ZANAGA IRON ORE

Speculative Buy

Market Cap £48m

Shares in issue 278.777m

As at 30 Jan 13, 72.89% of shares in issue not held in public hands

So only about 75.5m shares in public hands

52 week high 117.25p

52 week low 14.00p

Current SP 17.00p

As at 30 June 2012

Net Assets £144m

Cash £26m (more than half market cap covered by cash)

Cash flow for the year £3m-£5m outflow

http://www.shareprophets.com/analysis/19/zanaga-iron-ore-is-a-speculative-buy-at-17p-argues-doc-holiday

The Zanaga story has been a jaded one after coming to market when natural resource companies were well regarded. Zioc listed at 156p twice subscribed at IPO with a high profile high case value, reporting the largest Iron Ore play in west Africa.

Xstrata tied up the joint venture 50-50 minus one share and assigned $100m to the PFS which has increased dramatically securing the future of the development and forging a relationship which would translate to the JV forecasting delivery of Ore to China at $45 m/t with a $28 m/t recover cost which in real terms exceeds all juniors and majors in their peer group with Zanaga forecasting significant profits in all climates.

The company has 73% of the stock out of public hands with a £26m cash position against the modest £48m marketcap today. The company has assets worth three times the current marketcap with the tangible cash in the bank.

Now lets look at the decline and reasoning to this, Well its no secret the sector has been somewhat unloved along with Xstrata (Ziocs partner) merging with Glencore who are finalising their future with the Chinese government (Announcement pending 2nd May 2013) taking longer than expected. Glencore and the Jv have been subject to speculation questioning glencore's intent on building the Iron Ore business with Zanaga, However what we do know is Xstrata do not have any Iron Ore plays like this and certainly not on this scale.

The stocks hampered with an institutional seller which has clearly effected the share price 40p to 17p. Relief will come when the overhang has cleared and its my understanding that at less than 5% this should not be too much longer.

The facts speak for themselves the company holds approx 60% of the company in cash with £144m in assets supported with a highly profitable business plan then zanaga has to be considered as a eyes on recovery play.

The next month will be key to Zanaga accelerating its developments or further delays in news and with this in mind I advise buying into the distressed weakness with a view to following the merger with disclosure on Xstrata/Glencores future plans and act according.

Best Regards Doc

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(These are but opinions derived from my own experiences and thoughts and do not adopted as statement of fact)
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