By: OrePulse

Zanaga Iron Ore Co Ltd will hire a financial adviser and widen its search for financing options for its iron ore project in the Republic of Congo, also known as Congo-Brazzaville, after its board found that a proposed equity stake purchase by Red Arc Minerals is unlikely to close before a November 30 cutoff, the company said in a statement.

Zanaga wholly owns the Zanaga iron ore project in Congo-Brazzaville. The talks with Red Arc stretch back several months: Red Arc's proposed stake purchase became public in February, Zanaga said, and the two companies then entered a period of exclusive negotiations. That exclusivity period lapsed on July 31, and Zanaga said a number of issues in the proposed transaction still needed to be agreed before a deal could be completed by the November 30 deadline. Zanaga did not specify which issues remained unresolved.

In a statement announcing the search for a financial adviser, Zanaga chair Clifford Elphick said the company had "made encouraging progress with Red Arc Minerals and remain committed to working constructively with RAM," but added that, "recognising that further matters need to be agreed, we believe it is prudent to broaden our financing options."

Elphick said the board had decided the company should "undertake a strategic review of all available alternatives, to maximise value for all shareholders and stakeholders." The review will weigh a range of financing options for the project rather than relying solely on the Red Arc proposal.

Zanaga said Red Arc had made progress toward lining up as much as $500 million in financing to support its proposed investment. Despite the board's conclusion that the deal is unlikely to close by the deadline, the company said the Red Arc proposal remains one of the options to be weighed in the broader review, alongside other alternatives.

The financial adviser has not yet been named, and Zanaga did not disclose a timetable for completing the strategic review or for appointing the adviser.

Alongside the funding review, Zanaga said work on site has also moved forward: the company has finished sampling ore in bulk from the deposit, a step it called a key milestone, and is preparing follow-on metallurgical and engineering studies.

"We continue to advance the technical development of the Zanaga Project," Elphick said. He added that the "successful completion of the bulk sampling programme is an important milestone," and that "forthcoming metallurgical testing and engineering work will further strengthen the Project's technical foundation."

Elphick said the company's priority remains to "secure the right funding solution to unlock Zanaga's significant long-term potential."

Zanaga said the strategic review covers all avenues for funding the Congo-Brazzaville project, including a continued role for Red Arc alongside other potential sources of capital.