Transcript: Akora Resources (AKO) - High-Grade Iron Ore Explorer in Madagascar

Morgan Leighton
May 13, 2021

Interview with Paul Bibby, MD & CEO of Akora Resources. Akora Resources Limited is a Melbourne based mineral exploration company which was incorporated in October 2009.

Akora Resources has three prospective exploration target areas comprising some 308 km2 of iron ore tenements. Bekisopa is the flagship project with its high grade ~65% lump iron ore suitable for Direct Ship Ore (DSO). The focus post the successful capital raising on the Australian Securities Exchange (ASX) is to build on the quality historical geological knowledge and drill to define a +100 million tonne JORC CODE 2012 compliant high-grade lump direct ship iron ore maiden resource.

We Discuss:

  • 1:20 - Company & Recent Result Overview
  • 2:48 - Business Plan & Journey so Far
  • 4:14 - Team Experience & People Involved
  • 8:14 - Mining in Madagascar: Jurisdiction, Relations with Locals & the Geo Team
  • 14:57 - Iron Ore 101: What Should the Market Get Excited About?
  • 21:41 - Financing it All: Enough Money for Short-Term Goals?
  • 22:36 - Management's Focus & Shareholder Breakdown
  • 25:12 - Expectations for 2021: Interest, Convince, Excite

Matthew Gordon: Paul, how are you, sir?

Paul Bibby: Very well, thank you for making contact.

Matthew Gordon: Well, not a problem. We wanted to hear the story, I had a few requests. And its Iron ore, which is a little bit topical at the moment so I appreciate you joining us. So where in the world are you?

Paul Bibby: So I'm in Melbourne, that's where we're headquartered. We're a small team and we've got some Iron ore prospects in Madagascar, a mineral rich country and we've got a bit of work ahead of us to prove up a good resource there.

Matthew Gordon: All right, okay, thanks for that. A relatively new story, a small company, with A$17-18M market cap, kicked off in December. You put out 12, well, you've done 12 holes, put out 8 holes. Is that what you thought it would be?

Paul Bibby: It is actually in terms of product rate better than we thought it would be. We've actually just in the last day, Matthew, you may have just missed it. We've done all 12 holes now in terms of reporting. And at the north and the south of our 6km strike very good results, surface intersects of Iron ore grading 62%, 63%. And right along that strike, 11 of the holes all intercepted Iron ore, depths to 100m so that's the most encouraging thing. Because up until we did this drilling, we knew there was Iron ore outcropping at the surface, high-grade Iron ore, we just didn't know the extent. So this drilling programme, very much exploratory, has proven that it's at least 100m plus in depth, with widths of 150m and 200m, because we've only done 2 or 3 holes in the line but extending right across that 4 to 6km strike.

Matthew Gordon: Okay, brilliant. With new stories, I quite like a new story because it means that, sometime recently you've actually sat down and come up with a plan about what you're trying to do. So you're the kind of few months before the go public in December to work out what you were doing. So can you describe what it is that you, this small team has set out to do in Madagascar. Is it just because Iron ore is topical at the moment or you’ve been at this for a while?

Paul Bibby: No, my colleague John started the company. He initially had some very attractive upgradable banded Iron formation projects on the east coast of Madagascar so that were grading 30%. But one of the really attractive features of the Tratramarina project was that it was 16km from the coast. So in terms of location, absolutely fabulous. Therefore, lower capital cost potentially, they’ve drilled 7 holes there, it confirmed that there was banded Iron formation. The Iron ore went quiet for quite a while and we also found the Bekisopa tenements. Initially worked on in the 60s by the French, the BRGM, then by the United Nations and it showed that a shallow trenching and pitting 5m deep and a few shallow drill holes to 19m that there was Iron ore at the surface. So we've had no doubt there was potential for a high-grade Iron ore project. We've just had to wait for the right time to bring the company to market to raise the funds to get it underway.

Matthew Gordon: Okay. So tell me a little bit about the team. So what's your background, what have you done?

