PERTH (miningweekly.com) – An updated scoping study on Nigeria’s Agbaja iron ore project has significantly increased project economics, ASX-listed Kogi Iron said on Wednesday.
Compared to the 2021 scoping study, the updated scoping study has increased Agbaja’s projected capital cost from $507 million to $557 million, while operating costs have increased from $309/t to $503/t.
The mining rate and mine life remained unchanged at 1.7 million tonnes per year and 25 years respectively, with the project expected to produce 500,000 t/y of steel billets, or 12.33 million over its operational life.
However, with rising commodity prices, Agbaja’s projected after-tax net present value increased from the $273 million assumed in the original scoping study to $1.4 billion, while its internal rate of return after tax increased from 14% to 33%.
The project’s expected average annual cash flow also fell from $74 million to $213 million and its payback period was reduced from six to four years.
“Kogi Iron is delighted with these updated financial metrics for the Agbaja Steel Project in Nigeria. The results of recent benchmark price forecasts produced by Fastmarkets, a leading steel and commodity price consultant, released at the ASX in June 2022, enabled the company to, among other things, elevate the project’s potential financial returns from approximately 14% to approximately 33%,” said Kogi’s non-executive chairman. Sean Gregory.
“All projects must compete for capital, and with these results our continued investment in feasibility studies at Agbaja is reaffirmed and should attract the interest of additional investors.”
The updated scoping study is part of the feasibility work that is currently underway at Agbaja and scheduled for completion in the first half of 2023.