TIDMKEFI
RNS Number : 7744R
Kefi Gold and Copper PLC
31 October 2023
31 October 2023
KEFI Gold and Copper plc
("KEFI" or the "Company")
Q3 2023 Quarterly Operational Update
Ethiopia - Tulu Kapi Progressing Towards Launch; Saudi Arabia -
Exploration Results Show Potential for Resource Expansion at Jibal
Qutman and Hawiah, Whilst Development Studies Progress
KEFI (AIM: KEFI), the gold and copper exploration and
development company, has focused on the Arabian-Nubian Shield since
2008, assembling a pipeline of projects in the Kingdom of Saudi
Arabia and in the Federal Democratic Republic of Ethiopia, with the
most advanced being the shovel-ready, high-grade Tulu Kapi Gold
Project ("Tulu Kapi") in Ethiopia which is being prepared for its
launch.
We are pleased to provide this Q3 2023 operational update
covering the three months to 30 September 2023 and more recent
developments. This update encompasses the activities of the
Company, as well as wholly owned KEFI Minerals (Ethiopia) Ltd
("KME"), majority-owned Tulu Kapi Gold Mines Share Company ("TKGM")
in Ethiopia, and minority-owned Gold & Minerals Ltd ("GMCO") in
Saudi Arabia .
Executive Chairman, Harry Anagnostaras-Adams commented: "KEFI's
third quarter was one of our having our heads down clearing many
conditions precedent for the launch of Tulu Kapi Gold Project in
Ethiopia and, likewise in Saudi Arabia, our team has continued
clearing the checklist for shaping the development plans for the
Jibal Qutman Gold Project and the Hawiah Gold-Copper Project.
"Conditions in both of our host countries continue to improve
for our industry and, whilst one should never discount the
challenges in frontier markets, our teams are doing an excellent
job, our partners, contractors and financiers are working with us
closely and supportively and we are driving hard to hit our next
big milestone which is to trigger before the end of this year the
first stage of the Tulu Kapi Gold Project launch.
"A sign of our confidence is that we are lifting our exploration
ambitions in both Saudi Arabia and Ethiopia, where similar geology
presents similar opportunity which we have come to understand since
entering the Arabian Nubian Shield fifteen years ago. Our
proprietary database has already helped yield our discoveries and
we will continue to tackle our exploration pipeline during
development of our production projects.
"We have successfully assembled strong alliances with partners,
banks and contractors in both countries which, in due course, will
demonstrate their importance for KEFI's growth in terms of both
local standing and local financial capacity."
ETHIOPIA
Tulu Kapi Gold Project
Progress on all fronts maintains the plan to launch the
high-grade Tulu Kapi Gold Project (2.1g/t gold open-pit Ore Reserve
plus 5.6g/t gold underground Mineral Resource) before the end of
2023, and to scale up activities to full construction over the
following months in line with the continued upgrade of security
protections and preparations of the community. We will go as fast
as the conditions on the ground warrant, to ensure rapid ongoing
progress.
The planned US$320 million project financing and launch sequence
is being executed as follows:
o Final credit committee approvals by the mandated development
banks are now being processed after the finalised details of
exemptions from exchange and capital controls were received from
the Ethiopia Central Bank earlier this month.
o Upon receipt of final lender approvals, the relevant field,
legal, plant and mining teams will mobilise to concurrently
complete:
-- Community resettlement agreements with households, all of
which has been planned in detail with the authorities and
international specialist experts;
-- Final procurement agreements for the fixed price process
plant and the mining fleet, for which the contractors and
fabricators are on standby;
-- Detailed definitive documentation between all syndicate
members, all of which has been drafted; and then
-- Final Board approvals by the equity-capital providers,
including the development banks themselves, regional investors
subscribing to equity risk notes and the Federal and Regional
Governments subscribing to share capital at the Ethiopian
subsidiary-level.
The finance plan is summarised as follows:
o US$320 million: development capital excluding the mining fleet
provided by the mining contractor including:
-- US$190 million: secured debt (senior and mezzanine) from
project lenders;
-- US130 million: equity-risk capital (in US$ and Ethiopian Birr
as required by the project), comprising:
-- US$40 million: from the Ethiopian Federal and Regional Government;
-- US$90 million: from KEFI subsidiaries, in turn sourced from
Equity-Risk Notes ("ERN's") subscribed by the project lenders and
large regional investors, with up to half of the ERN's being
convertible into shares of KEFI (at KEFI's election) to be
prohibited until Year 4 onwards at then prevailing market share
prices.