Paul Bibby: So yeah, I'm a metallurgist by training. I started with the Rio Tinto group of companies as an 18 year old so straight out of school and they put me through university to train me up so I had a very exciting time. I worked initially in Aluminium in all stages from bauxite, alumina, smelting and even downstream. Then went into all the classic CRA Rio Tinto commodities, Iron ore, worked in Kalimantan, Indonesia on the big culture and premier coal project, which was just a fabulous time. And then a number of others took me into the head office to try and teach me business and strategy and all of those good things. I finished up in around about 2001 or 2002 in the Pilbara at the Iron ore mines, which was then called Hamersley Iron, now Rio Tinto Iron Ore. Where it all started for that company-at Tom Price and Paraburdoo. I also had some people working at the port, with the sampling and the ship loading and that sort of thing. So, again, a very exciting time. And I've got a broad breadth of knowledge in mining and mineral processing and so that's my background. Then I went on to be a manager and CEO for some smaller mid-tier companies here in Australia.

Matthew Gordon: Any of them work out.

Paul Bibby: Oh that was good. I was fortunate to be picked up by a company called Zinifex and we brought together the Lead-Zinc part of Zinifex with Umicore lead zinc companies out of Belgium and France and the like, and formed a company called Nyrstar. We put that together, I was based in London for a year or more. And then the global financial crisis happened and a few other strategic things happen when you bring two companies together. The Belgians won the day, the Australians were sent back to Australia. I then got picked up by a company called OceanaGold and worked in the Gold space, Gold mines in New Zealand and the Philippines. It was the end of the global, probably still the middle of the global financial crisis so we had to really restructure the company to get on a stronger financial footing. That happened and then I've got into a couple of smaller Gold and Silver plays, really work-outs type companies and as often is the case with those work-outs, the board and management make the decision a bit too late, and you're not given enough time to do the dramatic things that need to happen. But yeah, we did okay. 

Matthew Gordon: But I guess the smaller companies are a lot harder in many ways because you have so many where you get different sorts of problems from like Rio Tinto companies where decision making is a little bit more important almost you could argue with smaller companies. Do you enjoy it down at this end?

Paul Bibby: Very much. I was fortunate that I had 24 years at Rio Tinto. I was moved around every 2 or 3 years, I was given huge experience and then I've gone into various medium sized and smaller companies. We aren't in a position to be here at Rio Tinto, we can't have the support staff. John is very strong financially. I'm very strong from the process, operating side and together, we've got a very lean organisation. We've got the knowledge and the learnings that we've taken from our background. And yeah, we are bringing people into the company to help us on contracts. We've got a fabulous geologist, and we've also set up a team in Madagascar, which we can we bring in to do the work. So we're very lean and mean, we are not spending money because there's a huge pot of money behind us. We're conscious of the fact that we raised $5 million and that has to go into drilling through this year and next and we'll spend that very wisely to prove up a resource. 

Matthew Gordon: Brilliant. Have you been in country yet? Have you seen the asset?

Paul Bibby: Oh yeah, many times. I've been travelling to Madagascar since 2016. I've visited all other sites, which is terrific. It's a developing country. It's a very poor country, but a very energetic country. You know, people want to be part of things and get on. We've had some very well-educated Malagasy geologists working with us. And I've got to meet some people in significant positions, expats and also Malagasy to support us. In 2019, I spent 2 weeks camping in an intended site, as we did a geological survey. And we walked out, it was 400km crisscrossing the tenement doing a magnetic survey. So I enjoy that hands on, I don't have to be the person up here all the time. I like to be a part of it, but not interfering to get in people's way. But just so I know, the things are being done properly and with a sense of urgency.

Matthew Gordon: Brilliant. So you got John as the CFO, keeping purse strings tight. So tell me about the geologists that you mentioned. Who is he?

Paul Bibby: Yeah, Tony, Tony Truelove out of Brisbane and Queensland, a place that you mentioned you've been. Tony's got broad experience, a lot of it in Gold and precious metals, but he's also worked in Iron ore, here in Australia and India and a very practical geologist. I mentioned I was camping out in 2019, I took Tony with me. In the lead up to that I got him to read up on all of the French documents that we had translated from the BRGM's work. And all of our reports and internal reports for Bekisopa. And then we went to site, we spent a week in the office with our geologists and the maps and things. And then he had a very clear picture of what he was going to do. And then for that next 10 days when we were camping out, he walked the ground. And he did it on his own, with 2 local village people from the nearby village, which is about 30 km away. It's a very remote location, Bekisopa. And they were basically his guides, and it was terrific. So he saw things and added to the geological knowledge that really gave us confidence that this ore body wasn't just a sufficient event and that that was in the start of it. And with Tony, we've planned the drilling programme, which we did late last year and he's continued to work with me on and off when we've needed that geological support.

