Zanaga Iron Ore (AIM: ZIOC): Investors brought in to build the mine, now taking control of it

ShareSoc asks AIM Regulation and the FCA to examine the Red Arc Minerals deal before shareholders vote

Zanaga Iron Ore Company (ZIOC) has been quoted on AIM since 2010. Its only material asset is the Zanaga Project in the Republic of Congo, a fully permitted iron ore development with a 6.9 billion tonne resource which, the Company says, “could establish Zanaga as one of the world’s largest iron ore mines”. For most of ZIOC’s time on AIM, control of the Project sat with Xstrata and then Glencore. In 2022, ZIOC agreed to regain full ownership in exchange for new shares.

In March 2025, ZIOC raised US$23 million at around 4.1p a share from a group of new investors and used US$15 million of that raise to buy back and cancel Glencore’s 43% stake. ZIOC presented the new investors as bringing the industry standing the Project needed. Greymont Bay was the cornerstone investor. Sir Mick Davis who, as Xstrata’s chief executive, led its acquisition of control of the Project in 2011, was named as a key investor.

Eleven months later, Red Arc Minerals (“RAM”), founded by Sir Mick Davis and controlled by Greymont Bay’s manager, Heeney Capital, signed a binding term sheet to take up to 87.5% of the Project. It looks to do this without making an offer for a single ZIOC share.

The deal in brief

RAM would pay US$25 million into Jumelles, the subsidiary that owns the Project, for 20%.

It would then have an option to buy a further 67.5% of Jumelles from ZIOC for US$125 million, taking control of the subsidiary’s board at 50.1%.

ZIOC would be left with 12.5% of the Project, the US$125 million, a 1% royalty half of which RAM can buy for US$50 million, and a Jumelles board seat (which it loses if its stake falls below 5%).

ZIOC has identified RAM as a related party. It states that RAM is “controlled by Heeney Capital”, which also “controls and makes all investment decisions for” Greymont Bay I LLC and Regatta HCRP I LP, which together hold 21.2% of ZIOC.

ZIOC has declared a “Heeney Capital or Red Arc Minerals related Concert Party”, holding around 28% of ZIOC. The declaration also mentions Mark Cutifani, a ZIOC shareholder and an adviser to both Heeney Capital and Greymont Bay, but does not clarify whether he is a concert party member.

Our concerns

Control of ZIOC’s only material asset would pass to a related party without an offer to shareholders, at a price fixed before the Project is de-risked and untested in the market, and without the independent safeguards a board would normally put in place to protect minority shareholders.

We have raised this with AIM Regulation and the FCA and put detailed questions to ZIOC. Its response, reproduced at the foot of this article, answered none of them. The facts in this article are drawn from the company’s own announcements and presentations.

1. Control without an offer

Because RAM buys into the subsidiary rather than acquiring ZIOC shares, Regulation 33 (the provision in ZIOC’s Articles that allows the Board to require an offer to all shareholders) is not engaged, regardless of how much control of the group’s business is transferred.

At the one point where Regulation 33 could bite — if RAM’s Jumelles shares are exchanged for ZIOC shares at 15p — the Board has agreed in advance not to use it.

We have asked when the concert party formed. ZIOC dates it to February 2026, but the core members held nearly 30% by the end of 2025. In September 2025, the company agreed lock-ins over their shares at the request of an unnamed “potential investor”. Regulation 33 is triggered by acquisitions, so the timing matters.

Shareholders will get a vote under AIM Rule 15. But a vote is not an offer: it passes by a simple majority, the concert party can vote, and those on the losing side have no way out. If that vote approves both tranches, shareholders will have settled the transfer of control up to around three years before it happens.

2. A price fixed early, and never tested

RAM’s first US$25 million pays for the work that de-risks the Project. The price at which RAM can take control was fixed in February, before that work was done, and RAM need only exercise if the price has turned out to be advantageous. The de-risking is already under way: in July RAM reported a letter of intent for up to US$500 million of project financing.

The price has not been tested. On 12 March chief executive Martin Knauth told investors: “The lots of entities that we have been engaging with have also been very clear that they would only invest at the asset level and then also as part of a consortium” (recording, at 3m33s).

