TIDMKEFI
RNS Number : 3695V
Kefi Gold and Copper PLC
14 April 2021
14 April 2021
KEFI Gold and Copper plc
("KEFI" or the "Company")
Q1 2021 Operational Update
KEFI (AIM: 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 latest
quarterly operational update.
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 ("G&M") in
Saudi Arabia for the period from 1 January 2021 to 31 March 2021
("Q1"), together with more recent developments where
appropriate.
In Ethiopia
The Tulu Kapi Gold Project (the "Project" or "Tulu Kapi")
remains on track overall, in line with previous guidance with the
financial closing program having commenced and remaining in
progress. Notably, the project finance consortium remains focused
on:
-- approval and execution of detailed finance documentation in the current quarter, Q2 2021;
-- receipt of Project equity/subordinated debt subscriptions to
settle following the KEFI Annual General Meeting in June 2021 and
senior debt drawdown to then follow in H2 2021; and
-- production commissioning of the open pit mine to start in Q4 2022.
In Saudi Arabia
We have commenced a Preliminary Feasibility Study ("PFS") for
the potential start of development of the Hawiah deposit in 2023.
This follows a successful Phase 3 drilling programme which has
extended the known mineralisation in the Maiden Resource Estimate
("MRE") as previously reported. The MRE was announced 19 August
2020 for the Volcanic Massive Sulphide deposit at Hawiah, of 19.2
million tonnes at 0.9% copper, 0.8% zinc, 0.6 g/t gold and 10.3g/t
silver.
The success of the Phase 3 drilling programme has led the
KEFI-managed Saudi joint venture operating company, Gold &
Minerals Ltd, to already have commenced the 13,500m 'Phase 4'
diamond-drilling programme which, coupled with a post-drilling MRE,
is intended to upgrade strategic portions of the Hawiah deposit to
allow for preliminary mine planning and design as required during a
Preliminary Feasibility Study ("PFS"). Drilling will close the
drill-spacing on the recently delineated down-plunge Camp Lode area
to allow for Inferred Resource classifications in these zones.
Drilling will also target the high-grade copper 'transition zone'
which lies between the oxide and fresh sulphide domains across the
Hawiah deposit and has already returned grades in excess of 5%.
Harry Anagnostaras-Adams, Executive Chairman of KEFI, commented
:
"It is all systems go in both Ethiopia and Saudi Arabia. Despite
the various challenges of maintaining progress in today's
COVID-hampered world, we continue to successfully drive for
starting full development of our Ethiopian Tulu Kapi Gold Project
in mid-2021 and for project commissioning late 2022. Given the
excellent drill results to date at Hawiah we have also accelerated
operations to enable the start of development in 2023 in Saudi
Arabia.
"The combination of these two potential production operations,
each of which today reports JORC-Compliant Resources with in-situ
metal value in the order of US$3 billion (at today's metal prices),
provides excellent potential for returns to shareholders. This is
reinforced by the two projects' respective exploration
programmes.
"We envisage KEFI owning at least 65% of Tulu Kapi in Ethiopia,
producing 190,000 oz of gold per annum, hitting full production
from the open pit operation during H1-2023. And in parallel we
envisage KEFI owning 34% of our Hawiah polymetallic discovery
(mainly copper and gold) in Saudi Arabia.
"These are both transformative projects for KEFI and successful
implementation of both will firmly position the Company at the
forefront of the burgeoning minerals sector in the highly
prospective Arabia Nubian Shield. Moreover, KEFI has already
secured additional exploration acreage in the vicinity of Tulu
Kapi, whilst it expects to further expand its footprint in Saudi
Arabia in the near term, thereby offering further material upside
to investors across the portfolio.
"Our projects taking off during a cyclical upturn in gold and
copper is indeed refreshing after many years of preparatory work
during the sector's cyclical doldrums. It is also timely given our
host countries' proactive steps to boost their respective mining
sectors and the preparedness of KEFI for rapid growth."
