Why I’d consider Zanaga Iron Ore Co Ltd after almost four-bagging in a year

Zanaga Iron Ore Co Ltd (LON: ZIOC) is one of the market’s best-performing stocks this year and I think it’s worth a look.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Shares in Zanaga Iron Ore (LSE: ZIOC) have exploded higher over the past four weeks, making the stock one of the market’s best performers during this period. 

Since mid-October, the shares have gained 350%, and since the beginning of October, the stock has surged by 420%. Even after this rally, I believe there’s more upside on offer for shareholders in the months ahead. 

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Building the business

Zanaga’s rally started at the end of September when the firm announced alongside its half-year results that it is continuing to assessthe opportunity for a small-scale early production start-up project.” Such a project has been under consideration for several months, and the company is planning to be able to inform shareholders of the details towards the end of the year. 

If this start-up project goes ahead, it would be a significant development for it, turning the business from an exploration company, into a fully functioning iron ore miner. Funds generated could then be used to progress the development of the rest of the Zanaga Iron Ore Project, one of the most significant iron ore deposits in Africa. 

The second piece of good news for shareholders arrived on November 8. Management announced that the company had been awarded an Environmental Permit by the Ministry of Environment of the Republic of Congo. This permit “covers the Zanaga Project’s first phase of development pursuant to its Mining Licence granted in August 2014.

This approval is a huge step forward for the company. With the permission in place, outside investors should be willing to commit capital, and the firm can start to move forward with other plans. 

Plenty of risks ahead

It might be sitting on one of Africa’s most significant natural resource deposits, but the firm still has an enormous amount of work to do before it reaches the production stage and cash is in short supply. 

At the end of August, the business reported a cash balance of $4.2m. The company only used $434,000 of cash in the first half, so it can keep the lights on for some time yet, but it’s likely Zanaga will have to seek funding shortly if it wants to start a small project. 

It’s worth noting that it has been trying to develop its resource for many years and so far, there’s little to show for it. The last time I covered the business in 2014, the share price was still just under 19p. 

Nonetheless, the awarding of the environmental permit could be the catalyst that the company needs to get started developing its operations.  This is why I’m positive on the firm’s outlook. Even though it will probably be several more years before the business is generating a profit for investors, Zanaga’s outlook is now much improved. 

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Rupert Hargreaves does not own any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Senior woman wearing glasses using laptop at home
Investing Articles

SSE shares are up 15% since the market correction! Should I buy?

Jabran Khan looks at why SSE shares have been on an upward trajectory in recent weeks and decides if he…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

After crashing 29%, Spectris shares look cheap to me

After peaking at 4,167p last September, Spectris shares have slumped by over 29%. But I see deep value in the…

Read more »

British Pennies on a Pound Note
Investing Articles

Here is why I added this dirt-cheap FTSE 100 penny stock to my holdings!

Jabran Khan explains why he added this dirt-cheap FTSE 100 stock to his holdings and is excited by its recovery…

Read more »

Woman looking at a jar of pennies
Investing Articles

3 FTSE 100 penny stocks! Which is the cheapest buy?

Our writer examines three penny stocks that feature in the FTSE 100 index to ascertain whether they have a place…

Read more »

Arrowings ascending on a chalkboard
Investing Articles

Is the Vodafone share price an opportunity at current levels?

Jabran Khan looks at the current Vodafone share price and decides if he would add the shares to his holdings…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

4 gems I’d include in my Stocks & Shares ISA

Jon Smith explains some of the top stocks he's thinking about including in his Stocks and Shares ISA a we…

Read more »

Compass pointing towards 'best price'
Investing Articles

At 85p, are Rolls-Royce shares a no-brainer buy? 

The Rolls-Royce share price look very cheap right now. And I think this might be my last chance to buy…

Read more »

positive mental health woman
Investing Articles

My £3-a-day blue-chip passive income plan

Our writer sets out his passive income plan of investing a few pounds each day in top stocks.

Read more »