AKORA Resources Ltd is moving closer to production at its Bekisopa Iron Ore Project in Madagascar, following a promising scoping study.
The study indicates the project's capacity to initially produce two million tonnes per year of high-grade direct shipping ore (DSO), with a 64% high-grade iron product in the first year and an average of 61% iron over the initial five years. Over that time, estimated revenue will be US$545 million.
This study, prepared by Wardell Armstrong International (WAI), focused on a low capex option utilising Bekisopa’s DSO JORC indicated resource of 4.4 million tonnes hosted in the project’s southern zone.
Key highlights of the study include:
Key scoping study metrics for 'Low Capex Case' Bekisopa DSO start-up operation.
“Bekisopa‘s 5.5 million tonnes of indicated and inferred DSO resource from just the southern zone of the project is sufficient to deliver robust project economics from a conservative mining and processing production ramp-up, paying back the start-up capital in two years," AKORA Resources managing director and CEO Paul Bibby said.
"Notably, this is just the starting position after only three years in the field. More drilling ahead will define additional resources.
“The start-up ‘Low Capex Case’ capital approach enables AKORA to progressively develop the project, quickly generating cashflow as production builds to 2 million tonnes per annum and de-risking the project’s development in a staged fashion. Additional studies should ensure that free cashflows can be directed to further drilling to enhance mining and processing options.
“The potential exists to deliver more low-cost DSO, lump or fines, or to access some of the 194 million tonnes JORC resource with the objective of conducting feed material processing upgrades to significantly extend the mine life and produce either a 2mm Fines product and/or a clean low impurity high-grade iron concentrate for the ‘Green Steel’ future.”
Continued growth potential
Bekisopa is poised to yield an impressive, estimated revenue of US$545 million over an initial five-year period. The project's C1 operating costs are projected at US$45 per wmt on average for the first five years, reducing to US$42/wmt when operating at full capacity, and is expected to generate a pre-tax operating cash flow of US$270 million.
The estimated upfront capital cost of US$55.3 million is based on the utilisation of contractor labour and equipment, including excavators, trucks and mobile processing units for crushing and screening.
This approach, extending to truck hauling and ship loading, aims to maintain low initial capital expenditures. The project plans to process the iron ore into a high-grade 61% iron average-grade lump and fines product.
Currently, only 20% of Bekisopa's 6-kilometre mineralisation strike length has been shallow drilled for inclusion in the study, suggesting significant growth potential.
The study does not yet account for potential DSO tonnes from AKORA's nearby Satrokala Project, which boasts around 30 kilometres of prospective iron ore mineralisation.
Success in exploration at either Bekisopa or Satrokala, both wholly owned by AKORA, could substantially enhance this initial 5-year DSO Start-Up Plan and lead to markedly improved study outcomes.
Location of Bekisopa and Satrokala iron ore projects in central Madagascar, Africa.
“Delivering the updated Bekisopa Scoping Study within three years of listing the company is a significant achievement,” AKORA’s chairman Mike Stirzaker said.
“We remain confident that there will be further DSO resources at Bekisopa, and potentially at Satrokala, which if realised, will enable extending DSO production beyond this first five years.
“Then, as the steel industry demands clean, low impurity, high-grade iron ore concentrates, AKORA will be well-placed to upgrade practices and deliver that higher value product to assist with low carbon emission steel-making. As shareholders, we should all be pleased with this study’s results and how that will feed into delivering the pre-feasibility study (PFS).”
Board to consider pre-feasibility study Phase
The board of AKORA is set to convene soon to deliberate on the positive results of the scoping study for the Bekisopa DSO start-up project. They anticipate endorsing the progression to the PFS phase, which includes assembling a dedicated team for project execution.
While the full scope of the PFS is yet to be determined, it aims to refine the project's development pathway, capital, and operating cost profiles. This phase will evaluate the most viable options between Low Capex) and Low Opex models. The study will also consider allocating future year capital expenditures from generated cash flow where appropriate.
Enhancing the project's financial prospects, the addition of further DSO indicated or measured resources to extend the production life of the DSO start-up is a significant focus.
Some of these resources are expected to derive from the recently completed 2023 infill drilling campaign in the Northern and Central Zones at Bekisopa. Additional exploration at Bekisopa and initial drilling at the Satrokala site present further opportunities to amplify the first phase of the project’s development.
For a full rundown of the scoping study, please see today’s announcement.
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