Disclaimer: This is not a “broker level investment thesis”, it is more a “shits and giggles high level discovery”.

I also used GPTs to speed up the process, and I have done my best to ensure all numbers are reasonable, if not conservative.

Some stuff is based on “Iron Ore from the Majors”, and other stuff is based on “Akora’s Iron Ore”.

If you do decide to invest, you do so at your own risk and I am not responsible for any losses, but would happily accept donations to a charity I have started called “Pets for Pensioners”.

If you want ASX validated data, ONLY refer to released from the company, not my musings.

Who are Akora Resources?

Graeme Hunt is the Chairman, former head of iron ore for BHP. Deep, relevant experience and networks

Peter Bird is the new MD and CEO, former EGM Business Development & Investor Relations at REX Minerals, with multiple executive and leadership roles

What is Akora Resources?

An emerging high-grade iron ore producer in Madagascar, advancing four key projects, each with major upside compared to the current “Rip and Dig” DSO (Direct Ship Ore) PFS (Pre Feasibility Study):

1. Bekisopa (Flagship Project, 1 Billion Tonne Potential)

World-class, high-grade DSO and magnetite deposit

Only 9,000m drilled across 40% of a 6km strike

Resource:

~10Mt Indicated DSO (“Rip & Dig”)

30 - 80Mt Inferred DSO (“Drill & Blast”) - TBC with drilling

110 - 160Mt deeper magnetite within the inferred tonnes - TBC with drilling

Additional 300Mt - 800Mt total exploration potential at depth and across strike - TBC with drilling

We will use a 750mt total resource size for Bekisopa calculations

2. Tratramarina (Coastal, Extremely Low Cost Haulage)

16 km from coast, 160 km SE of Antananarivo

Banded iron formation with surface enrichment (e.g. 11m @ 34.5% Fe)

Easy logistics: sealed road access, near potential port

Abundant water and hydro-power potential

Ideal low-cost future development target

3. Satrokala (Early Stage, Large Upside)

30km strike with strong magnetic anomaly

Only 5 holes drilled in two areas; low grades so far

Large, underexplored footprint

4. Ambodilafa (Future Opportunity)

Hematite DSO (40 - 65% Fe) and upgradable magnetite (25 - 35% Fe)

45 km from Nosy Varika, 75 km from Mahanoro port

Drilling highlights: 54m @ 35.4% Fe, 42m @ 30.8% Fe

5km magnetic strike, >500m depth, untested Western Limb

Potential Expansion - Bekisopa South

Adjacent to southern Bekisopa - the richest DSO zone

In talks with government for acquisition

Highly prospective “bolt-on” to existing DSO development

Apples and Oranges

Disclaimer: Getting true data is difficult, and different majors for gold and iron ore have different costs, so I am trying to use “reasonable averages”.

The AISC for Gold and the C1 cash costs for Iron Ore generally do not include things like royalties and the cost to ship products to refineries or the customer.

For Gold: Research suggests the average AISC for gold miners in 2025 is ~$1,500/oz, with additional off-site transport and royalties adding ~$50 - $150/oz, leading to an estimated C3-equivalent cost of $1,550 - $1,650/oz. I will use $1,600/oz

For Iron Ore: C1 cash costs are about $22/t, and costs for freight and royalties, are likely around $15 - $20. I will use a C3 total of US$40/t .

We will use these numbers as the foundation for the calculations.

Gold is HOT

Gold is HOT, and it’s grabbing all of the headlines because of the 40% rise in USD price over the last year. AUD Gold price is 3% higher because of the fall in the AUD.

Iron Ore, on the other hand, has fallen 13% from $108 to $94 USD in the same period.

But it isn’t all doom and gloom for Iron Ore miners.

Compare AISC (All-In Sustaining Cost) for gold vs C1 cost per tonne for iron ore (BHP, RIO, FMG, Vale).

Let’s do this in USD terms to keep things simple, and we will keep it to the majors.

