Zanaga Iron Ore : Interim Results 2019

30 September 2019

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

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 2019 and an update on post reporting period end events to September 2019.

Highlights

• •Infrastructure improvements announced in recent weeks in theRepublic of Congo ("RoC")including further progress on the development of thePointe Noire Special Economic Zone ("SEZ")

  • oIncreasing activity in infrastructure development in RoC with the potential to provide a positive impact to the economy of the RoC, including the development of mineral resource projects

  • oSignificant rail, port and power projects under investigation with the support of large Chinese government funding institutions and infrastructure companies

  • oThe SEZ has the potential to provide critical infrastructure to facilitate the advancement of mineral resource projects in RoC

  • oThe Zanaga Project Team have increased engagement with the entities involved in developing various infrastructure projects in RoC with the objective of exploring potential synergies that could support the development of the Zanaga Iron Ore Project(the "Project")

• •Early Production Project ("EPP Project" or "EPP")

  • oBrownfield logistics scenarios advancing well

    • ▪Evaluation of both Congo and Gabon export routes continue

    • ▪Preferred trucking contractors identified

  • oGabon export route

    • ▪Railway excess capacity currently limited to 1 million tons per annum ("Mtpa")

    • ▪Targeting c.US$110m capital cost estimate for 1Mtpa iron ore pellet project using conventional pelletisation process

    • ▪Pellet feed process plant cost estimation increased to US$40m from US$38m following adjustments to the process flow sheet to ensure achievement of target 65% Fe product grade

    • ▪Bolt-on conventional pellet plant cost estimate expected to be finalised in Q4 2019

    • ▪Rail and port costs in negotiation

    • ▪Engagement of third party contractors to assess customs and legal framework

    • ▪Gabon export scenario evaluation expected to conclude in Q4 2019

  • oCongo export route

    • ▪Under further consideration due to the impact of potential third party upgrades to railway, port and power infrastructure in RoC

  • oDirect Shipping Ore ("DSO") scenario evaluation expected to conclude in Q4 2019

• oOn completion of assessment and evaluation work, outcomes to be presented to the board of Jumelles Ltd, thejoint venture company ("Jumelles") for consideration

• •30Mtpa staged development project (12Mtpa Stage One ("Stage One"), plus 18Mtpa Stage Two expansion ("Stage Two")):

  • oValue engineering opportunities continue to show potential to reduce construction time and reduce capital and operating cost estimates associated with the Zanaga Project

  • oZanaga Project Team engaging with third party contractors and consultants to evaluate value engineering options to a higher degree of confidence

• •Management incentivisation scheme approved and announced on 30 August 2019 ensuring strong alignment with shareholder interests

• •Cold pelletisation technology remains under evaluation

• •Cash balance of US$1.4m as at 30 June 2019 and US$1.2m at 31 August 2019

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

"The first half of 2019 has been very positive for the Zanaga Iron Ore Project and the Company. Supported by its shareholders, Jumelles has made substantial progress in progressing the Zanaga Project through the definition of a small scale early production project solution (the EPP Project) while simultaneously engaging with large infrastructure and financing entities on the improved development case for the 30Mtpa staged development project.

The combination of higher iron ore prices in 2019 as well as simultaneous supply shocks from the major iron ore producers has led to more encouraging conditions for the Zanaga Project's development as atier one iron ore project.

The Zanaga Early Production Project has the potential to produce iron ore in a shorter period of time, at low capital cost, utilising existing brownfield logistics solutions, while the substantial value of the larger 30Mtpa project provides strong foundations for a larger development case.

We look forward to updating our shareholders on these exciting developments towards the end of 2019."

Copies of the unaudited interim results for the six months ended 30 June 2019 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	Andrew Godber, Edward Thomas
Adviser and Corporate Broker	[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 its associate Jumelles Limited. The ZanagaIron 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 the Company'sannual results published on 29 June 2019, Glencore and ZIOC agreed a 2019 Project Work Programme and Budget for the Zanaga Project of US$1.3m plus US$0.13m of discretionary spend, dependent on certain workstreams requiring capital. ZIOC agreed to contribute towards the work programme and budget an amount comprising US$0.65m plus 49.99% of all discretionary items approved jointly with Glencore. Ignoringany entitlement to savings, ZIOC's potential contribution to the Zanaga Project in 2019 is US$0.73m in total.

We are pleased to report that the Zanaga Project's activities are currently running in line with the2019 budget forecast.

As at 31 August 2019, ZIOC had cash reserves of US$1.2m and the Board continues to take a very prudent approach to the management of the business.

