Akora Resources moves to pre-feasibility study phase for Bekisopa iron ore project

Akora Resources (ASX: AKO) has taken a key step forward with plans to develop its high-grade Bekisopa iron ore project in Madagascar by giving approval for the commencement of a pre-feasibility study (PFS).

The PFS will investigate a low-cost initial start-up option to develop a direct shipping ore (DSO) operation at Bekisopa.

It follows the company receiving positive scoping study results last month estimating the project could produce up to 2 million tonnes per annum of high-grade lump and fines products at an average 61% iron grade over the first five years.

High-return, low-cost opportunity

The scoping study assessment of the open pit mining “low capital expenditure (CAPEX)” case suggested that Bekisopa could deliver an estimated initial five-year revenue of around $815 million and generate pre-tax operating cash flow of around $405 million, providing an operating cost margin of over 100% and delivering a 64% internal rate of return.

An estimated upfront capital cost of approximately $83m was based on the use of contract labour and mining equipment, along with mobile processing equipment.

Further cost savings can come from using contractors for truck hauling the products to port and for ship loading.

Low capex examination

The next stage in proving up that potential will now be assessed by the PFS, which will focus on the low capex option supported by the project’s joint ore reserves committee (JORC)-indicated DSO resource of 4.4Mt hosted in the project’s southern zone.

This resource is contained within an overall total project resource of 194Mt.

Notably, the southern zone resource that is the focus of the PFS makes up just 20% of Bekisopa’s 6km strike length with the company planning to build on the current number with further drilling.

Akora has appointed Wardell Armstrong International to conduct the PFS, with the first modules of work focusing on defining the port options and delivering an updated mineral resource estimate (MRE).

Upgraded plans

Akora Resources managing director and chief executive officer Paul Bibby said the new MRE will include results from recent 2023 in-fill DSO drilling across Bekisopa’s northern and central zones.

“A great deal has been achieved over the last three years with November’s scoping study confirming Akora is well positioned to deliver higher value, lower impurity iron ore products for making lower CO2-emission greener steel,” Mr Bibby said.

“Advancing to the PFS phase is another major step towards developing an iron ore DSO operation at Bekisopa.”

Major growth opportunities

Akora believes there are significant opportunities to expand the size, scope and low-cost advantages of the Bekisopa project which has a JORC exploration target of 0.5 to 1 billion tonnes within two tenement areas totalling 31.2 sq km.

The project has the significant advantage of offering an initial high-grade cash generating DSO start-up option, followed by either the production of a 2mm fines product and/or an iron concentrate.

The project is also advantaged by the fact that the initial 194.7Mt-inferred JORC resource has very low impurities and an average head grade of 32% iron able to produce a 67.6% iron concentrate at a grind of 75 microns.

This is expected to lead to lower power needs in the production schedule and significant upfront and operational cost savings.