Akora Resources has obtained positive scoping study news from a low start-up cost examination of its Bekisopa iron ore project in Madagascar.
The updated Bekisopa scoping study has confirmed the project to be economically viable and potentially developed as a 2 million tonnes per annum (Mtpa) of direct shipping ore (DSO) operation.
Notably, the scoping study highlighted the viability of the low capital expenditure (CAPEX) option examined by specialist consultants Wardell Armstrong International.
That ‘low CAPEX option’ focused on an initial open pit mining option utilising Bekisopa’s DSO Joint Ore Reserves Committee (JORC)-indicated resource of 4.4 million tonnes (Mt), which is hosted in the project’s southern zone.
Strong initial returns
The study estimated the project could deliver an estimated initial five-year revenue of around $855 million, which could generate pre-tax operating cash flow of around $425 million.
The low CAPEX option also provided an estimated development capital cost of around $87 million.
To achieve those numbers, the study examined the use of contractor labour, mining equipment and mobile processing equipment in the development phase to keep upfront capital costs contained.
Major step taken
Managing director and chief executive officer Paul Bibby said the receipt of the positive scoping study results has brought Bekisopa a major step closer to production, adding that it is just the first step in an opportunity to develop a much larger operation.
He highlighted that only 20% of the project’s 6km strike length of shallow drilled mineralisation was included in the study.
There is also further potential of additional DSO tonnage from the company’s nearby Satrokala project, which was not included in the scoping study.
Satrokala has around 30km of prospective strike length of iron ore mineralisation.
Exploration upside
Mr Bibby said exploration success at Bekisopa and/or Satrokala would significantly add to this initial 5-year DSO start-up plan and result in significantly improved study outcomes.
“Bekisopa‘s 5.5 million tonnes of indicated and inferred DSO resource from just the southern zone of the project is sufficient to deliver robust project economics from a conservative mining and processing production ramp up, paying back the start-up capital in two years. Notably, this is just the starting position after only three years in the field. More drilling ahead will define additional resources,” he said.
“The start-up ‘low CAPEX case’ capital approach enables Akora to progressively develop the project, quickly generating cashflow as production builds to 2 million tonnes per annum and de-risking the project’s development in a staged fashion.”
More to come
Mr Bibby said additional studies will examine directing free cashflows from the low CAPEX start-up operation to further drilling with the aim of enhancing the company’s mining and processing options.
“The potential exists to deliver more low-cost DSO, lump or fines, or to access some of the 194Mt JORC resource with the objective of conducting feed material processing upgrades to significantly extend the mine life and produce either a 2mm fines product, and/or a clean low impurity high-grade iron concentrate for the ‘Green Steel’ future.”