Infrastructure developments in Republic of Congo and the Pointe Noire SEZ

The Zanaga Project Team have been monitoring evolving developments in infrastructure improvements in the Republic of

Congo ("RoC") including the progress made in progressing the development of the Pointe Noire Special Economic Zone("SEZ").

There has been a particular increase in activity surrounding infrastructure developments in RoC in recent weeks, as evidenced by a number of announcements involving the progression of multiple large scale infrastructure projects. Many of these projects involve significant rail, port and power projects which are under investigation with the support of large government funding institutions and infrastructure companies with the potential to provide a positive impact to the economy of the RoC, including the development of its mineral resource projects.

The Zanaga Project Team are encouraged by its discussions with these large infrastructure and financing institutions, predominantly from China, as well as discussions with institutions involved in the development of the Pointe Noire SEZ, which has the potential to provide critical infrastructure to facilitate the advancement of mineral resource projects in RoC.

The Zanaga Project Team are engaging with a number of the entities involved in developing these infrastructure projects in RoC with the objective of exploring potential synergies that could support the development of the Zanaga Iron Ore Project. The Zanaga Project Team have been particularly impressed with the extensive experience these entities have in developing large scale infrastructure projects in Africa including railways, process plants, multiple power plants, ports, and transshipping operations.

The discussions thus far could potentially substantially improve the development prospects of both the EPP Project as well as the 30Mtpa staged development project through debt and equity financing solutions, accelerated development timeframes for key logistics infrastructure, and collaboration on power and port alternatives associated with the Zanaga Project.

Early Production Project Assessment

The ZanagaProject Team's workcontinues in evaluating the potential for an early production project that would produce a minimum of 1Mtpa of high quality iron ore product at a capital cost of approximately US$110m. If the early production project is judged viable and is successfully proceeded with, it potentially provides a low cost platform for the Zanaga Project to enter into production. It could also lead to the evaluation of a number of alternative options for the development of the larger 30Mtpa staged development project.

The EPP Project is envisaged as an initial development stage for the Zanaga Project, targeting an operating scale of 1Mtpa of pellet feed iron ore concentrate and/or iron ore pellets with transportation of the product via existing logistics infrastructure.

The Zanaga Project Team has adopted a strategy towards the EPP Project of engaging with experienced third party contractors for mining and for all logistical aspects of the EPP Project such as the trucking, rail and port solutions. As aresult, Zanaga's operating company would only be required to undertake the EPP Project's processing activities. Throughthis approach, it is believed capital expenditure can be minimised and limited predominantly to the processing plant solution required for the beneficiation of Zanaga iron ore into a high grade iron ore product pellet feed/pellet product.

A comprehensive update on the EPP Project's evaluation process as well as recent developments on the 30Mtpa stageddevelopment project was provided to shareholders in a project update on 28 March 2019as well as the Company's 2018

Annual Results announced on 30 June 2019. A further update is provided below on specific aspects of the EPP'sdevelopment.

1) Pellet Feed Concentrate Plant update

Together with the Project's preferred EPC contractor for the pellet feed concentrate plant, the Zanaga Project Team have reviewed the planned process flow sheet and decided to make some minor adjustments in order to have a high degree of comfort in achieving the targeted product grade. As a result the estimated capital cost associated with the pellet feed concentrate plant has increased slightly to US$40m, however the estimated operating cost remains unchanged at US$3.75/t Run of Mine (excluding power).

2) Trucking Contract

The Zanaga Project Team is evaluating the optimal solution for the export of the EPP Project's iron ore via either Gabonor RoC. In order to export the material it needs to be trucked to a railway siding in either RoC or Gabon. Two potential rail sidings are currently under consideration, either (a) Franceville in Gabon, which is approximately 173km from the Zanaga Project, or (b) Mossendjo in RoC, which is approximately 160km from the Zanaga mine site.

The Zanaga Project Team have evaluated proposals from multiple trucking companies capable of trucking Zanaga product to the rail siding alternatives. A shortlist of preferred trucking contractors has now been identified and the Project Team are now engaged in detailed discussions to optimise the commercial terms of the contract.

3) Rail and Port

The Zanaga Project Team are discussing a potential solution for the rail and port logistics solutions with the relevant service providers in Gabon and RoC. The Gabonese route has to date been the preferred route due to upgrades of capacity on the Transgabonais railway line as well as the significant port expansion underway in Libreville.

However, due to the potential for significant rail and port infrastructure improvements in RoC, through upgrades announced to the railway line and improvements planned by the SEZ to the existing port of Pointe Noire, the Zanaga Project Team are working to ensure these potential scenarios are also considered in the appraisal of the EPP Project.

