AKORA Resources to meet with mining representatives from Madagascar at upcoming Perth event

AKORA Resources (ASX: AKO) will meet with representatives from Madagascar’s mining ministry during the Africa Down Under conference in Perth this week.

AKORA managing director Paul Bibby will present at the event, while he and chair Graeme Hunt will separately meet with Olivier Herindrainy Rakotomalala, Madagascar’s Minister for Mines and Strategic Resources.

The conference presents an opportunity for Mr Bibby and Mr Hunt to discuss progress on Madagascar’s mining code and present the outlook for the development of AKORA’s Bekisopa direct shipping ore (DSO) iron project, beyond the completion of the pre-feasibility study.

Minerals-rich nation

Madagascar is rich in mineral resources including copper, cobalt, chromium, coal, gold, lithium, iron ore, uranium, zinc, zirconium, rare earths and a growing graphite industry.

Some of the world’s largest miners including Sumitomo and KOMIR operate in Madagascar producing a range of commodities, while Rio Tinto (ASX: RIO) and several other listed Australian companies including AKORA are developing projects across the island nation.

The Bekisopa project has a 194.7 million tonne inferred JORC resource with very low impurities, capable of producing a premium-priced +68% iron concentrate.

AKORA is targeting the valuable “green steel” direct reduced iron-electric arc furnace technology used to make steel without coal, producing significantly fewer carbon emissions.

This technology requires iron ore grades of at least 67% and AKORA has already had positive discussions with potential buyers.

Cash flow opportunity

AKORA is advancing plans to generate early cash flow in the near term with an option to produce up to 2Mtpa at Bekisopa over the first five years using DSO with an average iron grade of 60% for shipping to blast furnace-basic oxygen furnace steelmakers.

AKORA has drilled 314 holes at Bekisopa across five campaigns totaling more than 8,900m over the past four years.

The initial two drilling campaigns of 64 holes totaling 4,000m delivered a maiden mineral resource estimate of 194.7Mt.

The three most recent drilling campaigns dating to June of this year have been designed to add DSO tonnage, boost production planning and increase mine life for a pre-feasibility study.

AKORA’s plan is to develop Bekisopa in two stages, with Stage 1 producing approximately 62% direct shipping iron ore before ramping up to 2Mt.

Using a US$100/t benchmark price, the company can achieve a payback in 2.1 years while generating approximately $74 million in profit by year three and around $148m in cash flow at the annual 2Mt rate.