AKORA Resources (ASX:AKO) has outlined ‘significant’ upside of its Bekisopa Iron Ore Project in Madagascar following the completion of an updated Scoping Study.
The $13.77 million market capitalisation company says the updated Scoping Study shows the project to be economically viable and could build to an initial 2 million tonnes per annum (Mtpa) of DSO.
AKORA Chairman Mike Stirzaker says releasing an updated Bekisopa Scoping Study within 3 years of listing the company is a significant achievement.
The company will meet shortly and further discuss the outcomes of the study and fully expects to move into a Prefeasibility Study (PFS) phase, including building the team to complete these projects.
The PFS, while yet to be fully scoped, will refine the development pathway and resultant capital and operating cost profile, defining the preferred options between the ‘low capex’ and the ‘low opex’ cases.
AKORA says the Scoping Study was prepared by Wardell Armstrong International (WAI) and focused on a low capital expenditure option utilising Bekisopa’s DSO JORC indicated resource of 4.4Mt hosted in the project’s southern zone.
Under a ‘low capex case’ open pit mining operation, a 2 million tonnes per annum (Mtpa) peak in production is economically viable with an initial 5-year mine life at Bekisopa South.
In a ’low capex case’ open pit mining operation, the study found Bekisopa could deliver an estimated initial 5-year revenue of US$545 million for C1 operating costs of US$45 per wet metric tonne (wmt) weighted average over an initial 5 years (US$42/wmt at full production rate). It is expected to also generate pre-tax operating cash flow of US$270 million.
The estimated upfront capital cost of US$55.3 million was based on using contractor labour, mining equipment (excavators and trucks), and mobile processing equipment (crushing and screening plant) suitable for processing the iron ore into a high-grade 61% Fe average grade lump and fines product.
Results from the study show the project is poised to have a net present value of 10% (NPV10) of US$125 million and an internal rate of return (IRR) of 64% pre-tax.
AKORA notes the study demonstrates a 64% ‘high-grade’ iron product in the first year followed by the 61% average across the next 5 years.
As of 2:40pm AEDT,AKORA’s share price had increased by 17.24% to $0.170.
The company says an immediate upside includes the 2023 DSO infill drilling outcome, further drilling for DSO at Bekisopa to define more tonnes, as well as the ‘substantial’ 194Mt JORC inferred resource and first drill testing on Satrokala’s 10km of the prospective strike length.
AKORA Resources Managing Director and Chief Executive Officer (CEO) Paul Bibby says the company has the option to tap into the existing 194Mt resource to extend the mine life or deliver a more low-cost DSO.
“Notably, this is just the starting position after only 3 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 2Mtpa 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.”
As of 30 September, AKORA had $1.776 million cash and cash equivalents at hand according to its latest quarterly report.
Write to Adam Drought at Mining.com.au
Images: Akora Resources