KEFI (AIM: KEFI), the gold and copper exploration and development company with a focus on the Arabian Nubian Shield and with projects in the Kingdom of Saudi Arabia since 2008 and the Federal Democratic Republic of Ethiopia since 2014, has unveiled its Q1 2023 Quarterly Operational Update.
Highlights
• Tulu Kapi Gold finance package of US$390M agreed in principle
• Working intensely with Government on few remaining security and administrative arrangements
• Significant progress in Saudi Arabia
This update encompasses the activities of KEFI Minerals (Ethiopia) Ltd (KME) and Tulu Kapi Gold Mines Share Company (TKGM) in Ethiopia, and Gold & Minerals Ltd (GMCO) in Saudi Arabia, since release of the Q4 2022 Quarterly Update on 2 February 2023 and is being announced ahead of the end of the quarter to facilitate discussions at various events in Ethiopia and the Middle East in the coming days.
The Tulu Kapi Gold Project is under TKGM (now planned to be 70-80% owned by KEFI). The Jibal Qutman Gold Project, the Hawiah Copper-Gold Project and the other Saudi projects are under GMCO (now planned to be 25-30% owned by KEFI), depending on refinements to final financing refinements.
ETHIOPIA
As first mover for modern industrial-scale metal mining in Ethiopia, it has been our privilege to be consulted in respect of regulatory systems for mining and international financing. This has taken some years as has our need to traverse the widely-publicized security challenges in the country, which thankfully subsided last year. Having borne the costs and delays involved over the recent years, it is especially pleasing that we are now preparing to trigger full project development at KEFI’s first development project, with few loose ends now expected to be imminently resolved with the Government.
We also await Government permission to follow up our other exploration discoveries in the Tulu Kapi district and, to that end, based on discussions with the Government have recently re-assembled our Ethiopian prospecting team for that and other initiatives.
Tulu Kapi Gold Project
This is KEFI’s most advanced project. The Definitive Feasibility Study has been updated for contracted terms and pricing as well as for the outcome of a series of internal and independent reviews. The Project is at the project financing and construction stage and is launch-ready upon Government regulatory clearances and security installation.
Since release of the last Operational Update on 2 February 2023, the Tulu Kapi Gold Project financing has advanced as follows:
• The project finance banks have, as of last week, both been formally provided certain specific protections and benefits from the Government of Ethiopia, which had become conditions precedent for financing.
• The total Project finance package of US$390M (mining fleet US$70M provided by the mining contractor and US$320M provided by debt and equity financiers) is now conditionally in place within the syndicate.
• Drafting of the numerous definitive agreements is either complete or advancing well and all parties have indicated that they intend to proceed to seek formal final approvals on satisfaction of the conditions precedent in the hands of Government in respect of administrative matters and security.
• TKGM now has the intense attention of the Ethiopian Ministry of Mines, National Bank of Ethiopia and the other Ministries and agencies and expects to resolve all outstanding issues in the coming weeks, so that the syndicate can then proceed to seek all-party formal approvals including KEFI shareholder approval. Upon all approvals being formally confirmed, we can then proceed with drawdowns and Project launch so as to be in full production by mid-2025.
SAUDI ARABIA
Despite making two significant discoveries in Saudi Arabia since entering the country in 2008, our progress has only progressed rapidly in the past 18 months as a result of Saudi Arabian Government regulatory overhauls. The country’s prospectivity for further discovery is widely recognized and the international industry is mobilizing at the invitation of the Government.
The Jibal Qutman Gold Project
• We applied for a mining licence in 2015 on the basis of an assumed gold price of US$1,200/oz, and the heap leach processing oxide ore containing c.200,000oz within a 733,000oz gold Resource. This was seen as a starter project pending the proving-up of a larger scale project warranting the higher capital investment for Carbon-in-Leach (“CIL”) process
• As the current consensus long-term gold price of US$1,650/oz is now significantly higher, the focus of the Jibal Qutman feasibility study has moved to the larger CIL-based project.