Matthew Gordon: Okay, well, let's talk about the country itself. There's a few names operating in that. I think people, nice summer time. I think they've just gone back on site after COVID restrictions, right? And you got a Rio Tinto company there as well. QIT is that right? I can't remember.

Paul Bibby: QIT Minerals, yes. 

Matthew Gordon: And we've had Base Resources on here a few times actually telling us about them. So yeah, it's interesting country, growing country, and there's a desire to get miners well mining. But so you've got a kind of good relationship locally, because you're using and employing locals. Is that the idea of how you do business in country? 

Paul Bibby: Yeah, very much. So like I said, the team is John and I. And then we bring Tony in as we need Tony. We've got a small board, there's only 4 on the board of which John and I are 2 of those people. You mentioned Base Resources. Mike Stirzaker is on our board, he's our chairman, very knowledgeable fellow. He has visited our projects in the past as part of his past work with Pacific Road Capital, and then he's been on the Base Resources Board so he's also got first-hand experience with Base. And he's visited our projects and contributed money in the past, to the company to progress the projects. So I've got those. We're a member of the chamber of mines. So  I've met the fellows from Rio Tinto, from Base, BlackEarth Minerals and a number of other companies that are working across Madagascar, just to share experience and have a presence there to promote the mining industry and get it moving along.

Matthew Gordon: It’s interesting because I read it a while ago, Rio, the QIT sort of encroaching on some of the wetlands there so you've got to be quite sensitive to doing things the right way there, I think probably more so than certainly else in a certain kind of way.

Paul Bibby: Yeah. Look, no doubt there are groups who are there with good intentions and well-meaning to help the country develop. So to do that, you need to be cognizant of the community and the social environmental responsibilities. What we've been doing from my very first visit, and I said, the little village of about 80 or 100 people it’s about 20 or 30km, from our actual main tenement number 10-430. We took, we contacted them first to say we're coming, we spent the night there. And then the next morning, we presented them with medical supplies, which they asked for. And the school teacher said we'd like some chalk, chalk for the Blackboard. So we took boxes of chalk, we also took books and pens and colouring pencils. And we've done that 2 or 3 times and the community loves that. When I was there last year, which was October 2019, we sat down in each little village like this has what they call the mayor so that like the main person for communicating to the broader, I guess officials. He said that there's 2 or 3 things he would like help with. And the first and most obvious was to drill a well for potable water, because at the moment they are taking water from the swampy ground. So we're going to do that. When we get back there this year, towards the end of May, that's one of the community projects we're going to be doing. Others are helping them with transport and fixing up their roads so that they have better roads to get to the markets to sell their rice and they're zebu the cattle and so on. So, all sensible things, nothing outrageous, because it doesn't make sense. But every time we go there, the important thing is to engage, to listen, but also to involve them in the work. So we take the folks there, we might take 4 or 5 for a couple of days. They go back and then another 4 or 5 camp and they each get to share some work experience but also some financial reward.

Matthew Gordon: You've raised a bit of money Paul, you raised $5M, you've done 12 holes, you got a 4000m metre programme that you want to complete now. To what end? What do you need to do by the end of this year to kind of get the market excited? Because if I look at your share price, recently, people are not that excited about your drill holes, it seems. Why not?