Ethiopia
Tulu Kapi Finance Plan Being Finalised with Senior Lenders and
other Syndicate Members
In accordance with previous guidance, there have been no
material changes in the Project financing plan with the estimated
capital costs of the Project at c.US$263 million in total,
comprising c.US$221 million for initial development, c.US$21
million sustaining capital and c.US$21 million closure costs. In
addition, a standby facility of c.US15 million has now been
included in the finance plan to provide additional headroom and the
mining fleet is c.US$60 million.
The sustaining and closing capital is planned to be funded from
future operational cash flows. The initial development capital will
be structured as follows (presented in the anticipated sequence of
public reporting this quarter of progress, as detailed documents
are agreed between the counterparties), although is subject to
further refinement as final procurement and financing costs are
finalised:
-- Mining Contractor to supply fleet within mining services agreement, c.US$60 million
-- Senior Lenders to provide Term Loans, c.US$140 million
-- Equity-Risk capital c.US$100 million:
o the Ethiopian Federal and Regional Governments are already
investing into Project company TKGM:
o Ethiopian private sector organisations which have expressed
interest to also invest in TKGM are expected to commit in May in
time for the settlement of equity funds mid-year;
o the KEFI contribution funded by subordinated debt from the
Ethiopian subsidiary of likely more than one multinational
industrial group and product offtake-linked subordinated finance
(for working capital and for a standby) from an international
metals trader; and
o mining contractor to invest in KEFI shares.
-- At this stage, it appears KEFI will own at least 65% of TKGM,
which will depend on final requirements of senior lenders and
syndicate allocations.
Tulu Kapi Development Activities Continue
Whilst the Project financing is being finalised, scheduled
long-lead Project activities continue to be progressed and
include:
-- procurement and other works for offsite infrastructure funded
by the Government as its Project equity contribution;
-- resettlement preparations in accordance with World Bank IFC performance standards; and
-- updates to input costs and details of arrangements with
contractors including for the processing plant Front End
Engineering and Design ("FEED"), for construction and local
sub-contractor competitive quotations, and for the mining
operation, updated competitive bids for the full schedule of rates.
These 'home-stretch pricing checks' have led to immaterial
refinements to Project operating cost estimates.
Tulu Kapi Project Milestones in the Short Term
The key steps to progress the development of the Tulu Kapi gold
mine during the first half of 2021 include the following:
-- Finance:
o approval and execution of detailed finance documentation;
and
o receipt of Project equity/subordinated debt subscriptions
(senior debt drawdown is anticipated to follow in H2 2021).
-- Community:
o continue building new starter houses and associated
infrastructure for resettled community;
o consultations and payment of compensation for resettled
community; and
o employment, training and community development schemes for the
broader community.
-- Construction:
o continue access road construction and electricity connection
from main grid to site;
o start bulk earthworks for on-site infrastructure; and
o start fabrication of plant components in various factories
internationally.
KEFI also plans to advance the exploration of the Tulu Kapi
District by commencing field programmes following the anticipated
grant of exploration licences.
Saudi Arabia
KEFI's operations in Saudi Arabia are conducted through its 34%
owned joint-venture company, G&M, where KEFI is the operating
partner.
A Preliminary Feasibility Study has been started for the
development of the Hawiah discovery
Recent Highlights in Saudi Arabia
-- A Maiden Mineral Resource Estimate ("MRE") was announced on
19 August 2020 for the Volcanic Massive Sulphide deposit at Hawiah,
where the Company has initially discovered 19.2 million tonnes at
0.9% copper, 0.8% zinc, 0.6 g/t gold and 10.3g/t silver.
-- The just-completed Phase 3 drilling programme has doubled the
strike and plunge extension of the Camp Lode structure from the
2020 MRE area, with copper grades increasing down-plunge as
anticipated by the geological model.
-- The deepest massive sulphide intersection at the Camp Lode at
a vertical depth of 590m extends the total plunging strike length
of mineralisation to 1.2km from surface, with mineralisation
remaining open.
