KEFI has been a first mover in both Saudi Arabia and Ethiopia, operating in these jurisdictions for quite some time. Do you see a new wave of mining happening here now that regulations seem to be welcoming more exploration and investment?
It is already happening. Exploration has taken off in Saudi Arabia with the likes of Ivanhoe Electric launching large exploration programmes. Mining in particular has taken off in Ethiopia because of the existing backlog of development projects which were, in effect, awaiting the economic reforms. KEFI negotiated for the sector – such as exemptions from exchange controls and up to 80/20 project finance being permissible instead of a maximum of 50/50.
KEFI recently substantially increased and upgraded the MRE for the main Hawiah deposit and the nearby Al Godeyer deposit after receiving the Umm Hijlan Exploration Licence from the Saudi Government and also the Jibal Qutman Gold deposit. Can you talk us through the details?
Combined, these projects are the gold-equivalent of 3.8Moz and the aggregate strike length of known VMSstyle gossans yet to be drilled indicates that we could double current mineral resources.
Given that VMS deposits such as Hawiah occur in clusters, it is notable that we have only drilled the “low hanging fruit” under gossans (three VMS deposits discovered) but have not started to drill targets under shallow cover on the extensive licences.
Hawiah and Jibal Qutman are the only significant minerals discoveries made in Saudi Arabia in the past decade and now will rank amongst the few developments in the Kingdom in the next few years.
Our joint venture company, Gold and Minerals Company Limited (GMCO), is looking to start gold production at Hawiah and Jibal Qutman initially on the oxides with open pit CIL. We will then expand at both by going deeper and mining the sulphide gold ore at Jibal Qutman and sulphide copper-gold-zinc-silver ore at Hawiah. Additionally, the strike length of Jibal Qutman and Hawiah have been drilled to only 25% and 50% respectively.
How does your JV with GMCO benefit KEFI?
We could not have penetrated the Saudi market without our Saudi partner, and we accepted to be a minority shareholder from day one. The value GMCO has created through its successful discoveries and its high-quality project pipeline means that we have made a significant contribution to launching the modern minerals sector in the Kingdom. Plus, of course, it means that our 15% shareholding is worth multiples of our investment.
In December KEFI was awarded an exploration licence in Ethiopia for critical minerals. This is one of a number of opportunities the company plans to pursue. Can you talk us through the licence and any other plans in the pipeline?
The Konso licence has intriguing historical results from the work of the Ethiopian Geological Survey and Vale. Large, mineralized zones have been identified for nickel, copper, cobalt, and PGMs, and separately for tantalum and lithium.
That study was done more than a decade ago when economics were less attractive than indicated by today’s metals prices. We have also applied for other ground for critical metals, in which Ethiopia is especially well endowed.
We focused on this opportunity because of our relationships in Saudi Arabia, and because they are setting out to become a leading electric vehicle manufacturer. So, our interest is driven by the regional demand as well as the potential for supply. Plus, of course, we are applying for extensive new gold ground based on our proprietary database.
Finally, in May, the company also formally launched its Tulu Kapi gold project located in Ethiopia. Can you tell us more about the project and how it complements KEFI’s already robust portfolio?
Tulu Kapi Gold Project is one of the most robust new developments in Africa, with grades of +2g/t in the open pit and +5g/t in the underground mine, free milling ore for 94% recovery from conventional CIL. Combined planned open pit and underground production will be close to 200Kozpa.
In May 2024 we launched the early works to prepare the community and district for Major Works. The early works ended in December 2024, and we are now focusing on the final stages of preparations of site, regulatory clearances, and legal documentation for closing financing and triggering full development.
Our two co-lending banks have approved the transaction and it appears that we are successfully assembling the non-debt development funding without the need for public equity issues. That would obviously be a rare and special accomplishment and, moreover, at current record gold prices the financial projections indicate that all project debt might be repaid after only the first production year.
We have plenty to strive for at KEFI, now that our host jurisdictions have become so overtly supportive and pro-development generally.