Gold Profit Margin

Price: $3,303 per ounce

Average Cost (AISC): $1,600 per ounce

Gross Profit: $3,303 - $1,600 = $1,703 per ounce

Gross Profit Margin: ($1,703 / $3,303) × 100 = 51.56%

Iron Ore is COOL

Iron Ore is cool, because it is stupidly simple. It scales beautifully, has machinery and technology that has been perfected over decades, greatly benefits from automation and autonomous vehicles, has much simpler processing complexity - especially for DSO, and is primarily “a logistics challenge”.

Gold looks good (apparently - I think it is gaudy AF), and is mostly a store of value, whereas iron ore is essential for steel and infrastructure, with no viable substitutes.

Iron Ore Profit Margin (for majors)

Price: $95 per tonne

Average Cost (C3): $40 per tonne

Gross Profit: $95 - $40 = $55 per tonne

Gross Profit Margin: ($55 / $95) × 100 = 57.89%

Costs to produce gold have increased by about 50% in the last 5 years, whereas they have only increased by 33% for Iron ore2

Mining is about Digging Rocks 3

There are 28g in 1 oz, but Gold is measured in tory ounces, for which there are 31g per oz.

The average gold grade for an open pit mine is about 1.5g/t.

Which is great, because using the numbers above, we can do some calculations (see footnote 2).

Gold has a margin of $73 per metric tonne of dirt mined.

Iron ore has a margin of about $55/t.

That’s a difference of about $18/t.

For Gold to yield a profit of $55/t, the price would need to come down $2,867.28/oz (or down about $500) - which it was on the 4th February 2025 (5 months ago)

For Iron Ore to yield a profit of $74/t, the price would need to go up to $114/t (or up about $19) - which it hit on the 24th October.

The Midpoint Profit is $64.46/t (($73.91 + $55) / 2), which means for gold and iron ore to “meet in the middle” 4 the gold price would need to be $3,085.25/oz, and Iron Ore would need to be $104.46/t.

Looking at historic prices and margins, the take away is that for the majority of the last 20 years, iron ore has been a more profitable endeavour on a “per tonne mined” basis than gold.

Take out the 40% rise in gold price in the last 12 months, and iron ore would easily be out performing gold.

Not all Ores are Created Equal

Gold ore (e.g., at 1.5 g/t as in your prior queries) is extracted and processed (via milling, heap leaching, etc.) to produce doré bars, which are impure, typically 60 - 90% gold (14.4 - 21.6 carat) mixed with silver, copper, or other metals.

Doré is sent to refineries (e.g., Perth Mint for Australian miners like Newmont) to achieve 99.9%+ purity (24-carat). This step incurs additional costs, which are included in the $1,600/oz C3-equivalent cost for iron ore.

So for simplicity sake, let’s assume that $1600 produces 1oz of 24 carat gold.

Refining Matters:

Doré bars, typically 60 - 90% gold, are not equivalent in weight to pure bullion. A 1 oz doré bar at 85% purity contains just 0.85 oz of actual gold.

In my model, I assume a generous 90% recovery from ore (to account for mining and processing losses), and then use the full cost ($1,600/oz) to deliver 1 oz of refined 99.99% bullion. In short, the refining step and its associated losses are already factored into the economics.

Iron Ore on the other hand, has varying degrees of “purity”.

DSO mining is simple

Mine > crush and screen > put on a truck > drive to port > put on a ship.

For the last 40 years, majors like BHP and RIO have produced immense profits from this exact process. This will be the same for the first 6 to potentially 20 years of Akora’s operations (subject to confirmation from more drilling).

High Grade Iron Ore Fines are a bit more complex

Mine > crush and screen > finer crushing and screening > grinding > put on a truck > drive to port > put on a ship

The decarbonisation push is encouraging all levels of the supply chain to reduce emissions. Whilst there is additional Capex and Opex for producing high grade, the economies of scale and significant margins for grade premiums easily offset these costs. And as grades decline and impurities increase for many of the majors, the discounts for lower grade, and the premium for higher grade ores will continue to widen.

