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An updated scoping study into the Agbaja iron-ore project, in Nigeria, has significantly increased the project’s economics, ASX-listed Kogi Iron said.

Compared with the 2021 scoping study, the updated scoping study has increased Agbaja’s expected capital cost from $507-million to $557-million, while operating costs have increased from $309/t to $503/t.

The mining rate and mine life have remained unchanged at 1.7-million tonnes a year and 25 years respectively, with the project anticipated to produce 500 000 t/y of steel billets, amounting to 12.33-million over its operational life.

However, with commodity prices increasing, Agbaja’s projected net present value after tax has increased from the $273-million considered in the original scoping study, to $1.4-billion, while its internal rate of return after tax has increased from 14% to 33%.

The project’s anticipated average annual cash flow has also increased from $74-million to $213-million and its pay-back period has declined from six years to four years.

“Kogi Iron is thrilled with these updated financial metrics for the Agbaja iron and steel project in Nigeria. The results from recent base-case price forecasts produced by Fastmarkets, a leading steel and commodity price consultant, released to the ASX in June 2022, have resulted in the company elevating, amongst other things, the potential financial returns for the project from approximately 14% to approximately 33%,” said Kogi nonexecutive chairperson Sean Gregory.

“All projects must compete for capital, and with these results our ongoing investment in the feasibility studies at Agbaja is reaffirmed and should attract the interest of additional investors.”

The updated scoping study forms part of the feasibility work which is currently under way at Agbaja and is due for completion in the first half of 2023.