4) Potential DSO stage

The board of Jumelles has approved a process to evaluate the potential for the production of up to 1Mtpa of DSO iron ore product. The evaluation of this option leverages the extensive study work already completed on the EPP Project.

The intention is to consider this interim production phase as a potential solution during the construction of the EPP Project; however the board of Jumelles is not ruling out the possibility of this option being a standalone project albeit with a shorter expected life of production.

Depending on how this initiative proceeds, it is the intention to provide further information in due course alongside information provided on the progress of the assessment of the EPP Project.

30Mtpa Staged Development Project

The ultimate objective of Jumelles remains to develop the larger 30Mtpa staged development mining project. The Stage One project plans to produce 12Mtpa of premium quality 66% Fe content iron ore pellet feed product at bottom quartile operating costs for more than 30 years on a standalone basis. The capital cost associated with this Stage One phase was estimated at US$2.2bn, including contingency, on completion of the 2014 FS.

The Stage Two expansion of 18Mtpa is nominally scheduled to suit the project mine development, construction timing and forecast cash flow generation, and would increase the Project's total production capacity to 30Mtpa. The productgrade would increase to an even higher premium quality 67.5% Fe content iron ore pellet feed at even lower operating cost. The US$2.5bn capital expenditure for the additional 18Mtpa production, including contingency, could potentially be financed from the cash flows from the Stage One phase.

1) Economic evaluation exercise

In view of changes in the pricing of iron ore products in the market and the emergence of a high grade pricing index which has been developed in recent years, in March 2019 the Company carried out the exercise of inputting updated assumptions into the economic model produced as part of the 2014 FS in two specific areas focused entirely on freight and iron ore pricing. This exercise was carried out for illustrative purposes as a high level evaluation exercise.

As part of the 2014 FS on the 30Mtpa (12+18Mtpa) staged development Project, the potential economic outcomes of the Project were reviewed across a range of prices based on a long term 62% Fe benchmark index structure. However, in recent years the 65% concentrate index has become established and this should be seen as a more appropriate index on which to benchmark pellet feed concentrate products such as that which would be produced by the 12+18Mtpa staged development project.

Earlier this year, as explained above, the Company re-ran the 2014 FS model with a new range of prices from US$70/dmt to US$110/dmt for the 65% concentrate index, and these results were reported to shareholders on 28 March 2019.

2) Infrastructure opportunities

The Zanaga Project Team continue to engage with a number of entities on the potential to develop the infrastructure associated with the staged 30Mtpa Project. A number of enquiries have been made by third party experienced infrastructure builders capable of developing all areas of infrastructure associated with the Project. A process is underway to evaluate potential financing solutions with these parties as well as possible value engineering opportunities such as reduced capital cost and shorter delivery times for key infrastructure components of the Project.

Power

The Zanaga Project Team are engaging on a variety of solutions for off-grid power suitable for the EPP Project. The EPP Project requires approximately 10 megawatts of power and a number of entities have expressed an interest in providing this power solution. The Zanaga Project Team are evaluating the option of sourcing third party power with Independent

Power Producers ("IPPs"), as well as the option of incorporating an owned power solution into the project.

In addition to the evaluation of diesel generator solutions, the Zanaga Project Team are also investigating multiple power solutions that would provide power to the mine site within a short timeframe, including a new heavy fuel oil (HFO) solution which may have the potential to further lower energy costs.

This is in addition to the continued investigations into the potential for the inclusion of small scale hydro power into the EPP Project which would increase capital costs but could provide very low cost power as regards operating costs, or potential transmission line connections to existing grid infrastructure.

As regards the 30Mtpa staged development project, the strategy is to connect the Zanaga Project to the national gridnetwork. The Project's 100MW power requirement would be supplied by existing and plannedpower generation capacity in the country. It is encouraging to note the progress in advancing the Sounda and Mourala dam projects whichhave the potential to supply all of the power required for the Zanaga Project's development phases.

Power would be delivered to the mine site through two connection points to the current 220kV transmission network within 160km and 200km of a proposed new transmission line to the east and south of the mine site respectively. The Zanaga Project Team has been engaging with potential IPPs and Government departments in order to develop a power supply for the Project.

The Zanaga Project Team have also been working with a number of third parties to investigate the potential for optimisation of the power solution designed for the staged 30Mtpa Project outlined the 2014 FS. A number of projects in the RoC are under investigation and could form part of the power solution for the Project. In addition, a number of areas of optimisation of the initial design are under investigation today.