• Current activities on and around site are focused on the work required to complete a Definitive Feasibility Study (“DFS”) to the standard required by our project finance lenders in Saudi Arabia. This work includes:
o a 13,000m drilling programme (to be completed in April 2023) which is aimed at upgrading and expanding the current 733,000oz Resource;
o metallurgical, geotechnical and hydrological drilling programmes;
o detailed mine plans;
o metallurgical testwork;
o finalizing environmental and social responsibility plans and permitting;
o a trenching programme over the planned locations for the processing plant and other
infrastructure to ensure these areas do not contain mineralization; o water source optimization; and
o detailed costings of capex and opex.
• Kefi is targeting the completion of the DFS this year and, based on encouragement from regulators and development financiers, we expect minimal delay in closing finance within Saudi Arabia and starting development so that we can be in production around mid-2025.
The current 13,000m drilling programme focuses particularly on the South Zone, 3K Hill, 4K Hill and Red Hill areas.
The Red Hill deposit and nearby areas have particularly good potential to provide additional ounces from the current drilling programme.
Hawiah Copper-Gold Project
This deposit is a 2019 discovery of KEFI and we have so far declared a Resource of 29.0 million tonnes (Mt) at 0.89% copper, 0.94% zinc, 0.67g/t gold and 10.1g/t silver, after 54,439m of drilling. We expect this Resource to increase as well as defining additional Resources at nearby prospects including Al Godeyer where we have already completed 4,176m of drilling and expect to report its Maiden Resource Estimate and detailed assay results in April.
Kefi has already identified an apparently economic starter project in 11.1Mt of open pittable Resource at 0.9% copper, 0.75% zinc, 0.81g/t gold and 10.3g/t silver for contained metals of: 100kt copper, 83Kt zinc, 288Koz gold and 3,685Koz silver.
Current activities include the following:
• completing over the next 18 months the recently launched 56,000m drilling programme to establish Ore Reserves for mining by both open pit and underground techniques;
• optimizing design of the process plant to maximize metallurgical recovery and perhaps produce copper cathode (finished copper product), water source optimization and detailed costings of capex and opex; and
• the Pre-Feasibility Study is nearing completion for internal review. We target to secure finance and launch shortly after the start-ups at Tulu Kapi and Jibal Qutman.
Exploration Projects
During the past 15 months Kefi has been granted 14 new exploration licences, about three times what we were granted in the previous 13 years, including five new licences in January 2023. This demonstrates the seriousness of the country’s commitment to the development of the minerals sector.
The company has formed regional exploration teams which have mobilized onto all projects for initial prospecting of what we now see as four project areas spread over the new licences. As was the case at Jibal Qutman and Hawiah, many of these licenses have abundant evidence of historical workings and surface expression of mineralization.
“The company’s working environment has improved significantly in both Ethiopia and Saudi Arabia. Our teams are working intensely with the host governments to launch the first two of our three development projects. We start first with Tulu Kapi Gold in Ethiopia, then Jibal Qutman Gold in Saudi Arabia,” Executive Chairman,” Harry Anagnostaras-Adams, said.
“KEFI’s beneficial interest in their aggregate gold production from 2025 is estimated to be in the order of 140,000oz.
“At the current gold price of c. US$2,000/oz, KEFI’s beneficial interest in the estimated Net Operating Cash Flow from Tulu Kapi alone is estimated to be c. £75M average per annum and in the NPV is estimated at £207M, or respectively 1.8 pence and 5 pence per current KEFI share in issue.
“At Tulu Kapi in Ethiopia, the project finance is conditionally in place and, with the Government, we are ensuring that all security and administrative arrangements are also in place.
“At Jibal Qutman in Saudi Arabia, whilst we had originally defined a starter project at then-lower gold prices, we are completing a feasibility study on a larger project at today’s higher gold prices.”
For further information please visit: https://www.kefi-goldandcopper.com/
