TIDMKEFI
RNS Number : 3504Z
Kefi Gold and Copper PLC
14 September 2022
14 September 2022
KEFI Gold and Copper plc
("KEFI" or the "Company")
Issue of Jibal Qutman Exploration Licences
-- Two Exploration Licences issued to facilitate development of the Jibal Qutman Gold Project
-- Award of final Jibal Qutman Exploration Licence expected shortly
-- DFS for Initial 500,000 oz gold development Q1 2023, first production 2024
KEFI (AIM: KEFI), the gold and copper exploration and
development company with projects in the Federal Democratic
Republic of Ethiopia and the Kingdom of Saudi Arabia is pleased to
announce the issue of two of the three required Exploration
Licences covering the Jibal Qutman Gold Project area through the
Company's Gold and Minerals Limited ("G&M") joint venture in
Saudi Arabia. G&M is owned 30% by KEFI and 70% by its partner
Abdul Rahman Saad Al Rashid and Sons Ltd ("ARTAR").
Jibal Qutman Licences
-- 'Jibal Qutman North' and 'Jibal Qutman Southeast' Exploration
Licences ("ELs") have been issued on an initial 5-year term,
covering 174Km(2) .
-- The original and outstanding Jibal Qutman Exploration
Licence, covering an additional 99 Km(2) , is still undergoing
renewal and is expected to be granted in the coming weeks.
-- Upon its issuance, the three contiguous licences
(collectively referred to as the "JQ EL") will cover a combined
area of over 270km(2) .
-- The Definitive Feasibility Study ("DFS") for the development
is now focused on an initial production plan of c.500,000 oz gold
over a 10-year period, rather than the initial Preliminary
Feasibility Study target of c.200,000 oz gold, which was modelled
on a gold price of US$1,200/oz.
-- The JQ EL are situated on the highly prospective
'Nabitah-Tathlith' fault zone and offer additional exploration
upside beyond the known 733,000 oz JORC gold resource, with further
gold mineralisation already documented across the JQ EL.
-- Field programmes for the DFS, which includes confirmation
drilling, environmental baseline studies, geotechnical and
metallurgical drilling, are expected to commence in October 2022
following the award of the third exploration licence.
-- Project development and exploration teams dedicated to this
project have now been formed, with key elements currently
in-country preparing to re-enter the area.
-- The DFS is targeted for completion at the end of Q4
2022/early Q1 2023, depending upon the timing of the grant of the
outstanding Exploration Licence. Environmental permits are targeted
for Q1 2023.
-- A subsequent Mining Licence Application ("MLA") is expected to be resubmitted in early 2023
-- Long lead items for the proposed Jibal Qutman processing
plant are being scheduled, with the longest having an 18-month
period from purchase to commissioning.
-- Project financing in mid-2023 for Jibal Qutman is expected to
be sourced and implemented within Saudi Arabia, which has
well-developed international capital markets and a mandate to
invest in the country's mineral resources.
Broader Saudi Arabia Portfolio
-- G&M is rapidly becoming a leading
explorer/developer/producer in the fast-emerging Saudi minerals
sector following the recent overhaul of the local regulatory
system.
-- In addition to Jibal Qutman, G&M is focused on the
development of the Hawiah Copper-Gold Project, with an existing
JORC resource of 24.9Mt at 0.9% copper, 0.85% zinc, 0.62 g/t gold
and 9.81 g/t silver.
-- Exploration teams are also mobilising to the recently awarded
exploration projects, namely the Jabal Hillit and Qunnah 'Al
Qassim' exploration licences (straddling the prospective Ad
Dawadimi and Afif terranes in the eastern portion of the Arabian
Shield in Saudi Arabia), and the Jadib Al Qahtanah exploration
licence, 45km east of the Mahad Ad Dahab mine, the principal
historic Saudi gold and silver mine.
-- Going forward the Company's Saudi assets are expected to have
shorter approval, financing and development schedules given there
is no need to resettle communities, less restrictive security
protocols and established capital markets and funding options.
KEFI Production Targets & Economics
-- The successful launch of Tulu Kapi and then Jibal Qutman
within the following six months or so, should see first gold pour
for both at the end of 2024.
-- Combined initial production of the Jibal Qutman Gold and Tulu
Kapi Gold Projects is expected c.200,000 oz per annum of gold (KEFI
beneficial interest c.120,000 oz pa gold).
-- Net Operating Cash Flow (Earnings Before Interest Tax and
Depreciation less Royalties and Sustaining Capital Expenditure) at
a flat gold price of US$1,645/oz (CIBC long term consensus forecast
as at August 2022) of Tulu Kapi is estimated to average GBP74
million (US$86 million) over the following 7 years (KEFI beneficial
interest estimated at GBP52 million (US$60 million)*.We have yet to
publish updated estimates for Jibal Qutman which will further
increase these estimates.
-- These preliminary projections do not take into account any upside from the projects.
-- Ongoing drilling at the Hawiah Copper-Gold Project, KEFI's
recent Saudi discovery, is also expected to yield increased
resources and a Preliminary Feasibility Study in Q4 2022. Its
mineral resources, in gold-equivalent terms, are already
approximately those of Tulu Kapi and Jibal Qutman combined before
any further resource uplift.
-- KEFI have established development personnel and contractors
with the wherewithal to develop these 2 million tonnes per annum
gold open pit/CIL (Carbon-In-Leach) projects. These are
complimented by in-country operations designed to maximise skills
transfer and local employment.
