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KEFI Minerals Q4 2019 Operational Update

KEFI Minerals plc (LON:KEFI), the gold exploration and development company with projects in the Federal Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, is pleased to provide its quarterly operational update.

This update encompasses the activities of KEFI Minerals (Ethiopia) Ltd and Tulu Kapi Gold Mines Share Company in Ethiopia, and Gold & Minerals Ltd in Saudi Arabia for the period from 1 October 2019 to 31 December 2019, together with more recent developments where appropriate.

Any material events have already been reported in separate announcements, which are referred to below along with appropriate updates.

Highlights

Ethiopia’s Tulu Kapi Gold Project

  • The commencement of the off-site development programme for the Tulu Kapi Gold Mine in late 2019 and closing with KEFI’s public sector equity partner.
  • The next steps are to:

o launch the on-site development and community resettlement;

o execute all documentation, which is well advanced, for KEFI’s private sector equity partner ANS Mining Share Company; and

o complete scheduled preparations and finance milestones leading to major works starting in the local dry season from October 2020.

  • KEFI approved a new Project infrastructure debt-finance proposal, being a bank-loan based proposal received from two leading African banks as underwriters and co-lenders. A terms sheet was signed, which is subject to credit approval, and which provides better economics for TKGM.
  • The gold price has firmed significantly since Q3 2019. Using the proposed bank loan infrastructure financing at the current gold price of circa US$1,650/oz, KEFI estimates:
  • net cash flow of the open pit mine to be US$502 million;
  • the Definitive Feasibility Study or DFS-based NPV of the open pit (US$333 million) added to that of the PEA-based NPV of the underground mine (US$103 million), totals to the aggregate Project NPV of US$436 million. NPV’s are based on after tax cash net cash flows as at today; and
  • On this basis and after taking into account that KEFI has already invested nearly all of its contribution to the Project equity, KEFI’s 45% beneficial interest is US$196 million (approximately £153 million), about seven times the current market capitalisation of the Company.

Saudi Arabia’s Hawiah copper-gold-zinc-silver exploration project

  • We discovered in Saudi Arabia’s Hawiah licence area a polymetallic deposit. The first 45 drill holes identified three distinct massive sulphide lodes which vary in thickness from 3m up to a maximum of 19m. All of the massive sulphide assays received to date had encouraging grades of copper, gold, zinc and silver.
  • The system remains open at depth and for the purposes of indicating the potential importance for KEFI shareholders, at an assumed 2% copper-equivalent which initial assay results would suggest is reasonable. The in-situ metal content of the indicated 12 million tonnes at current metal prices would approximate the analogous in-situ metal content of the one million ounce reserve in the open-pit at KEFI’s Tulu Kapi Gold Project in Ethiopia, but the system is open at depth.
  • The next step is to complete the current stage 2 drilling program with a view to reporting in mid-2020, a maiden resource in compliance with the JORC Code.

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