive capital required to advance the Zanaga Project through the pre-production phase and towards a final investment decision”.
The term sheet also gives RAM an option to pay $125 million in cash to ZIOC for an additional 67.5% (fully diluted) stake in Jumelles, taking its ownership to 87.5%, exercisable within 18 months after the full Tranche One funding is completed.
If Tranche Two closes, ZIOC would receive a 1% net sales revenue royalty on iron ore concentrate sales, with RAM able to buy back half of that royalty for $50 million.
"I am pleased to announce the signing of binding terms with Red Arc Minerals, a company founded by Sir Mick Davis and Heeney Capital to invest in strategic high-grade iron ore assets," said chief executive Martin Knauth.
"Red Arc Minerals brings both financial strength and deep industry expertise that enhances our ability to deliver the Project.
Our established relationship with some of the mining industry's most respected leaders continues to mature, and this transaction is indicative of their confidence in the Project's world-class technical and financial credentials."
ZIOC said the transaction is subject to due diligence, definitive documentation and shareholder and regulatory approvals, and it expects to put the proposals to an EGM by 30 June 2026 after targeting completion of long-form documents by 31 May.
Knauth added: "The transaction represents a major acceleration of the Company's growth strategy by providing the non-dilutive capital required to advance the Zanaga Project through the pre-production phase and towards a final investment decision.
"The transaction aims to deliver significant value to ZIOC shareholders, in the short and long term, by creating a clear pathway to retaining a strategic ownership stake and securing a compelling royalty interest in a world-class producing iron ore asset.
"Through our extensive strategic partnering process, we believe this proposal provides the greatest opportunity for the Company and its shareholders to participate in the success of the Project as it advances towards production."