kogi iron directors back themselves

Kogi Iron directors back themselves by increasing shareholdings

Thursday, December 05, 2013 by Proactive Investors

Kogi Iron directors have increased their individual shareholdings in the company through personal investments.

Kogi Iron (ASX: KFE) directors have aligned their economic interests to shareholders by increasing their individual shareholdings in the company through personal investments.

It is also a vindication of the development potential and value that can be extracted for shareholders at the Agbaja Iron Ore Project in Nigeria.

Notably, the directors now hold a combined total of 59.2 million shares, or 18.5% of the total shares on issue, in the company.

The company had recently highlighted low strip ratios that will minimise future mining costs at Agbaja.

These average 0.42 to 1 during the first three years of operating the Stage 1 pit before increasing to a still attractive 20 year strip ratio of 0.72 to 1 for both the Stage 1 and Stage 2 pits.

“This most recent subscription to Kogi shares by my fellow Director and I continues the practice of the Board participating “hand in hand” with our fellow shareholders to provide capital to the Company,” chairman Dr Ian Burston said.

“It also demonstrates our continued support for the Agbaja Project in Nigeria, the Scoping Study work that is nearing completion, and the new Managing Director Iggy Tan and his team.”

Directors' Shares

Burston acquired 5,555,556 shares at $0.09 each for a total consideration of $500,000 from his participation in the recent Share Purchase Plan that raised $0.97 million.

This brings his total shareholding up to 14,222,223 ordinary shares, just under half, or 7.5 million, of which are loan shares previously issued under the company’s loan share plan.

Non-executive director Don Carroll bought 1,111,111 shares for $100,000 under the SPP, bringing his total shareholding up to 9,111,111 shares.

Of these 6 million are previously issued loan shares.

Tan had acquired 7.5 million shares priced at $0.11 each under the company’s loan share plan.

Analysis

The cash commitments of $500,000 and $100,000 by Burston and Carroll respectively for the recent SPP are a strong vote of confidence in extracting further value and uplift in share price of Kogi Iron and its Agbaja Iron Ore Project.

This is logical given the factors that differentiate the project. These include:

- The very low strip ratios for the project’s Stage 1 and Stage 2 mine areas;
- A 20 year mine schedule that gives a high level of mine life certainty;
- Proximity to established transport infrastructure;
- Scope to increase the Resource beyond its current 488Mt at 42.7% iron; and
- The requirement for just simple magnetic separation to beneficiate the ore.

With a Scoping Study nearing completion at Agbaja, a $19 million valuation (and share price of around $0.10) seems light given the strength of the iron ore price and interest building in the study results.