ASX-listed Kogi Iron has advised that it is nearing the end of its small-scale trial iron-ore mining at the Agbaja Cast Steel project, in Nigeria.

The company is in the process of conducting trial mining on site, as well as various community activities, including water clarification and flow tests before the Irimi-Okpaka Water Bore is installed.

Kogi is also evaluating the environmental and social benefits, as well as local business opportunities, from the planned iron-ore mine.

The trial mining is helping to inform a feasibility study for the Agbaja project, which is allowing the company to do steel refining tests and work on its investment policy – comprising gas supply and market entry.

Kogi has applied to the World Bank MinDiver Project for funding, for which the company needs to provide a stakeholder engagement and community plan, as well as environmental and social management plans.

The company explains that scopes of work for feasibility study consultants have been revised to concentrate on critical path decisions and key project value drivers in the near term, while preserving cash, pending full funding.

Consultants’ mandates will be progressed once initial funding is secured including: PricewaterhouseCoopers (Nigeria) for corporate advisory on gas supply and market entry policy; Tenova Pyromet (in South Africa) and Uvan Hagfors Teknologi (Sweden) for steel refining tests and engineering; Lantosmon for environmental and water management; FastMarkets for market studies and offtake strategy; SRK Consulting for an iron-ore reserve estimate and mine plan, ore beneficiation plant, and tailings and water management.

Further, the company wants to engage AGV Mining for ore reserve drilling, mining and site works and PW Nigeria for civil works, infrastructure and logistics.

Kogi MD David Turvey says the company’s staged fundraising plan will start out with initial funding of about $1-million to $2-million for early works and critical path value drivers toward the feasibility study.

An opportunity may exist for a small equity raise from private individuals, but the larger target fundraising of the remaining $6-million to $7-million for the project could be a combination of equity, convertible notes and other hybrids.

Turvey explains that investors are wary of the project being in a very early stage, while Covid-19 has also contributed to investors de-risking their investments in equity markets. Additionally, while investors acknowledge the medium-term returns from Agbaja, other opportunities exist in lower-risk countries compared with Nigeria.

Institutional investors will only be interested to invest larger amounts of capital once the feasibility study is complete.

Turvey remains confident about and committed to developing the iron-ore and steel project.