(Alliance News) - Zanaga Iron Ore Co Ltd on Monday reported a swing to annual profit and announced a subscription agreement with an institutional investor.

Shares in Zanaga, an iron explorer focused on the Republic of the Congo, dropped 17% to 10.39 pence in London on Monday.

Zanaga said it has entered into an equity subscription agreement with institutional investor Shard Merchant Capital Ltd. Zanaga will issue up to 36 million shares in up to three tranches of 12 million each. At current prices, the shares will be worth GBP3.7 million in total.

Shard Capital is a London-based wealth and asset manager. Last year, it subscribed for 7.0 million shares of the final tranche of its 21 million share facility signed in 2020, raising around GBP1.3 million.

Executive Chair Clifford Elphick said: "Following entry into the equity subscription agreement, Zanaga Iron Ore Co is pleased that a financing structured has been put in place which will give the company access to funding through a relatively low cost structure which minimises dilution to shareholders."

Also on Monday, Zanaga said it swung to a pretax profit in 2022 of USD8.1 million from a loss of USD1.9 million the year before. It generated no revenue, unchanged from a year prior, but reported a USD9.1 million gain on the revaluation of investment.

The company said that the iron ore market had proved relatively stable in the last few months, and this provided a backdrop for sustained pricing at current levels.

"The Zanaga project therefore has the potential to deliver sustainable iron ore production to strategic customers looking to secure positions in the commodity," the company said.

Zanaga said that it has been investigating opportunities that have the potential to unlock infrastructure solutions as well as options available for lowering capital and operating costs of the project.

"With Zanaga Iron Ore Co now positioned as 100% owner of the Zanaga project we are now able to engage with strategic entities interested in partnering with us going forward.

"Despite global uncertainty, the project team have continued to progress numerous workstreams with the potential to add significant value to the options available for the development of the Zanaga project."

By Will Neill, Alliance News reporter

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