Paul Bibby: Yeah. Look I'm actually hugely disappointed in what's happened since the 13th of April, hugely disappointed, because the results are fabulous. But what I think we've seen is the number of things. We've reported the results. And like I said, Yeah, there's numbers like 7m at 65% Iron at surface. So that's the outcropping material. And we don't know how big it's going to be, it might only be 10 or 20Bnt, but that's going to be at today's prices, a fabulous earner. But then below that the drilling has identified, intersects of 70m at 44%, 37 at 47% Iron. And then we've done some first pass processing tests, because what really matters is not what's in the ground, it’s what the product, the blast furnace is gonna see that make the Iron to become the steel. The product has upgraded very readily by crushing to 2mm. So that's very simple, couple of stages of crushing, screening, and then low intensity magnetic separation, because the bulk of the product is magnetite, but some of the surface where the material is hematite and that's been upgraded to 68% Iron, low impurities, phosphorus today for alumina and silica are combined about 3 or 4%, which is way better than the average products going to market today, supplying the Chinese and the Japanese and the like, and the rest of the world. So the product grade for me as a metallurgist is absolutely outstanding. And the impurities, like I said phosphorus, alumina and silica are also low and very competitive. We're going to put out a graph. I'll send you the latest presentation in the next day or two, which has a graph. Can I show this on the screen now, might be a bit hard to see. Look, I'm still putting this together. Okay, but there it is. There you go. What this is showing is all of the competitors, you know, the Vale’s, the Rio’s and the BHP’s and their average grade is around 60% at 6 or 7%, silica and alumina. Our test results are up here. Can you see that? I'll send you the proper PowerPoint. And what that's showing is, we've got product right at 65.5% so that's the premium grade Iron ore, which is going to be sought after at just under 4% combined silica and alumina. So, fabulous numbers. I guess there's a bit of education we have to do. 

Matthew Gordon: Let's do that now. Because I think that's really important because people are very focused on precious metals and battery metals and in Iron ore, It comes and goes and ebbs and flows in terms of people's interest in it. So you've talked about grades, they give us some ideas about the grades that are good. And you're saying as far as a metallurgist, you believe these grades are good. What else do people need to know? Are they looking at this game, well, how does this get at scale because there's probably a very large Capex number at the end of this. So what should they be excited about now given your stage of development. 

Paul Bibby: Fabulous question. We're at early stage. So we haven't sat down and put the pencil on the paper to try and work out what the process circuits are going to be and what the capital and operating costs will be. What I can say is that we've drilled this, we're seeing good intercepts at surface. So low stripping ratio mining, it's going to be conventional mining, blasting shovels, trucks, crushing. That's what they all have to do. And then we're crushing to 2mm and magnetic separation. And our ideal opportunity would be to do that dry, but if it's wet, that's not a problem either. But 2mm is coarse for many Iron ore products, because you’ve got 2 products basically lump, which is a quarter of an inch or 6mm to 32mm and fines which is less than 6mm. So crushing to 2mm makes this a fine product, which is the bulk of the Iron ore that's traded. So that's part A. So our processing will be very simple, minimal processing, conventional mining, crushing, separation. Where our project at Bekisopa is 220km from the coast. It sounds like a big number, but if you can compare it to existing operations in the Pilbara, Tom Price when it started in 1965, with some 320km from the coast, Paraburdoo 380km which is where I live. So I know that well off. BHP’s project is the same. The projects in Brazil are similar numbers from the coast if not further, and so they're not difficult things to overcome. So what we need to do is prove up a resource that justifies the capital will be spent. And that's what we're doing with this drilling programme this year. So this 4000m of drilling will get us an inferred JORC resource. It will tell us the extent, both in terms of strike length, which is potentially a maximum of 6km on our main tenement, widths of several 100 metres and depths of a couple of 100m, you multiply that together with a density, but we think we will have a resource by the end of this year of around 150Mt of iron mineralization. So then we can start thinking about what is the process? What is the product? What is the capital gonna be, but from what we've done on our first round of testing, no optimization is shown that the processing is going to be minimal. And then it's just going to be a capital thing in terms of road construction, access to the port, that sort of thing, which every project has that challenge. But I think it's going to be numbers. I think the best thing today to say would be less than 500M million, rather than 5Bn billion for a 3 or 5Mt project.

Matthew Gordon: Right? So that's what you're looking to build and that's what people should be looking at. So at 17M market cap today, clearly people are not seeing that yet. So now, it's just about numbers. You've got to do some more drilling and prove up what you think is there until the market that through the JORC report at the end of the year. That's your goal, that’s what you are setting up to be. At $5M can you do that or whatever's left of the $5M?

Paul Bibby: Absolutely. The programme that we've got for this year, the 4000m, that is going to maybe eat half of the money, it's not going to use the whole money, it's gonna be half the money. We manage it very tightly. We had a practice run October, November, December last year with the first 1100m that was all done remotely because we couldn't travel because of COVID. So lots of video, lots of phone calls, lots of photographs. So Tony, the geologists, myself, we could manage it. And I've also got people representing me in country with expat experience to be me as best as possible. 

Matthew Gordon: What else are you working on? What are the companies that you are working on?