If lots of entities wanted in, there was a market. Yet ZIOC signed exclusively with a related party and has disclosed nothing about any other proposal. It has also agreed that if a rival offer is announced before the vote and shareholders reject RAM in favour of it, RAM takes 10% of the rival’s consideration.

ZIOC’s March teach-in describes the initial tranche as “equivalent to an equity raise at 15p per share (>150% premium)”. But that is the price only if RAM walks away. If RAM proceeds, by our calculation on the company’s own figures it pays the equivalent of approximately 9p a ZIOC share for its first 20%; and the same US$25 million also buys an option over the second tranche. In our view, headlining the fallback price gives shareholders an incomplete picture.

3. Minority shareholders left exposed

If both tranches complete, ZIOC becomes a 12.5% minority holder in a project controlled by RAM. If RAM then pursues a sale of Jumelles above an undisclosed valuation threshold, or proceeds with financing construction of the mine, the announcements say ZIOC will be “required to participate on the terms set out in the definitive documentation”, terms shareholders have not seen. The presentation to investors speaks instead of ZIOC’s “right to fund, or sell”. The company has not explained the apparent inconsistency.

The US$125 million goes to ZIOC, not to its shareholders, and ZIOC says it is roughly what it would need to fund its share of construction. So the cash either goes back into the Project to stand still, or it does not, and ZIOC is no longer in the business of building the mine.

The Board has announced none of the safeguards shareholders would expect in a structure of this nature: no independent committee, no independent valuation, no market test, and no vote confined to independent shareholders.

The Board’s composition does not reassure. Philip Mitchell joined the Board as Greymont Bay’s appointee and is a declared concert party member, yet the Board describes him as independent “notwithstanding the criteria set out in Code Provisions 10 and 11”.

Andrew Trahar, ZIOC’s investor relations manager and also a declared concert party member, has the Board’s consent to act as a consultant to RAM.

What we expect the Board to do

If investors will come in only at asset level, the Board’s job is to protect the shareholders who cannot follow them there. Before any vote, we expect:

1. An independent committee of directors with no connection to RAM, Heeney Capital or the concert party, with its own advisers.
2. A tested price: an independent valuation of the Project and of RAM’s option, a genuine market check among the “lots of entities” the chief executive described, and no penalty on shareholders for preferring a better offer.
3. A vote of independent shareholders only, with the second tranche put to a separate vote when RAM seeks to exercise it.
4. Protection for what ZIOC keeps: no forced sale or financing without independent approval and a fair-value floor, and a board seat that does not vanish at 5%.
5. Full disclosure: who owns RAM and Gulf Iron & Steel, which holds marketing rights over 20% of the Project’s output; when each concert party member acquired its shares; and whether and when the Board considered Regulation 33.

ZIOC’s response

On 22 September we wrote to the Board with a detailed list of questions covering the matters in this article, and invited ZIOC to comment before publication. The company replied through its public relations adviser on 25 September with the following statement, which we publish in full:

“The Company has made all disclosures required of it under the AIM Rules and MAR to date, and will continue to comply with its disclosure obligations, including in connection with the proposed Red Arc Minerals investment (“Proposed Transaction”), as they arise.

“As the Company concludes the definitive long-form documentation, ZIOC Shareholders will have the opportunity to review the terms of the Proposed Transaction in a circular, and subsequently vote on the Proposed Transaction.

“The Company continues to believe this to be the best option to progress the project to a Final Investment Decision and deliver significant value for shareholders. Throughout the process, management has sought to engage with shareholders to explain the rationale for the Proposed Transaction and provide an opportunity for shareholders to ask questions and better understand its strategic benefits.”

ZIOC has not answered any of the detailed questions we put to it. We will publish any further response it wishes to make.

The bottom line

The Project plainly needs partners. Our concern is that control of ZIOC’s only material asset should not pass to a related party, at an untested price, without shareholders being offered a way out or, at the very least, without the independent process that would show the price is fair.

Shareholders should read the circular closely when it arrives, and vote.

We’re watching developments closely.