An Illustration of Grade and Quality

The benchmark grade is 62%.

FMG produces ore that can be as low as 56%, which incurs heavy discounts.

Premium grade ores can go up to 72%, which attracts significant premiums.

Akora is expected to produce between 68% and 71% high grade iron ore.

For more information on iron ore pricing, you can refer to https://www.sgx.com/derivatives/products/iron-ore and use the drop down to change the index.

As of today (prices in USD):

62% iron ore fines are $94/t

65% iron ore fines are $104/t

Difference: $3.30/t or $10 for 3% grade improvement.

Akora’s Recent PFS

Akora recently released, what could be considered, a very conservative PFS.

Despite the conservatism, the C1 cash costs came in at $42/t, with 68% of that (or $28/t) being for haulage using rigid body, 40T trucks.

Akora’s C3 cash costs (including royalties and transport to the customer) are expected to be about $63/t.

This is still above our comparison rate of $40/t for the majors, but haulage optimisations and in-house logistics should bring this down significantly, over time.”

The most “conservative” aspect? Transport.

Future haulage optimisations could include:

The PFS uses contracted labour for haulage. However, Scoping Study from November 2023 suggests that by investing US$10m to buy trucks and bring haulage “in house” would result in savings of approximately $10/t

At 2mpta, that is $20m in savings.

The current vehicle is a truck without a trailer. Some mines use trucks with 3 or more trailers. Using trailers to a 40t truck with 20t trailer combination would increase road based throughput would reduce Akora’s $28/t for a 40t truck to $18.67/t for a 60t load - or a saving of $9.33/t.

This brings the C1 cost down to $32/t - much closer to the majors

The development of a slurry pipeline to significantly increase the volume and radically reduce the cost per tonne to low single digits. $28/t for a 40t truck becomes $3/t for a gravity powered slurry pipeline - or a saving of $25/t.

This would bring the C1 cost down to around $20 - more inline with the majors.

With this in mind, it is important to understand that despite the fact we have proven an “inferred” resource of ~200mt, the company is only allowed to report on 10mt of “indicated” resource.

The PFS also uses a “10mt of DSO ore using a Rip and Dig process” because “just” the first ~10m or so of ore does not need to be drilled and blasted to be mined (just rupped and dugged).

Adding a simple “Drill and Blast” step to the mining process should unlock at least another 30mt to 100mt of ore. Processing studies during the PFS concluded that 40% head grade material (of which there is a lot, especially in the central and northern zones), can be upgraded to 58+ DSO using a simple drum separation process.

As per the ASX announcement on 5th February 2025, the key highlights include:

The Bekisopa iron ore deposit has intermediate grade Direct Shipping Ore (DSO) mineralisation ranging from 40 to 58% Fe, which is additional to the identified high grade DSO resource

Intermediate grade material averaging 52.8% Fe has been upgraded to 59.2% Fe Lump product at 80.8% recovery, using basic dry magnetic upgrading.

Intermediate grade material averaging 50.3% Fe was upgraded to 60.8% Fe Fines product at 88% recovery, using basic dry magnetic upgrading.

In short, the softness of the ore means light processing of low head grade material produces vast quantities of highly profitable iron ore product.

A Possible Plan (with some high level numbers)

Note: This is “just” for the Bekisopa tenement, which has estimates of 500mt to 1BT of ore.

Phase 1: Early State DSO

The benchmark grade for Iron ore is 62%.

As per the Akora Resource PFS (page 36)

“Bekisopa Lump and Fines product split as 30% and 70% respectively, at average iron grades of 64% for the Lump product and 61% for the Fines product.”

And

“In recent years, Lump iron ore product typically achieves a ~US$9/dmt premium above the standard benchmark price.”

