Annual Reports and Accounts 2020

Zanaga Iron Ore Company Limited - 2020 Annual Report and Accounts

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Business Overview

30 June 2021

2020 Highlights and post reporting period end events to June 2021

• Zanaga Iron Ore Project (the "Project" or the "Zanaga Project") 30Mtpa staged development project (12Mtpa Stage One ("Stage One"), plus 18Mtpa Stage Two expansion ("Stage Two"))

1. Initiative completed to update the cost estimates associated with Stage One, as outlined in the 2014 Feasibility Study (the "FS Review")

1. External independent technical expert engineering firms engaged by Jumelles Limited ("Jumelles"), the joint venture company between ZIOC and Glencore, to oversee and provide input into the FS Review

1. Successfully ascertained potential capital and operating costs associated with the construction of Stage One in the current market environment

1. FS review indicates that capital and operating cost estimates for Stage One remain approximately within the guidance levels outlined in the 2014 Feasibility Study ("2014 FS")

• 1. Floating Offshore Port Study completed in May 2020
  2. • Concept Study completed on the viability of a Floating Dewatering, Storage, and Offloading port facility ("FDSO" or "Floating Port")
     • Potential indicated for $184m reduction to capital costs of Stage One of the Zanaga Project
     • No change expected to operating cost, significant NPV and IRR improvement
• Ore Reserve estimate re-statement
  o The Zanaga Project's 2.1 billion tonne Ore Reserve estimate has been re-stated by SRK and updated based on market pricing as of 31 December 2020
• Early Production Project ("EPP Project" or "EPP")
• 1. Multiple production scenarios remain under investigation focusing on processing facilities and suitable logistics solutions through the Republic of Congo ("RoC") and/or Republic of Gabon ("Gabon")")

• 1. Studies completed in June 2020 to determine cross border transport viabiity (mainly taxes and customs) between RoC and Gabon
• Work programme and budget for 2021 and 2021 Funding Agreement agreed with Glencore Projects Pty
  Ltd ("Glencore"), a subsidiary of Glencore plc

Corporate

• Equity subscription agreement concluded with Shard Merchant Capital Ltd ("SMC")
  o Subscription agreement ("Subscription Agreement") with SMC dated 25 June 2020
  o SMC has subscribed for 21 million ordinary shares of no par value in ZIOC (7 million in 2020 and 14 million in 2021), equivalent to 6.8% of ZIOC's ordinary shares on a fully diluted basis
  o Transaction involves SMC using reasonable endeavours to place the relevant Subscription Shares that it has subscribed for and to pay to ZIOC 95% of the gross proceeds of any such sales
  o Proceeds of £1,025,942.30 received to date, following 14,750,000 shares being placed by SMC, with a further 6,250,000 ordinary shares remaining to be placed

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• 1. Proceeds applied to general working capital, including the provision of further contributions to the
     Zanaga Project's operations
• Cash balance of US$0.4m as at 31 December 2020 and a cash balance of US$0.7m as at 31 May 2021
• Outbreak of COVID-19 has not had a material impact upon the Group although the continuing prevalence of the pandemic constrains a number of commercial activities. Further detail regarding the Group's response to the outbreak can be found within the Strategic Report.

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

"Despite significant challenges in 2020, the Zanaga Project has managed to proceed through significant milestones.

The conclusion of a Concept Study into a Floating Port facility for the Zanaga Project presented a potential solution to a logistics challenge which now provides significant flexibility on coastal route selection. In addition, the Concept Study indicates that there is potential to achieve significantly improved economics through the reduction of upfront capital costs relating to the transportation of Zanaga iron ore product at the coast, leading to an enhanced Internal Rate of Return.

It is also pleasing to have concluded an updated costing exercise, using independent technical experts to evaluate the Stage One development costs. This resulted in confirmation that the Project's 2014 cost estimates remain reliable in today's market environment.

Furthermore, an update exercise was undertaken to evaluate the Ore Reserve for the Project. This has resulted in the reconfirmation of the Ore Reserve - which remains one of the largest ore reserves globally."

The Company will post its Annual Report and Accounts for the year ended 31 December 2020 ("2020 Annual Report and Accounts") to shareholders on approximately 9 July 2021.

The 2020 Annual Report and Accounts will be available on the Company's website www.zanagairon.com today.

About us:

Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (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 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.

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Chairman's Statement

Dear Shareholder,

In these exciting times for iron ore it is pleasing to see substantial progress being made by the Zanaga Project Team ("Project Team"). The efforts of Jumelles, the joint venture between the Company and Glencore, have provided new and exciting opportunities for the Project which is particularly relevant at such an interesting and positive time for iron ore.

Iron Ore Market

China's strong demand for iron ore continues to surprise the market, with sustained levels of high steel production and an increasing desire for high quality iron ore products - similar to those that would be produced by the Zanaga Project. Iron ore prices have risen to record highs in the last few weeks and have maintained these high levels as the supply side struggles to respond, however there are reports in the media that the Chinese authorities are making attempts to manage speculative trading in iron ore contracts and mitigate extreme price movements such as we have seen in recent months.

30Mtpa Staged Development Project

Three key activities have been completed by the Project Team in relation to the Stage One of the 30Mtpa Project.

1) Floating Port Study

In May 2020 a Concept Study was completed to evaluate a Floating Port facility for the Zanaga Project. This concept study demonstrated the clear potential of a Floating Port facility to significantly enhance the economics of the Zanaga Project through the reduction of upfront capital costs and increase the Internal Rate of Return. In addition, there is potential to achieve significant ancillary technical benefits such as reduced environmental impact, elimination of dredging, and significant flexibility on coastal route selection. The Project's port solution has been a challenge for the Project since the 2014 FS was completed and we are pleased with the results of this evaluation exercise.

2) FS review

The Project Team also concluded the FS review process which involved an updated costing exercise, using independent technical experts to evaluate the Stage One Project development costs. This resulted in confirmation that the Project's 2014 FS cost estimates remain reliable in today's market environment.

3) Ore Reserve Statement Update

The Project Team have completed a process to update the Ore Reserve estimate. The Zanaga Project's 2.1 billion tonne Ore Reserve estimate has been re-stated by SRK and updated based on market pricing as of 31 December 2020.

EPP Project

The Project Team continue to undertake a process to evaluate the potential development of an EPP Project that would be quicker to construct than the larger 30Mtpa staged development project and would utilise existing road, rail and port infrastructure in Republic of Congo and Republic of Gabon. The Project Team continue to advance study work in an effort to improve their understanding of the viability of the EPP Project. The Project Team continue to evaluate the potential for the EPP Project to operate as a standalone project, or as an initial pathway to production during the construction period of the flagship 30Mtpa Staged Development Project.

Cash Reserves and Project Funding

ZIOC is pleased with the current operating budget expectations for the Project for 2021 and expects the Project Team to continue to deliver on work programmes as planned.

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