# KEFI Gold and Copper working intensely to launch the first two of three development projects

- Link: https://www.directorstalkinterviews.com/kefi-gold-and-copper-working-intensely-to-launch-the-first-two-of-three-development-projects/4121111451
- Published: 2023-03-22T07:10:55+00:00
- Author: Ethan Davis

**KEFI Gold and Copper Plc** ([LON:KEFI](https://www.directorstalkinterviews.com/company/kefi-gold-and-copper/kefi.l)),
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 provided its Q1 2023 Quarterly
Operational Update.

**Highlights**

·    Tulu Kapi Gold finance package of US$390 million 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 (“Tulu Kapi” or the “Project”) is under TKGM (now planned
to be 70-80% owned by KEFI). The Jibal Qutman Gold Project (“Jibal Qutman”), the
Hawiah Copper-Gold Project (“Hawiah”) 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-publicised
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$390 million (mining fleet US$70 million
provided by the mining contractor and US$320 million 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 recognised and the international industry is mobilising
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.200,000 oz 
within a 733,000 oz 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 13,000 metre drilling programme (to be completed in April 2023) which is aimed
at upgrading and expanding the current 733,000 oz Resource;

o metallurgical, geotechnical and hydrological drilling programmes;

o detailed mine plans;

o metallurgical testwork;

o finalising 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 mineralisation;

o water source optimisation; and

o detailed costings of capex and opex.

·    We target to complete 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 13,000 metre drilling programme focuses particularly on the South Zone,
3K Hill, 4K Hill.

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, 0.67 g/t gold and 10.1
g/t silver, after 54,439 metres 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 4,176 metres of drilling and expect to report its
Maiden Resource Estimate and detailed assay results in April.

We have 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 10.3 g/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 56,000 metre drilling
programme to establish Ore Reserves for mining by both open pit and underground 
techniques;

·    optimising design of the process plant to maximise metallurgical recovery and
perhaps produce copper cathode (finished copper product), water source optimisation
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 we have 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.

We have formed regional exploration teams which have mobilised onto all projects
for initial prospecting of what we now see as 4 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 mineralisation.

**CORPORATE**

Over 90% of development capital for all three advanced projects has already been
conditionally arranged at the project or subsidiary level, subject to the final 
feasibility studies in Saudi Arabia confirming our expectations and to the various
conditions precedent applicable to funds drawdown on all projects.

At today’s gold price and assuming an ownership level in TKGM of say 77%, the NPV
to KEFI of just our Ethiopian project is estimated at US$251 million or £207 million.
Comparing this potential value indicator with current market capitalisation of c.
£30 million highlights the enormous opportunity to add value for shareholders as
we de-risk the Project.

KEFI’s beneficial interest in our Saudi projects, at various commodity price levels,
presents an aggregate (preliminary estimate of) NPV similar to that of the Ethiopian
project, serving to reinforce the scale of the value-adding opportunity.

Whilst the process of de-risking the projects in both countries has involved very
time-consuming security and regulatory challenges, both countries have recently 
turned the corner and we make steady progress.

> **Harry Anagnostaras-Adams, Executive Chairman of KEFI Gold and Copper Plc, commented:**
> “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. KEFI’s beneficial
> interest in their aggregate gold production from 2025 is estimated to be in the
> order of 140,000 oz.
> “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. £
> 75 million average per annum and in the NPV is estimated at £207 million , 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.”

Share on: