Zanaga Iron Ore : Interim Results 2018

27 September 2018

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018

Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (AIM: ZIOC) is pleased to announce its unaudited interim results for the six months ended 30 June 2018.

Highlights

• •Early Production Project ("EPP")

  • oPositive product test results

    • ▪Pellet feed concentrate results confirmed a premium product with an iron ore grade of 67.4% and low impurities is capable of being produced atthe Zanaga Iron Ore Project ("Zanaga Project")from haematitic upper level orebody layers

    • ▪Positive pellet test results from test work on pellets produced using new cold pelletisation technology with potential to provide significant cost benefits versus traditional pelletisation plants.Process launched by Jumelles, with support of Glencore, to ascertain commercial acceptability of Zanaga cold pellets with a range of steel industry customers

  • oCost estimations being secured from pellet plant developers for the potential pelletisation component of the EPP project, including assessment of both cold pelletisation and traditional pelletisation solutions

    • ▪Initial high level results indicate major capital and operating cost savings through the development of a cold pelletisation plant solution

    • ▪High level cost estimates indicate that a traditional pelletisation plant solution may present a viable economic solution in spite of the higher costs

  • oLogistics routes for the EPP project to two potential exit ports further defined-firm cost estimates under negotiation, with further results expected in Q4 2018

  • oStudy work underway to ascertain overall project feasibility and scope of operations with the objective ofdefining the EPP's economics

• •Port

  • oNon-binding Letter of Intent ("LOI") submitted toChina Road and Bridge Corporation (CRBC) by Mining Project

    Development Congo SAU ("MPD Congo") and other mining companies to support CRBC's discussions with

    Chinese funding institutions for the development of the new bulk mineral port at Pointe-Indienne, Republic of Congo

• •Appointment of Mr Jonathan Andrew Velloza ("Johnny Velloza")to the board of ZIOC as an Independent Non-

  Executive Director on 6 September 2018

• •Cash balance of US$3.0m as at 30 June 2018 and US$2.8m at 31 August 2018

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

"The first half of 2018has been very positive for the Zanaga Iron Ore Project and the Company. Supported by its shareholders, Jumelles has made major progress in progressing the Zanaga Project through the definition of a small scale early production project solution (EPP Project). The EPP Project is made all the more attractive due to the potentialability to produce high grade iron ore products that are currently trading at a premium in the market. We're alsocautiously optimistic about the positive results from the testing of the Zanaga product with a lower capital and operating cost cold pelletisation technology that has shown excellent results in its testing with a steel company and independent laboratories. The future of iron ore particularly lies in the production of high quality iron ore materials and the Zanaga Project is well aligned to benefit from that trend going forward.

We are also very pleased that Johnny Velloza has now joined the Board of ZIOC. Johnny'sextensive operational experience in the mining industry, particularly in iron ore, will prove invaluable to the Company as the Zanaga Project advances through the next phase of technical study work.

We look forward to providing our shareholders with further updates on the Early Production Project as the cost estimates are received and compiled by the Zanagaproject team."

Copies of the unaudited interim results for the six months ended 30 June 2018 are available on the Company's website atwww.zanagairon.com

The Zanaga Iron Ore Company Limited LEI number is 21380085XNXEX6NL6L23.

For further information, please contact:

Zanaga Iron Ore

Corporate Development and Andrew Trahar Investor Relations Manager [phone]

Liberum Capital Limited

Nominated Adviser, Financial	Christopher Britton
Adviser and Corporate Broker	and Richard Crawley
[phone]
About us:

Zanaga Iron Ore Company Limited (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 associate. 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.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Business Review - Operations Cash Reserves and Project Funding

As already reported in theCompany'sannual results published on 29 June 2018, Glencore and ZIOC agreed a 2018 Project Work Programme and Budget for the Zanaga Project of US$1.3m plus US$0.2m of discretionary spend dependent on certain workstreams requiring capital. ZIOC agreed to contribute towards the work programme and budget an amount comprising US$0.7m plus 49.99% of all discretionary items approved jointly with Glencore. Ignoringany entitlement to savings, ZIOC's potential contribution to theZanaga Project in 2018 is US$0.8m in total.

We are pleased to report that the Zanaga Project'sactivities are currently running in line with the 2018 budget forecast.

As at 31 August 2018, ZIOC had cash reserves of US$2.8m and the Board continues to take a very prudent approach to the management of the business.

Changes to the Board of Directors

Mr Jonathan Andrew Velloza ("Johnny Velloza") joined the board of ZIOC as an Independent Non-Executive Directorfollowing the Company's Annual General Meeting on 6 September 2018. Mr Velloza has a wealth of experience in themining industry and is currently completing his tenure as Deputy CEO and COO of Gem Diamonds Ltd. Prior to this, he was with BHP Western Australia Iron Ore where he was General Manager at Mining Area C, the largest iron ore mine in the BHP portfolio, from 2013 to 2015, leading a number of successful operational efficiency programs. He has also acted as a Senior Exploration Manager in Zambia and Chile for BHP from 2011-2013, Operations Manager at AngloGold Ashanti from 2009-2010 and held numerous managerial positions at De Beers from 2001-2009.

Mr Velloza, aged 47, holds a Bachelor's degree in Mining Engineering from The University of Johannesburg and a Bachelor's degree in Business from The University of South Africa.

In addition, Mr Michael Haworth stepped down as a Director to focus on other business commitments and retired at the

Company's Annual General Meeting on 5 September2018.

Early Production Project Assessment (EPP)

As part of the Company's annual results published on 29 June 2018, the Company provided a comprehensive update onprogress relating to investigations into the potential for development of a low capital cost project utilising existing road, rail and port transportation infrastructure. The project is envisaged to mine and beneficiateZanaga'shaematitic surface ores and produce either (a) high quality iron ore pellet feed concentrate, or (b) high quality iron ore pellets. Both of the target products would be expected to receive significant price premiums in the iron ore market.

The Zanaga Project Team have made significant progress in testing a new form of iron ore pellet, produced using a lower capital and operating cost technology, the results of which have been announced to shareholders on 29 June 2018 and 7 August 2018.

Following the success of the cold pelletisation test work, Jumelles, supported by ZIOC and Glencore, has commenced a process to assess customer acceptance of these new iron ore pellets. This process includes engaging with steel mills who might become substantial consumers of this product. As part of this process, Jumelles as a member of the Glencore group has the opportunity to utilise Glencore's extensiveIron Ore trading network.

Due to the continued rise in premiums for high quality iron ore pellets, the Zanaga Project team also commenced the process of securing capital and operating cost estimates for a conventional pelletisation solution for the Zanaga Project. It is encouraging to see the progress that is being made on establishing the viability of developing this solution for the EPP Project, and initial estimates provided to the Zanaga Project team indicate that an additional degree of optionality could be available in determining the potential viability of the EPP project using conventional pelletisation solutions.

As indicated previously, the Company and its associate Jumelles intend to be in a position to provide more detail on the outcomes of the study work by the end of this year including an economic assessment of the viability of the EPP project.

Cold pelletisation test results

On 30 June 2018, ZIOC announced the significant progress made in the Zanaga Iron Ore Project's pelletisation test workprogramme aimed at producing an industry acceptable iron ore pellet product using a lower cost cold pelletisationprocess. The results showed that the most recent batches of Zanaga cold pellets had met all industry standard tests as determined by independent third party laboratories.

Test work was then commissioned with the intention of ascertaining commercial acceptability in the steel production process. Two further 20kg samples of Zanaga cold pellets were sent to a European steel mill as well as an accredited European laboratory servicing the steel industry. The tests conducted by these independent laboratories returned positive results within the industry acceptable limits for conventional pellets.

These tests were undertaken by Jumelles, the joint venture between the Company and Glencore, as part of the overallinitiative to establish the viability of an Early Production Project (EPP) as described in the Company's Annual Reportreleased on 30 June 2018. As part of the ongoing work-streams, discussions are taking place with steel mills to consider further steps and tests that need to be taken in order to assess potential demand and pricing for Zanaga pellets and pellet feed concentrate.