-- Drilling at the Crossroads Lode at Hawiah also confirms
mineralisation remains open down-dip and down plunge with the
current known limits of mineralisation at a vertical depth of only
380m.
-- A total of 27 diamond drillholes covering 13,385m was
completed in the Phase 3 drilling programme and 13,500m of diamond
drilling is planned for the Phase 4 programme which has already
been commenced.
-- Baseline programmes for the PFS have commenced with a
potential lodgement of a mining licence application targeted for
mid-2022 and the start of development in 2023.
-- An updated MRE is planned to coincide with the completion of the Phase 4 drilling.
Camp Lode Extension
The Phase 3 programme has successfully demonstrated the
down-plunge continuation of the southward plunging Camp Lode ore
body, with the deepest intersection representing a 670m extension
from the 2020 MRE area. The increase in copper grade as predicted
by the geological model is particularly encouraging.
Highlights from the Phase 3 diamond drilling program include the
following drillhole results:
- HWD-074- 10.4m at 1.6% Cu, 1.4% Zn, 0.5g/t Au and 6.3 g/t Ag
- HWD-079 - 9.7m at 1.5% Cu, 1.3% Zn, 0.5 g/t Au and 8.3 g/t Ag
- HWD-082 - 10.0m at 1.8% Cu, 1.6% Zn, 0.5 g/t Au and 11.8 g/t Ag
- HWD-084 - 8.7m at 1.1% Cu, 1.6% Zn, 0.6 g/t Au and 10.1 g/t Ag
- HWD-086 - 9.3m at 1.8% Cu, 0.6% Zn, 0.4 g/t Au and 6.7 g/t Ag
- HWD-092 - 5.5m at 1.6% Cu, 0.53% Zn, 0.3 g/t Au and 6.9 g/t Ag
A full summary of the Phase 3 drill results of the Camp Lode and
Crossroads Lode as well as detailed assay and collar information
are contained in the appendix to the RNS issued on 13 April
2021.
Crossroads Lode Extension
Drilling at the Crossroads Lode has extended the mineralisation
110m deeper than previously explored. This is within the thickest
part of the lode which is now defined to a vertical depth of 380m
and remains open at depth. Received assay results have returned
results in line with the 'up-dip' drillholes in this area. The
outstanding drilling results will be announced in due course.
Phase 4 drilling and PFS Development
The success of the early drilling phases has demonstrated that
the tonnage and grade at Hawiah are robust enough to warrant moving
the project to the PFS stage.
The already commenced 13,500m 'Phase 4' diamond-drilling
programme, coupled with a post-drilling MRE, is intended to upgrade
strategic portions of the Hawiah deposit to allow for preliminary
mine planning and design as required during a PFS. Drilling will
also close the drill-spacing on the recently delineated down-plunge
Camp Lode area to allow for Inferred Resource classifications in
these zones.
Drilling will also target the high-grade copper 'transition
zone' which lies between the oxide and fresh sulphide domains
across the Hawiah deposit. This zone lies between depths of 20-50m,
with previous drilling returning assay results of more than 5%
copper. This zone has only been subject to limited testing and
additional drilling will allow for greater understanding of grade
distributions within this higher-grade copper zone, which would
likely be targeted during the early stages of any mine
development.
In preparation for the PFS, the first stages of the
environmental monitoring programme and geohydrological studies have
been initiated. These programmes will continue in tandem with the
rest of the project development to ensure a baseline is established
and all regulatory requirements are met, with the intention being
to complete the PFS by Q2 2022, ahead of a mining licence
application. The opening round of metallurgical testwork is also
progressing well, with initial findings in-line with
expectations.
Additional Exploration Licences
The project team recently welcomed visitors and inspectors from
both the DMMR and the local government to the Hawiah site for a
successful site overview and Project development meeting.
After receiving positive reports, KEFI remains cautiously
optimistic for the granting of additional Exploration Licenses in
the up-coming months, as per the Kingdom's Vision 2030 strategy.