Paul Bibby: No, this is my only project. This is my focus. John and I both started at Rio Tinto at the same time. This is a project that John founded, I've been an investor since the start and now this is my focus and I want this to go out as a big winner.

Matthew Gordon: How much money have you put in and how much did John put in?

Paul Bibby: John's probably put in over the years plus AUD$1M and for me several AUD$100,000.

Matthew Gordon: Okay.

Paul Bibby: I would love to put in more. But you know, when you've got 5 kids and education, everything else, you don't have a lot of spare change. 

Matthew Gordon: I feel the pain, I’m on the same boat. Right. But tell me about one of the Pacific Road Capital you mentioned, I can guess why they're in for 5.6% going to the last PowerPoint but also one of the newsletter writers John Tumasoz as well has in 5.6. Has he put cash into this?

Paul Bibby: Absolutely. I owe John some favours because, like I said, we went dormant. Alright, John brought me John Madden brought me in. Because they weren't able to raise the funds, the iron ore price had fallen. And he asked me, what am I going to do? So basically, I put the company on care and maintenance. We closed down the office, we had to move on people, all very sad, but that's what we had to do. Because we had faith that these tenements had value and some promise, then we had to wait for the right time. I was introduced to John Tumasoz who says, you know, he's out of North America. Now in New Jersey. I spoke at his conference and he liked the story. He put me in touch with half a dozen colleagues, and we raised US$2,5M in a matter of days. Those names are on that list at the top of the shareholders list there. And that has then enabled us to do more work like the geological surveys, the ground magnetic surveys, prepare for the listing, and do that initial drilling, so that $2.5M has gone into that. So the $5M that we raised in December last year, wasn't diluted by those activities. It was then available for future activities, which is this year's drilling, etc.

Matthew Gordon: Yeah. I like John Tumazos’s analysis stuff actually. Good guy, it seems.

Paul Bibby: Yes.

Matthew Gordon: Okay, so that's the plan. I suspect, then the market is going to want to see those, when is the drilling programme starting?

Paul Bibby: End of this month. So the way we are in the south central part of Madagascar, there's a wet season right across Madagascar. And it basically means that you can't be accessing the site at the moment because there's no roads and bridges. It's very remote from about the start of December to the end of March and this year, it's been a few weeks later into April. So we're just mobilising now. Unfortunately, like a number of developed countries, they've got their next wave of COVID. The team I've put together in terms of geological support driller, camp, construction, cooks and the like, transport, they are able to move because of the industry that they're in and move the people. So we have solutions to that but they're going to have to move with the negative COVID test. So you have to go and get your test before and have a permit. But yeah, so that's the plan, and we're looking to get underway at the end of May.

Matthew Gordon: Well, let's stay in touch with us. Let us know how you get on because I think that will be the next stage of development for the company. We'll have the numbers come back as you hope then I think people need to pick up and take a bit more interest. Have you got any sort of plans about how to get the story about your belief that this is good, the numbers are good, how do you do that?

Paul Bibby: There's gonna be another news announcement to go out in the next couple of days, which was that graph I've showed you. It's in our PowerPoint presentation, which I'll send out. I think we've also been hit with one of the requirements to get listed on the ASX is you have to have 300 new shareholders. So we had about 100, which were mums and dads and friends, we had to get 300 new. So in that mix of 300, there was Mackenzie Financial out of Toronto that liked the story; they put in a million dollars. And then we had to get a whole lot of others. So a lot of retail people and I think what's happened this month is that a number of them have taken advantage of the volume because of the news flow. Then there's a number of people who like the story which I am selling, and we need some more buyers. So hopefully through our discussion today, we can get into some more people interested and get some more buyers. Be assured that we're going to be working and focused on this. We like the story, the results are great. I guess it's awareness and continuing to do the work.

Matthew Gordon: Beautiful. Okay, Paul, stay in touch. We'd love to hear from you. Thank you.

Paul Bibby: Thank you, Matthew. I appreciate your time. All the best. Thank you.

Matthew Gordon: Thank you for listening. If you've enjoyed the interview, why not subscribe to CruxCast or our website and of course, our YouTube channel Crux Investor. Plus, you can catch us most days on Twitter and LinkedIn. We really love getting your feedback. So please keep it coming and we'll speak to you again soon.

To find out more, got to the Akora Resources Website