Kogi Iron : Half Year Report

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ABN 28 001 894 033

Interim Report - 31 December 2021

For personal use only

Corporate Directory

Directors

Company Secretary

Registered Office

Share Registry

Auditors

Solicitors to the Company

Stock Exchange Listing

Kogi Iron Limited

Half Year ended 31 December 2021

Craig Hart, Executive Director & Chairman

Richard Little, Executive Director

Sean Gregory, Non-Executive Director

Peter Huljich, Non-Executive Director

Ashley Pattison, Non-Executive Director

Patricia Vanni de Oliveira

Level 4, 100 Albert Road

South Melbourne VIC 3205

Telephone: [phone]

Link Market Services Limited

Level 12, QV1 Building

250 St. Georges Terrace

Perth WA 6000 Australia

Telephone: [phone]

Facsimile: [phone]

Email: [e-mail]

Website: www.linkmarketservices.com.au

RSM Australia Partners

Level 21, 55 Collins Street

Melbourne VIC 3000

Steinepreis Paganin

1202 Hay Street

West Perth WA 6005

Kogi Iron Limited shares are listed on the Australian Securities Exchange (ASX).

ASX Code: KFE

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For personal use only

	Kogi Iron Limited
	Half Year ended 31 December 2021
Contents
	Page
Corporate Directory	2
Directors' Report	4
Review of Operations	4
Auditors Independence Declaration	8
Consolidated Statement of Profit or Loss and other Comprehensive Income	9
Consolidated Statement of Financial Position	10
Consolidated Statement of Changes in Equity	11
Consolidated Statement of Cash Flows	12
Notes to the Financial Statements	13
Directors' Declaration	21
Independent Auditor's Review Report	22

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For personal use only

Kogi Iron Limited

Half Year ended 31 December 2021

Directors Report

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the "consolidated entity") consisting of Kogi Iron Limited (referred to hereafter as the "Company" or "parent entity") and the entities it controlled for the half year ended 31 December 2021.

Directors

The following persons were directors of Kogi Iron Limited during the financial half year and up to the date of this report, unless otherwise stated:

Craig Hart	Executive Director & Chairman
Richard Little	Executive Director
Sean Gregory	Non-Executive Director
Peter Huljich	Non-Executive Director
Ashley Pattison	Non-ExecutiveDirector (appointed 30 November 2021)

Principal Activities

During the financial half year, the principal activities of the consolidated entity were to continue evaluation studies and test-work programs associated with the commercialisation of the Agbaja Cast Steel Project. In addition, the principal activities of the Group were expanded through the acquisition of Macro Metals Limited, completed on 29 November 2021 (described further below).

Review of Operations

The loss after tax for the consolidated entity for the half year ended 31 December 2021 was $1,535,640 (2020: $1,224,501). Loss

for the period includes exploration project expenditure of $608,810 (2020: $158,576).

The half year period ending 31 December 2021 (Half-Year) was a pivotal one for the consolidated entity, having taken a significant step forward with the release of the Scoping Study for its Agbaja iron and steel project in Kogi State, Nigeria (Agbaja Project) and having added quality Australian iron ore assets through the acquisition of Macros Metals Limited ("Macro Metals").

Kogi's primary asset remains the Agbaja Project, a project of potentially national significance. The Agbaja Project is buoyed by the favourable results demonstrated in the Scoping Study released on the ASX on 13 December 2021. The Resource definition and potential small scale production opportunities offered by the Macro Metals projects provides an excellent short-term strategy that compliments the longer-term potential investment returns from the Agbaja project.

In November 2021, the Kogi entered into an agreement to acquire Macro Metals, the holder of a portfolio of exploration tenements in the Pilbara and Midwest regions of Western Australia. Refer below for further details.

