This post is in response to @zacko92 -...

This post is in response to @zacko92 - https://hotcopper.com.au/threads/akora-ako-vs-magnetite-mines-mgt.7273000/page-16?post_id=67043326

Before I get started, I want to preface this post with I haven't done a deep dive into FEX, I have watched a few investor videos on YouTube, read some reports and read a few threads on HC.

The reason for this superficial investigation is I very quickly felt I have missed the boat on this one, and given the very high cost of production and the current very short mine life, I can't see FEX having a lot of upside from here unless it makes a profitable acquisition in the near term.

FEX has paid a very handsome dividend stream if you were in early.

That said, let's take a look.

Business Stage
AKO is an exploration company that is realistically 3 years away from FID and 4 years away from its maiden production.

The FID decision could possibly be accelerated to 1.5 years, and the production timeline could possibly be accelerated to 2.5 years given the right conditions, but feel this is very optimistic.

FEX is in production, and started with a small but almost turn key operation only needing $15m and about 6 months worth of to get started.

Unfortunately is has a very small resource, and therefore a short mine life.

Winner: FEX - simply for the fact they are in production, making money, paying dividends.

Business Numbers
AKO
Market Cap: $12.3m
Share Price: $0.17c
Shares on Issue: ~72.2m
Cash at Bank: $500k (probably)

FEX
Market Cap: $143m
Share Price: $0.245c
Shares on Issue: ~584.2m
Cash at Bank: $45m (or there abouts)

Winner: FEX (for now) - a healthy cash balance and lots of infrastructure that is owned by the company. But they have a small resource that is being depleted at a fast rate, and is not being replaced. That said, FEX do have cash to acquire more land, but the viability of that land relative to their existing infrastructure is the primary question.

Resource Size
AKO currently has 1 defined resource that has been classified into 2 products:
~15Mt of what is likely 65% DSO
~ 270Mt of what is likely 65% fines or 68% DRI quality material, for about 75Mt of concentrate.

There is significant upside potential with what I believe to be up to 4 BILLION tonnes of resource in the "Bekisopa Region", for potentially an expansion of the products to:
~200Mt of DSO
~800Mt - 1Bt of 68% DRI concentrate

There are also 2 other resources at Tratramarina and Ambodilafa.

FEX initially had a small resource of about 10Mt that is being depleted at a rate of 1.3Mt per year.

I understand there is about 7Mt of resource left, or about 5 more years of production.

Project Commercials
Again, there are not many similarities, so for AKO I need to use what we have been told and what I have inferred from my own research.

The main similarities are for the DSO processing which are / will be very simple "blast > dig > crush > screen > transport".

AKO
Project Start Up Costs: $250m USD (probably) - more dilution to come
DSO Resource Grade: ~64% (currently) - potential for an upgrade with the MRE
DSO Manufacturing Rate: 2Mt per year (likely) - this is for an initial low cost DSO starter that will self fund up to 20Mt of concentrate in the future
DSO Mine Life: 10 years (initially) - but is likely closer to 50 years, and potentially up to 70 years for the Bekisopa Region, and an unknown amount for Tratramarina and Ambodilafa.
DSO Production Cost: ~$40USD/t or $60AUD (as per the Orior Capital report) - the biggest question for AKO is loading onto ships as there is basically no existing infrastructure.

FEX
Project Start Up Costs: $15m AUD - done and dusted
DSO Resource Grade: ~64%
DSO Manufacturing Rate: 1.3Mt per year
DSO Mine Life: ~5 years (initially) - the company has acquired more land but has not proven the viability of any new resources. Potential for acquisition of other operations.
DSO Production Cost: ~$52USD/t or $78AUD (as per the last quarterly) - the next question is how much more optimisation is available

Winner: N/A.

AKO is theoretical and FEX is actual.

AKO potentially has 20x upside in the Bekisopa Region alone - the current 200Mt being expanded to 4,000Mt (4B Mt) across all resources

If the numbers for AKO turn out to be accurate for the DSO component, then AKO would be the winner by a VERY LONG way given 800k extra production, and $20AUD/t more margin.

This $20AUD/t is $16m AUD in additional profit per year (25% more than our current share price), or $160m additional profit over the 10 year DSO mine life.