Zanaga Iron–Red Arc $25M funding: project economics and risk notes for engineers
Reviewed by Joe Ashwell
First reported on MINING.com
30 Second Briefing
Zanaga Iron has agreed a binding term sheet under which Mick Davis–backed Red Arc Minerals will invest up to $25 million in staged cash tranches to fund engineering and other pre-production work at the Zanaga iron ore project in the Republic of Congo. The initial funding, paid in five equal sub‑tranches, would give Red Arc a 20% stake in project owner Jumelles, with an option within 18 months to pay a further $125 million for an additional 67.5% interest, taking its holding to 87.5%. Zanaga Iron remains non‑diluted at listed level and would retain a 1% net sales revenue royalty on concentrate, half of which Red Arc can buy back for $50 million.
Technical Brief
- Funding is explicitly earmarked for engineering and other pre‑production work ahead of a formal FID.
- Cash injections are structured as five equal sub‑tranches, enabling gated technical work and decision points.
- Transaction completion is contingent on Red Arc due diligence and execution of definitive long‑form agreements.
- Regulatory and shareholder approvals are required before funds can be fully deployed into project studies.
- Royalty is defined on net sales revenue from iron ore concentrate, not gross production tonnage.
- Red Arc’s option window to proceed to the larger equity investment is limited to 18 months post‑stage one.
- Structure exemplifies a staged de‑risking model where pre‑FID engineering is financed without listed‑level equity dilution.
Our Take
The staged equity path into Jumelles, with Red Arc potentially reaching 87.5% ownership, mirrors structures seen in other Africa-focused iron ore financings in our database, signalling that control is increasingly being transferred only after early-stage de-risking is funded by the incoming party.
At a 0.3 g/t grade, the Black Pine indicated resource sits at the lower end of gold grades in our coverage, so the 4.8 Moz scale implies any future development case in the western US will likely hinge on low-cost, bulk-tonnage open-pit and heap leach style economics.
The 1% net sales royalty on iron ore concentrate, coupled with a defined $50 million buyback price, gives ZIOC a clear mechanism to monetise future upside at the Zanaga project while still offering Red Arc a way to clean up the royalty stack ahead of project financing if the asset advances.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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