And

“Iron ore grades higher than the benchmark of 62% Fe typically achieve a ~US$1.8/dmt premium per 1% increase in grade”

Akora will produce an average of 61% for fines, which will incur a small discount of about $3 per 1%, but that will be more than offset by “lump and grade premiums”, which should be $9/t for lump and US$3.60/t for grade for a total of about $12.50/t above benchmark.

This closes the gap between the gold margins per tonne of ore mined, and the iron ore prices per tonne of ore mined 5.

1.1 Simple DSO - Rip & Dig

10mt DSO at ~62% Fe

C1 costs of $42/t (including $28/t haulage)

2mtpa production assumed

Confirm FOB or CFR pricing assumption in PFS

Calculate margin per tonne and project revenue/profit over Phase 1

1.2 Expanded DSO - Drill & Blast

(My) Estimated 75mt of total DSO resource once drill and blast added

Include haulage improvement scenario

larger trucks with 20t trailers

road upgrades for faster trip times (Toliara bypass, RN7 upgrades)

Estimate improved logistics costs and re-calculate margin

Phase 2: High Grade DRI Future

Resource and recovery assumptions:

Remaining resource: 750 Mt - 75 Mt = 675 Mt

Assume 56% recovery rate from beneficiation (based on DTT studies)

Use 378mt of magnetite concentrate potential at 70% Fe (via grinding to 75 microns)

Use production scaling to 10mtpa (maybe 20mtpa?) for the DRI phase

Estimated Capex costs of $500m to produce 10mt of DRI grades per year

Estimates costs to build and operate a 350km slurry pipeline? US$400m and a conservative $5/t respectively.

Assume grinding costs increase but offset by reduced haulage

Potential optimisation: It has been suggested to try grinding to 100 microns, over 75 microns, to further reduce DRI capex and opex.

What if Akora was a Gold Mine? (Hint: this is where it gets juicy)

What is considered “Good” for open pit gold mines?

Low-grade: <1 - 1.5 g/t.

Medium-grade: 1.5 - 2 g/t.

High-grade: >2 - 3 g/t,

Exceptional: 3 - 5 g/t

We will use 1.5g/t as it is on the cusp of medium grade.

Assumptions

Akora Bekisopa Total Resource: 750mt

75mt @ 62% DSO priced at US$95/t

675mt of magnetite upgraded to 68% Fe, with 56% recovery = 378 Mt product @ US$140/t

Gold Price: US$3,300/oz

Open Pit Gold Grade: 1.5 g/t

1 troy ounce = 31.1035 grams

Akora Revenue Estimate

DSO Revenue: 75mt × $95/t = US$7.125 billion

Magnetite Revenue: 378mt × $140/t = US$52.92 billion

Total Estimated Revenue = US$60.045 billion

Gold Mine Equivalent

Revenue per tonne of 1.5 g/t gold ore = US$159.15/t

To match Akora’s US$60.045B revenue, a gold mine would need to move 377 million tonnes of 1.5 g/t gold ore

How many new gold mines have 377 million tonnes of ore at 1.5g/t grade?

What about higher gold grades per tonne?

Gold Grade

Gold Revenue per Tonne

Equivalent Tonnes of Ore

2g/t

$212

282mt

2.5g/t

$265

226mt

3g/t

$318

188mt

3.5g/t

$371

161mt

4g/t

$424

141mt

Of Course there are Risks!

“But you’re comparing gold and iron ore miners in tier 1 jurisdictions to a speccy explorer trying to become a producer in a third world country”.

Yes, there are risks, and I will list many of them here:

Madagascar is a third world / undeveloped country

Road and Port infrastructure is sub par

Madagascar hasn’t approved a new mine in years

You don’t have a mining permit. It has already been delayed months, why do you think it will get approved “soon”

You only have a $12m market cap, how will you raise funds

You’ve only drilled 9,000m

You only have a 10mt indicated resource

You haven’t assayed the whole of the resource to confirm DRI grades

Bekisopa is 220 km inland from Madagascar’s west coast, and almost 400kms by road - which is accessed via RN7 highway, as well as dirt tracks and river crossings

You don’t have your own port, and the port isn’t suitable for supporting bulk iron ore exports

Iron ore prices are going to crash below $80/t

Junior miners are risky

Finding and proving up the ore is one thing, successfully mining and shipping it is another.