Iron Ore Market

Iron ore prices have continued to be supported by robust demand from the steel industry in the first half of 2018. It is particularly encouraging that price premiums for high quality iron ore products, especially pellet feed concentrates andpellets themselves, have increased over the period supported by China's sustained drive to improve steel manufacturingefficiency and reduce pollution.

We do not expect major increases in supply of iron ore, and particularly not in high quality products with low impurities. We expect the structural shift in demand for high quality products to remain for the foreseeable future and the supply base to be unable to meet it for some time.

New Mineral Port in Pointe-Indienne

In March 2013, the RoC signed a Memorandum of Understanding with China Communications Construction Company

("CCCC"), and its subsidiary China Road and Bridge Corporation ("CRBC"), for the development of a new multi-user port facility 9km north of the existing port of Pointe-Noire at Pointe Indienne, including a deepwater bulk export facility for the iron ore industry. CRBC has conducted a significant amount of work on this major project, including a feasibility study on the port development.

ZIOC notes that there is still discussion between the RoC Government, China EXIM Bank and China Road and Bridge Corporation (CRBC) on the financing and development plan for the new bulk materials port development north of Pointe Noire.

Advancement of the new port development could provide a key catalyst in allowing the Zanaga 12Mtpa Stage One development project to derisk and proceed towards seeking finance.

CRBC has confirmed to the Zanaga Project team that it is engaged in discussions with Chinese funding institutions on the development of the New Mineral Port at Pointe-Indienne.

ZIOC confirms that a non-binding LOI has been provided to CRBC by Jumelles' subsidiary, MPD Congo, and four other mining companies to support the development of this port; this LOI outlines the need to hold discussions with CBRC to determine an economically and technical viable development of the new port in alignment with the needs of the mining companies.

Outlook and next steps

The global iron ore market continues to show strong demand fundamentals and solid support for high quality products such as Zanaga would produce.

The Zanaga Project Team have done an excellent job in progressing the definition of the EPP Project and advancing its economic assessment. The Zanaga project has always targeted the production of premium quality products and we remain focused on this strategy, including the potential to extend the product development plan through to the production of high quality pellet feed or pellets.

While port and power arrangements remain a challenge, the Zanaga Project Team continue to engage with stakeholders on the new mineral port as well as the opportunities presented by the extension of the port of Pointe Noire itself.

We look forward to providing further information to shareholders towards the end of 2018.

Financial review

Results from operations

The financial statements contain the results for ZIOC for the first half of 2018. ZIOC made a loss in the half-year of US$0.8m compared to a loss of US$1.4m in the full year ended December 2017. The loss for the 2018 half-year period comprised:

1 January to 30 June 2018 Unaudited	1 January to 30 June 2017 Unaudited	1 January to 31 December 2017 Audited
US$000	US$000	US$000
General expenses Net foreign exchange (loss)/gain	(416) (64)	(357) 242	(943) 366
Share of loss of associate Interest income	(354) 3	(382) 3	(824) 8
(Loss)/Gain before tax Tax Currency translation Share of other comprehensive income of associate-foreign exchange	(831) (13) (9)	(494) - - (84)	(1,393) - 52 (48)
Total Comprehensive income	(853)	(578)	(1,389)

1 January to

31 December

7

Audited

US$000

(943)

366

(824)

8

(1,393)

-

52

(48)

(1,389)

General expenses of US$0.4m (2017: US$0.4m), Directors' fees of US$0.1m (2017: US$0.1m), professional fees of US$0.2m (2017: US$0.2m) and US$0.1m (2017: US$0.1m) of other general operating expenses.

The share of loss of associate of US$0.35m (2017: US$0.4m) relates to ZIOC's investment in Jumelles Limited

("Jumelles"), the joint venture company in respect of the Zanaga Project.From May 2014, as a result of the completion of the Feasibility Study and thus consideration to complete the Glencore share option, only 50% (less one share) of the Jumelles results are now included above.

During the half year period, Jumelles' project expenditure was US$0.7 including the effects of currency translation of $0.01m loss. Capitalised exploration assets however, remain at US$80.0m.