What did the last announcement tell us? This is my reading between the lines of the testwork update that was announced 10 days ago now.
Kogi Iron Limited (ASX: KFE, “Kogi”, “the Company” ) is pleased to report on the progress of testwork associated with the commercialisation of the Agbaja Cast Steel Project in Kogi State, Nigeria. Sorry the update has taken so long. We had a few boardroom issues to deal with but we are all moving forward now.
Kogi has received notice from Tenova (a world leading metals and mining consultant which has been overseeing the bulk sample testwork programme) confirming they have been able to successfully produce “a beneficiated iron ore concentrate suitable for the production of pig iron and a refined metal with a grade and composition suitable for the production of billet.” Tenova have confirmed they can produce a concentrate suitable for pig iron and Tenova are able to produce a refined metal with a grade/composition suitable for billet. Refined metal with a grade and composition – ie they can get rid of the impurities! This has always been the big ‘IF” for me. Great news!
Tenova further added “We have not discovered any issues that would materially affect the economic viability of the project moving to the next phase.” Further evidence that we have an economically viable steel billet product!
Tenova are currently writing up the formal report of their findings which Kogi expects to receive in the coming weeks. The company is never going to be specific but there is clearly some fat built into this timeframe. And of course there is no info on when this will be released to shareholders. But watch this space, it could come any moment.
Kogi is now in a position to advance the project and progress the financing of the construction of the Agbaja Cast Steel Project. All systems go! We aren’t going to progress the financing of the project if the ore isn’t suitable for billet. We are now comforted that it is so it’s all systems go!
To this end Kogi anticipates that it will soon be able to announce progress on the appointment of an independent consultant to assess the steel import and consumption market in Nigeria and other rapidly developing regions of West Africa. Lets see exactly how big the opportunity is not only in Nigeria but also for the export market. It will diversify the customer base and could increase margins!
With the positive completion of the testwork program, Kogi looks forward to continuing with the Definitive Feasibility Study (“DFS” ) and announcing progress with potential off-takers, cornerstone investors and project lending banks. Look out everyone! Off-taker negotiations, cornerstone investor(s)! negotiations, and negotiations with financiers – all taking place now. And these negotiations will ramp up with the announcement of this update and it places KFE in a stronger negotiating position.
The successful completion of the testwork program will allow both the optimisation of the process for the efficient conversion on a commercial scale of the ore from the Agbaja iron ore deposit to a cast steel product and the completion of detailed capital and operating cost estimates. We now have a better idea of inputs and can gain greater clarity on production costs. As I said in my post a week or so ago – once this is out in the public and other firms can do their own sums, it opens up the door for a takeover.
The DFS for the Project will include both the Mine (which is effectively completed) and the Cast Steel Plant. While the DFS is still going on we have already done the mine portion. Now we need to do the steel plant portion. But we are advancing negotiations with cornerstone investors as well as financiers so this could all push ahead prior to a DFS.
Dr Ian Burston – Chairman of Kogi and Martin Wood, CEO, jointly commented “We are excited to have such a positive notice from our consultants and look forward to receiving the formal written reports which will enable us to give further details to our shareholders.” Good to see both Ian and Martin commenting about “such a positive notice”. This further confirms to me that the test results show that the impurities are out and a commercial quality and quantity can be produced. And these further details wont just be received by shareholders but by potential off-takers, cornerstone investors, and debt and equity financers.
The Company will continue to provide shareholders with updates as and when further results and reports are received. If there is good news we will sing it from the rooftop! Why do you think we appointed Proactive Investors?!
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