Akora Resources poised for growth as China diversifies iron ore imports

By Colin Hay - May 17, 2024

With the Chinese government looking to add impetus to its economy and diversify away from leading producing nations like Australia, analysts are predicting that suppliers of high-grade iron ore from other jurisdictions may be set to benefit.

The Chinese government recently revealed a 5% growth target for 2024, with stimulus measures introduced aimed at boosting the building sector.

China’s world-leading automotive industry is also expected to receive further supportive measures, adding to its expected iron ore demand.

China’s iron ore imports in the first quarter of 2024 totalled 310.13 million tonnes, up 5.5% from a year earlier, according to customs data.

New supply sources

The Chinese government has also indicated it is looking at acquiring more iron suppliers outside the leading producing countries such as Australia and Brazil.

This is good news for up-and-coming iron miners such as Akora Resources (ASX: AKO), which is on a fast track to develop a high-grade direct shipping ore (DSO) operation in Madagascar.

Iron ore prices have remained buoyant above US$100/tonne since November 2022 and rose above US$140/t earlier this year. Prices have since settled around US$116/t in May but are forecast to reach as high as $240/t by 2028.

Scoping study

This is all positive news for Akora, which recently reported positive results from a scoping study for its high-grade Bekisopa Iron Ore Project.

In its latest quarterly statement, the company reported that it had achieved a strong start to 2024 including moving the planned Bekisopa Stage 1 DSO Project to the pre-feasibility study phase.

The move was made after the company’s scoping study found that in a ‘Low CapEx Case’, an open pit mining operation could produce up to 2Mtpa of DSO, with the scoping study finding that this Bekisopa Stage 1 could deliver an estimated initial five-year revenue of around US$545m for C1 operating costs of around US$45 per wet metric tonne, weighted average over the initial five years.

Akora has now commenced a strategic investor process, including providing open access to the Bekisopa project data room and hosting participants on a site tour in Madagascar.

The company has also added to its project development team, hiring former BHP (ASX: BHP) Iron Ore president Graeme Hunt as its new non-executive chair and experienced mining operations and project developer Jason Whittle as general manager – development.

Bekisopa upgrade

Assay results from recent drilling in Madagascar have highlighted the potential to significantly expand Akora’s iron ore options.

The results will now be incorporated into upgrading the current Bekisopa mineral resource estimate, with additional DSO tonnage expected to add mine life, improve project financials and increase cash flow for its planned DSO start-up project.

The Bekisopa Project currently hosts an inferred resource of 194.7Mt, with the potential to produce a quality DSO product and a premium grade 67.6% iron concentrate suitable for direct reduced iron pellets for the steel industry’s accelerating decarbonisation