At a market cap of A$22m, Kogi Iron's EV is about about 5% of...

At a market cap of A$22m, Kogi Iron's EV is about about 5% of the NPV8 suggested in the company's scoping study. The ASX hosts a bunch of companies (some with independent feasibility studies) which show EVs of 2, 3 or 4% of project NPV. Many of those companies are focused on Australia (not Nigeria) and somewhat sexier commodities than steel billets. So, I would say Kogi is probably fairly priced at the moment considering its situation.

When (if) Kogi finalises a BFS and lines up its funding, the company's EV should increase to 20 to 30% of the NPV.

When (if) the project is completed and up and running, the market will value Kogi by reference to others in the steel manufacturing space. This is where it gets interesting. A quick review of the 20 biggest listed steel producers shows they trade with EV / EBITDA ratios of 4 to 4.5xs. Kogi's scoping study suggests operating cash flow of about US$160/t - after a miniscule US$1.5m/annum for G&A. G&A of US$20m is more likely, producing EBITDA of about US$60m/annum (A$85m). Applying the EV / EBITDA multiples, Kogi's potential EV - once the project is up and running - is A$340 to 385m. The project's capital cost is A$725m. Houston, we have a problem....