*EBITDA is based on internal management modelling used for
preparation of the 2021 Annual Report published on 1 June 2022 and
updated for the most recent published long term consensus gold
price. These estimates will shortly be updated for Tulu Kapi for
the final model adopted for project finance. Jibal Qutman estimates
will be published with the DFS.
KEFI Executive Chairman, Harry Anagnostaras-Adams,
commented:
"The regulatory processes in Saudi Arabia continue to facilitate
fast-tracking development of the Jibal Qutman Gold Project for its
construction to commence mid-2023 and first gold at the end of
2024. Our team at G&M has mobilised in anticipation that the
third of our three Jibal Qutman licence applications will be issued
within weeks.
"As a 2 million tonnes per annum open pit/CIL gold project,
Jibal Qutman is similar to Tulu Kapi in Ethiopia. The estimated
KEFI beneficial interest in the combined EBITDA of the Tulu Kapi
Gold project Gold project is GBP52 million per annum ($60 million
per annum) from 2025. That does not reflect any estimates for Jibal
Qutman or our larger expectations for Tulu Kapi, such as
anticipated resource growth of both open pit operations, the
underground at Tulu Kapi, the satellite prospects at both projects
and, of course, our Hawiah Copper-Gold discovery, the 2021 reported
resources of which already approximated those of the other two
projects combined (in gold-equivalent terms)."
Jibal Qutman Project Background
Geology and Exploration
As announced on 3 August 2022, the land access issues which have
delayed the start of the 733,000 oz Jibal Qutman Gold Project have
been resolved. As part of this process, it has been agreed that an
area of over 270Km2 is to be granted, covering the original Jibal
Qutman Exploration Licence, plus a significant land package along
strike to the north and south (see Figure 1 in the appendix
accessible via the following link:
http://www.rns-pdf.londonstockexchange.com/rns/3504Z_1-2022-9-13.pdf).
The maximum Exploration Licence size permitted under the 2020
updated Saudi mining law are typically 100Km(2) , as such, three
licences are required to cover the complete exploration area. Two
of these licences, covering the northern and southern extensions of
the Jibal Qutman gold system have now been issued and collectively
cover an area of 174Km(2) .
These two new ELs cover the north and south strike extension of
the Jibal Qutman gold system, which is part of the highly
prospective Nabitah-Tathlith Fault Zone that runs north-south
across much of the Arabian Shield.
Ancient and more modern artisanal mining excavations are known
to exist within the licence areas and the G&M exploration team
is confident of its ability to significantly expand the existing
Jibal Qutman resource base. Thirteen grab samples of mine dumps in
the Jibal Qutman Southeast EL taken by G&M in 2014, returned
grades of up to 66.5 g/t gold, averaging 10.5 g/t gold across all
13 samples. Ancient mining appears to have targeted quartz veins
with dump material presenting as quartz with strongly banded
sulphides (see Figure 2 in the attached appendix) - these veins
have not yet been identified in outcrop, as the area is
predominantly covered by alluvial/aeonian sands and gravels.
However, the quantity of dump material and the extent of more
recent artisanal mining are encouraging signs of significant,
sub-cropping continuation of the Jibal Qutman gold system. Grab
samples within the Jibal Qutman North EL area have returned gold
grades of up to 4.1 g/t gold, also associated with quartz
veining.
G&M exploration within the Jibal Qutman EL prior to 2016
focused on the 'Main Zone' trend, which presents as quartz veins
hosted within deformed volcanics and sediments. Shortly before the
end of this exploration phase, a second mineralised structure was
identified hosted within ultramafics on the eastern part of the
Jibal Qutman EL. This structure known as the 'Red Hill trend' is
yet to be fully explored and is open both along strike and at depth
within the Jibal Qutman resource area. Regional mapping has also
identified this structure within the adjoining Jibal Qutman North
and Southeast ELs, although at this stage it is untested.
Jibal Qutman DFS
Progress on the DFS continues, with Front End Engineering and
Design (FEED), plant layout and reserve definition nearing
completion. Metallurgical testing continues and preliminary
geotechnical design parameters have been agreed.
Whilst much of the DFS is being completed remotely, access to
the field is required to establish the baseline as part of the
Environmental and Social Impact Assessment (ESIA) and complete the
final geotechnical evaluation of the proposed reserve pits. This
cannot be completed until the final Jibal Qutman EL has been
issued, which may result in a delay to the final completion of the
study. However, at this stage, G&M believes the project is
still on track to proceed with financing and Mining Licence
submission in early 2023.
Market Abuse Regulation (MAR) Disclosure
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
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) +44 (0) 20 3470 0470
Jeff Keating, Adam Cowl
Tavira Securities Limited (Lead Broker) +44 (0) 20 7100 5100
Oliver Stansfield, Jonathan Evans
WH Ireland Limited (Joint Broker) +44 (0) 20 7220 1666
Katy Mitchell, Andrew de Andrade
IFC Advisory Ltd (Financial PR and IR) +44 (0) 20 3934 6630
Tim Metcalfe, Florence Chandler
Competent Person Statement
The information in this announcement that relates to geology,
exploration results and mineral resources is based on information
compiled by Mr Tomos Bryan, Exploration Manager for Gold &
Minerals Limited. Mr Bryan is a member of the Australasian
Institute of Mining and Metallurgy ("AusIMM"). Mr Bryan is a
geologist with sufficient relevant experience for Company reporting
to qualify as a Competent Person as defined in the JORC Code 2012.
Mr Bryan consents to the inclusion in this announcement of the
non-financial matters based on this information in the form and
context in which it appears.
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