· Updated strategy includes lower risk initial Phase 1 250,000tpy Nigerian steel billet plant
· Plant’s design and technical scope to allow expansion to original target output of 750,000tpy
· Completion by end calendar 2020 of US$8m raising for BFS outcome
Australian-based iron ore and steel development company, Kogi Iron Limited (ASX: KFE) (“Kogi”, “Kogi Iron” or the “Company”), has announced the Company will adopt a staged funding program to ensure the continued progress of its advanced Agbaja Cast Steel Project in Nigeria.
The new approach was detailed today in a market update prepared by Kogi Iron to be embedded from the start of the new financial year. It takes into account the impacts of the COVID-19 pandemic in the 1H 2020 and the subsequent economic challenges that have emerged in Nigeria this year.
The updated strategy was sanctioned at Kogi’s latest Board meeting and a Technical Committee meeting with the Company’s advisor, Dr Ian Burston, AM.
The COVID-19 virus and related volatile equity market conditions globally have resulted in the Company being unable to raise equity by its target date of 30th June 2020. Additional impacts of the recent oil price shock are adversely affecting near-term growth in the Nigerian economy, through ongoing Government initiatives remain supportive of investment in infrastructure and the mining industry to diversify Nigeria’s economic base.
As announced earlier in 2020, Kogi Iron estimates the completion of a Bankable Feasibility Study (BFS) for the Agbaja steel project will require approximately US$8 million in funding. Given current equity market conditions, the Company has amended its expected timeline to the next 5-6 months to raise this full amount, with timing subject to no further decline in global equity markets.
Raising funds in the least dilutive manner may be best achieved by funding in stages, with initial funding sufficient to commence early work and focus on ‘critical path’ key value drivers:
a) Technical – steel refining test work for removal of phosphorus
b) Investment Policy – gas/electricity supply and market entry.
In parallel, Kogi’s ‘in-country’ team will continue to progress the project’s Environmental, Social and Governance engagement with local communities.
Source: Kogi Iron Limited