This includes the nearby Al Godeyer exploration licence application
located 11km west of the Hawiah camp. Reconnaissance fieldwork by
the geological team has confirmed mineralisation along 700m of
strike length in this area, in a comparable style and
characteristic to the main Hawiah gossans. Initial surface sampling
has confirmed gold mineralisation within the gossans, with abundant
copper showings also noted.
Investor Webinar
The Company will host its usual live quarterly webinar at 9.30
am London time on Tuesday 27 April 2021 which will be accessed
via:
https://webcasting.brrmedia.co.uk/broadcast/6076035b0386285386cc80f5
Shareholders are encouraged to submit questions by emailing:
questions@brrmedia.co.uk
The webinar will subsequently be available on the Company's
website at:
http://www.kefi-minerals.com/news/webcasts.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Enquiries
KEFI Gold and Copper plc
Harry Anagnostaras-Adams (Managing Director) +357 99457843
John Leach (Finance Director) +357 99208130
SP Angel Corporate Finance LLP (Nominated
Adviser and Joint Broker) +44 (0) 20 3470 0470
Jeff Keating, Adam Cowl
Brandon Hill Capital Ltd (Joint Broker) +44 (0) 20 7936 5200
Oliver Stansfield, Jonathan Evans
IFC Advisory Ltd (Financial PR and IR) +44 (0) 20 3934 6630
Tim Metcalfe, Florence Chandler
Notes to Editor
KEFI Gold and Copper plc
KEFI is focused primarily on the advanced Tulu Kapi Gold Project
development project in Ethiopia, along with its pipeline of other
projects within the highly prospective Arabian-Nubian Shield. KEFI
targets that production at Tulu Kapi generates cash flows for
capital repayments, further exploration and expansion as warranted
and, when appropriate, dividends to shareholders.
KEFI in Ethiopia
Ethiopia is currently undergoing a remarkable transformation
both politically and economically.
The Tulu Kapi gold project in western Ethiopia is being
progressed towards development, following a grant of a Mining
Licence in April 2015.
The Company has now refined contractual terms for project
construction and operation, together with assembling the full
funding consortium and set the conditional terms for the
development funding package of c.US$221 million.
Estimates include gold production of c.190,000oz pa. All-in
Sustaining Costs (including operating, sustaining capital and
closure but not including leasing and other financing charges)
remain c. US$800/oz. Tulu Kapi's Ore Reserve estimate totals 15.4Mt
at 2.1g/t gold, containing 1.1Moz.
All aspects of the Tulu Kapi (open pit) gold project have been
reported in compliance with the JORC Code (2012) and subjected to
reviews by appropriate independent experts.
A Preliminary Economic Assessment has been published that
indicates the economic attractiveness of mining the underground
deposit adjacent to the Tulu Kapi open pit, after the start-up of
the open pit and after positive cash flows have begun to repay
project debts. An area of over 1,000 square kilometres adjacent to
Tulu Kapi has been reserved for exploration by KEFI upon
commencement of development, with a view to adding satellite
deposits to development and production plans.
KEFI in the Kingdom of Saudi Arabia
In 2009, KEFI formed Gold & Minerals Limited ("G&M") in
Saudi Arabia with local Saudi partner, ARTAR, to explore for gold
and associated metals in the Arabian-Nubian Shield. KEFI has a 34%
interest in G&M and is the operating partner.
ARTAR, on behalf of G&M, holds many Exploration Licence (EL)
applications pending the introduction of the new Mining Law. ELs
are renewable for up to three years and bestow the exclusive right
to explore and to obtain a 30-year exploitation (mining) lease
within the area.
The Kingdom of Saudi Arabia has announced policies to encourage
minerals exploration and development, and KEFI Minerals supports
this priority by serving as the technical partner within G&M.
ARTAR also serves this government policy as the major partner in
G&M, which is one of the early movers in the modern resurgence
of the Kingdom's minerals sector.
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