Agbaja project

Scoping Study

The Scoping Study released during the Half-Year is a critical element of the feasibility study process and is a mechanism to communicate the preliminary key project metrics, attributes and assumptions to shareholders and key stakeholders, facilitating a better understanding of the inherent value of the Agbaja Project. The Scoping Study brought together the work and combined studies to date completed previously and during the current Phase 1 and Phase 2 of the Feasibility Study. The Company has now successfully transitioned to Phase 3 of the Feasibility Study. Phase 1 of the Feasibility Study included the preliminary estimation of operating costs, capital costs and confirmation of metallurgical processes relating to the production of commercial quality steel billets, utilising material from the Agbaja iron ore deposit.

The Scoping Study demonstrated the potential for strong financial metrics for the Agbaja Project based on a proposed stand-alone open pit mine supplying a conventional crush, screen, scrubbed iron ore product to a steel billet plant located at the site. The consolidated entity envisages owning and managing the steel billet and casting plant and contracting the open pit mining and power generation.

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Kogi Iron Limited

Half Year ended 31 December 2021

The Scoping Study delivered the following production and financial results, assuming an average steel billet price of USD 550 per tonne (current import prices being over USD 600/ tonne):

• NPV of approximately USD 273 million or AUD 390 million (after tax);
• IRR of approximately 14% (after tax); and
• Payback period of 6 years (after tax) from the start of development.

The consolidated entity considers the Agbaja Project to be technically low risk given the present understanding and the amount of test work completed on the metallurgy of the conversion of iron ore into a steel billet product. Refer to the ASX announcement of 13 December 2021 for further details including a description of key assumptions for the Scoping Study.

Community Development Agreement

During the Half-Year, the Company's wholly owned subsidiary, KCM Mining, renewed the Community Development Agreement for an additional 5 years. The new CDA is consistent with the terms of the agreement it replaces and is a key agreement with the communities and the ancestral owners of the land relevant to our Agbaja Project.

Conversion of EL28784 to ML 35769

Exploration license EL 28784 has successfully been converted to a mining lease ML 35769. The mining lease is north of the main license containing the published JORC Resource for the Agbaja project. The total area for ML 35769 is 22.8 Km2. The Company plans to undertake exploration in this area later in 2022 or in 2023.

Next Steps

Key feasibility study activities for next quarter include:

• The detailed scoping and contract for the Feasibility Study head contractor for completion of the Feasibility Study and design.
• Environmental permitting.
• Exporting of the iron ore and coal sample for test-work.
• Appointment of mining consultants.
• Scoping and appointment of market feasibility advisors.
• Planning for project management and civil works.
• Commencement of basis of design works.

The consolidated entity is targeting completion of the Feasibility Study in December 2022.

Macro Metals

On 23 September 2021, the Kogi announced the execution of a binding term sheet to acquire Macro Metals Limited (Macro Metals), subject to shareholder approval. Following a General Meeting, held on 19 November 2021, where the acquisition received overwhelming shareholder approval, Kogi proceeded to complete the acquisition, including the issue of 384,615,383 ordinary shares as consideration to the vendors on 29 November 2021.

Macro Metals beneficially owns 100% of a high-quality portfolio of iron ore assets in Western Australia. The assets are located in the Pilbara and Midwest regions of Western Australia, areas renowned for its iron ore mines. An Inferred Mineral Resource of 11.5Mt at 53.1% Fe has been estimated for the West Pilbara Project and iron mineralisation has been demonstrated with drilling at Catho Well North, Cane River, Wiluna West and Mt Padbury (refer ASX Announcement 23/9/21). A further two highly prospective tenement applications in the Central Pilbara, Mt Pyrton and Fig Tree are progressing to grant.

As a result of the issue of the consideration shares, Kogi welcomed highly regarded mining investors Tolga Kumova, Evan Cranston, Ashley Pattison, Rob Jewson and Peter Gianni as cornerstone Kogi shareholders. This is an experienced team with a history of delivering project outcomes.

Ashley Pattison also joined the Board of Kogi Iron Limited as a non-executive Director effective 30 November 2021.

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