Is everyone ready for the pump n dump?, page-143

aTx, I asked if you had any ideas as to how the Agbaja project's EBITDA could be doubled and the capex halved as, in my opinion, one or both is required for the project to be viable. You didn't really get there.

Based on my understanding, having sufficient ore is not an issue. The issue is turning that ore into steel billets at a sufficiently low operating cost without having first to spend a fortune on capex.

Presumably the feasibility study information provided by the company to shareholders was based on the best input available to the directors. That being the case, it is hard to see a substantial improvement in the capex number occurring without the benefit of at least one pilot plant to test / enhance the production process. And, of course, there is always the risk that a pilot will reveal further challenges. (It is possible Kogi Iron can avoid the problems that caused multiple iron ore projects in WA to be abandoned or sustain major cost overruns but history is not on Kogi's side - think Sino Iron, Karara, Iron Bridge, Grange Resources' Southdown, Jupiter's Mt Ida, Cape Lambert's Pilbara project and Australasian Resources' Balmoral South.

Yes, the "Board could also work out a deal with a big time company (Vale for ex.) for a ‘first-in-line’ opportunity to buyout Kogi…for a startup funding package to help Kogi with start up operations." But why would a Vale, Rio, FMG, BHP be interested? Salesmanship may work at the junior level but it won't be enough for the big boys. An investment in Kogi Iron or the Agbaja project would have to enhance an existing industry participant's ROCE. Vale trades with an EV / EBITDA multiple of 2.7xs so they would have trouble with forecast capex much in excess of that.

Taking all the above into consideration, I think "penniem" has a valid point, even if it offended Yoda123.