Economic evaluation of the Agbaja Iron Ore deposit in Kogi State, Nigeria

Abstract

The economic viability of mineral resources is a critical factor in determining their potential for development and investment. This study conducts a comprehensive economic evaluation of the Agbaja Iron Ore deposit in Kogi State, Nigeria, to assess its financial feasibility for long-term mining operations. The deposit contains an estimated reserve of 200 million tonnes (Mt) of ore with a stripping ratio of 2.5, resulting in an annual waste burden of 18.3 Mt. At a production rate of 7.3 Mt per annum, the projected mine life is approximately 27 years. With a concentrate yield of 35%, an annual output of 2.6 Mt of marketable iron concentrate is expected. Using mathematical modeling and discounted cash flow analysis, the study evaluates key financial metrics including production costs, revenues, Net Present Value (NPV), and Internal Rate of Return (IRR). The assessment incorporates parameters such as mineable reserves, stripping ratio, mining and beneficiation costs, and cash flow components. Geological setting, mineralization characteristics, and local infrastructure were also examined to contextualize the economic performance. The analysis indicates annual revenue of ₦31.2 billion against operational costs of ₦9.9 billion, yielding a net profit of ₦10.2 billion after taxes and royalties. The NPV at a 20% discount rate is ₦37.2 billion, but declines with higher discount rates, becoming negative beyond 80%. The results affirm the project's commercial viability under favorable economic conditions, while highlighting the need for regulatory stability, cost control, and sound financial management.