viewKogi Iron Ltd

Kogi Iron negotiates funding proposals to advance Nigerian cast steel project DFS


The company is hoping to reach targeted funding agreements with various parties.

A map of Africa showing Nigeria

Quick facts: Kogi Iron Ltd

Price: 0.053 AUD

Market: ASX
Market Cap: $40.99 m
  • Agbaja Cast Steel Project is in Nigeria
  • The company has made progress towards producing a DFS for the Agbaja project
  • It hopes to raise funds from several sources, estimating that $10 million is needed to complete the Agbaja DFS over about 9 months

What does Kogi Iron do?

Kogi Iron Ltd(ASX:KFE) specialises in steel project exploration and development in Nigeria. It is run by financier Martin Wood and chaired by former BHP Billiton Limited (ASX:BHP) (LON:BHP) (NYSE:BHP) (NYSE:BBL) executive Don Carroll.

Managing director and CEO Wood was responsible for more than $2 billion of transactions during his time as a financier and advisor at Standard Bank, NM Rothschild and Benfield. The former chairman of the Association of Mining Analysts later founded the brokerage Vicarage Capital Limited, picking up global base metals and precious metals and oil & gas companies and assets.

Non-executive chairman Carroll is an engineer and Australian Institute of Mining and Metallurgy member with more than 30 years mining industry experience, focused on West Africa, the US and Asia. He is the former CEO of Guinea Alumina project in West Africa.

What does Kogi Iron own?

The key asset is the Agbaja Cast Steel Project in Nigeria owned by Kogi Iron’s 100%-held subsidiary KCM Mining Limited.

Test work for the West African project has been completed by Mintek and Tenova, including chemical and moisture analysis.

A market feasibility study was undertaken by London Metal Exchange successor Fastmarkets MB.

The objective of the study was to confirm the overall level of potential market demand for the cast steel product that Kogi intends to produce at Agbaja, with results to be fed into a definitive feasibility study (DFS).

Fastmarkets confirmed that based on bulk sample process work undertaken last year by Mintek/Tenova, Agbaja iron ore produced a high-quality steel product.

The product had a 99.61% iron grade with minimal impurities - 0.00939% carbon, 0.003% manganese, 0.015% silicon, 0.0194% phosphorus and under 0.0632% sulphur.

The global metals market analyst also reviewed Nigerian and regional steel market demand.

Fastmarkets forecast a long-term average billet price over the period from 2019 to 2039 of US$476 a tonne with a US$428-513 a tonne range. The marketing study price estimate was conservative compared to UK-based CARES’ prices.

Based on forecast market demand, Fastmarkets considered the Nigerian market capable of an extra 1.5 million tonnes a year steel billet production. It also recommended a project developer consider Cameroon and Ghana export markets.

Full environmental permits have been granted previously for a proposed Agbaja iron ore mine.

The company reported earlier this month that a next phase would involve “bringing the remainder of the project (including the cast steel mill) to full environmental compliance.

“The already completed comprehensive base line environmental data that has been collected will allow this next phase to be completed in a timely and efficient manner.”

Kogi said on April 2, 2019, it had estimated an extra $10 million would be needed to finish the DFS and bring the project a “final close” for processing facilities and associated infrastructure construction funding.

The DFS-related funding would also be used towards pit geotechnical work, early-stage project civil works, improving local infrastructure and “general corporate purposes”.

Kogi has been in discussions regarding potential funding, saying two weeks ago, “The company is in negotiations with various parties regarding this targeted amount of funding and will update shareholders when definitive agreements have been reached.”

In February 2019 the company raised additional funds for its activities and had entered into a letter of intent with Nigerian steel producer Inner Galaxy Group for a strategic partnership on Agbaja.

The potential partner produces 1 million tonnes at year at two facilities, in Lagos state and near Aba in Port Harcourt region.

Kogi and Inner Galaxy’s agreement is non-binding but gives them a framework for Agbaja project development and offtake agreement discussions for a third of Agbaja’s forecast production capacity.

Later that month, the company’s representatives presented to Nigerian government officials at the 25th annual Investing in African Mining Indaba conference in South Africa’s Cape Town during a Nigeria Beyond Oil-De Risking Mining Investments workshop.

Company representatives also met with potential investors at the One2One Cape Town mining conference in the southern African port city.

Inflection points

  • Funding packages for ongoing and planned activities

  • Significant transactions

  • $10 million funding for completion of Agbaja Cast Steel Project DFS in Nigeria

  • Results of individual DFS report inputs, including socio-economic study, biodiversity study, proposed water and soil quality measures, waste management proposals, health factors, meteorology and air quality data and land-use management proposals

  • Detailed engineering design proof-of-concept and key metrics for the DFS, including capital and operating expense estimates

  • Completion of Agbaja DFS within timeframe estimated at 9 months from securing funds

  • Project construction finance

  • Final investment decision

  • Cast steel product production, ramp-up

  • Revenues and profit

Kogi chairman Don Carroll notes DFS progress

“The company continues to progress the milestones required for the completion of the DFS and these next steps build on the significant work done to date,” Kogi chairman Don Carroll told the market on April 2, 2019.

“We have a clearly defined path that we are following as we continue towards the finalisation of the DFS and ultimately the production of a cast steel product in Nigeria.”


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