Whilst i haven’t put them here, I do have answers / responses / whatever for pretty much each of those, but I will only respond to them in the comments if people tell me which ones they are concerned about (assuming I haven’t been banned and can still respond).

Footnotes and Research

1 - USD Gold Costs

Newmont (TSX:NGT, NYSE:NEM): $1,620 (2025 full-year guidance, Tier 1 portfolio)

Barrick Gold (TSX:ABX, NYSE:GOLD): $1,460 - $1,560 (2025 full-year guidance)

Agnico Eagle Mines (TSX:AEM, NYSE:AEM): $1,575 (Q1 2025, up 0.59% YoY)

Polyus (LSELZL, MCXLZL): $1,168 (Q1 2025, up 11.4% YoY)

AngloGold Ashanti (NYSE:AU, ASX:AGG): $1,554 (Q1 2025, up 5.7% YoY)

Gold Fields (NYSE:GFI): $1,354 (Q1 2025, down 6.5% YoY)

Kinross Gold (TSX:K, NYSE:KGC): $1,452 (Q1 2025, up 7.3% YoY)

Freeport-McMoRan (NYSE:FCX): $1,697 (Q1 2025, up 14.3% YoY)

2 - (Approximate) Cost Increases

Metric

2020 Cost

2025 Cost

$ Increase

% Increase

Gold AISC

~US$1000

~US$1500

~US$500

50%

Iron Ore C1

~US$15

~US$20

~US$5

33%

3 - Margins

Using a gold price of $3303/oz, and an average of 1.5g/t (using metric tonnes), a generous 90% recovery rate (not all gold is recovered) and a total cost of $1600/oz to deliver 1oz of gold… What is the profit per tonne?

Metric Tonne (1,000 kg, Global Standard)

Gold content per metric tonne:

Ore grade: 1.5 g/t.

Recoverable gold: 1.5 g × 90% = 1.35 g/t.

Convert grams to troy ounces: 1.35 g ÷ 31.1035 g/oz = 0.0434 troy ounces per metric tonne.

Revenue per metric tonne:

Gold price: $3,303/oz.

Revenue: 0.0434 oz × $3,303/oz = $143.35 per metric tonne.

Cost per metric tonne:

Total cost to deliver 1 oz: $1,600/oz.

Cost for 0.0434 oz: 0.0434 oz × $1,600/oz = $69.44 per metric tonne.

Profit per metric tonne:

Profit = Revenue - Cost = $143.35 - $69.44 = $73.91 per metric tonne.

4 - Midpoint Calculation

Gold:

Profit = 0.0434 × P_gold - $69.44

0.0434 × P_gold - 69.44 = 64.46

P_gold ≈ $3,085.25/oz

Iron Ore (for majors):

Profit = P_iron - $40

P_iron - 40 = 64.46

P_iron = $104.46/t

5 - Closing the gap

Gold vs Iron Ore Profit Comparison

Gold

Price: $3,303/oz

Grade: 1.5 g/t, 90% recovery → 0.0434 oz/t

Revenue: 0.0434 × $3,303 = $143.35/t

Cost: 0.0434 × $1,600/oz = $69.44/t

Profit: $143.35 - $69.44 = $73.91/t

Iron Ore (Akora Resources)

Price: $94/t + $12.50/t (lump and grade premiums) = $106.50/t

Cost: $40/t (assumed industry average)

Profit: $106.50 - $40 = $66.50/t

Profit Difference: $73.91/t - $66.50/t = $7.41/t (gold higher)