-- We are also arranging our subsidiary-level funding capacity
to cover potential last-minute capital budgeting refinements such
as pricing adjustments for the fixed-price lump-sum plant
components last priced at end 2022.
SAUDI ARABIA
Jibal Qutman DFS
The Jibal Qutman Definitive Feasibility Study ("DFS") is
evaluating the economic and technical feasibility for building a
set of adjacent open-pit mines and a centrally sited
Carbon-in-Leach ("CIL") processing plant, to recover more than
500,000 ounces of gold, rather than the 169,000 ounces of gold
originally envisaged in the 2015 Preliminary Economic Assessment
("PEA"). The 2015 PEA focused on a small heap-leach approach as a
starter-project when, at that time, planning was based on a gold
price of c.US$1,200/ounce. GMCO also continues to explore for
additional resources on the same and similar structural belts at
this project area.
Key DFS workstreams which have now been completed include:
-- metallurgical and geotechnical drilling;
-- infill drilling to upgrade the resource classification; and
-- metallurgical tests, indicating gold recoveries of c.90% for
oxidised ore and 69-74% for fresh ore.
Workstreams progressed during Q3 2023 included:
-- finalisation of geological models to update the Mineral Resource Estimate ("MRE");
-- mine planning in more detail;
-- finalisation of processing plant design;
-- analysis of data from a ground magnetics survey and 23
trenches completed during the quarter, to better define drill
targets and also to finalise the location for site infrastructure;
and
-- completion of the initial accommodation and works compound at site.
Whilst the results of in-fill drilling and detailed mine
planning are assembled for an update to the current MRE,
exploration results build our expectation of significant further
growth.
Jibal Qutman MRE and Exploration
Resource Consolidation
Since January 2021, the JQ GMCO team has been working on
Resource consolidation ahead of the DFS, completing 23,500 metres
of diamond drilling which has been predominantly used on infill,
metallurgical and geotechnical programmes.
The 2023 MRE is nearing completion and will be finalised this
quarter. The work surrounding this MRE has focused predominantly on
resource classification upgrade and firming up grade distributions
rather than resource expansion. Once finalised it will be used to
drive the mine design and the subsequent Ore Reserve
definition.
Resource Expansion
Following the completion of the resource upgrade and support
works, drilling is now focused on the more then 12 other known
mineralised targets within the previously defined mining licence
area as well as the now much larger cumulative 270Km(2) exploration
licence area. This larger exploration area hosts the north and
south extensions of the known mineralised structures.
Generative programmes have commenced this quarter to develop
targets away from these defined JQ Resource areas. This exploration
has included a ground magnetic survey, airborne magnetic survey,
geological mapping and trenching. The generative work, whilst still
in its infancy, has already allowed for numerous targets to be
defined across the 270Km(2) area.
Two of the near mine targets are currently undergoing drill
testing with encouraging preliminary results.
1) The Red Hill 2 prospect. Located 1 kilometre along strike to
the north of the main Red Hill resource this target has intersected
the continuation of the main Red Hill thrust package, and
identified gold zones extending for more than 185m along
strike.
This structurally complex area is still being evaluated so true
widths cannot be estimated at this time however, the best trenches
within this zone include:
- JQT_403 intersected 39m at 1.74 g/t Au
- JQT_404 intersected 27.3m at 2.1g/t Au
Drilling to follow up on these results is underway with early
holes JQD161 intersecting 10.23m at 1.0g/t Au and JQD222
intersecting 8.46m at 2.7g/t Au.
2) At the Asfinga target, which is located around 1km north of
the 3K Hill Resource, four trenches have been opened to evaluate a
shear hosted quartz vein. Early assays from trenching indicate
mineralisation over a 150m strike length.
The best trenches within this zone include:
- JQT_414 intersected 16m at 2.31 g/t Au and 7.5m at 1.8g/t au,
- JQT_417 intersected 25.7m at 0.71g/t Au and 18.5m at 1.35g/t Au and,
- JQT_418 intersected 7.95m at 3.8g/t Au
Four diamond drill holes have been completed to follow up on
these results with assays pending.
Jibal Qutman Development Planning
The above work is designed to consider the alternatives for
scaling the annual production capacity and then finalise the DFS,
to optimise the project development plan, for approval by GMCO and
our project finance lenders in Saudi Arabia. Based on encouragement
from regulators and development financiers, we would then expect
that upon GMCO resolving its commitment to develop, there will be
minimal delay in obtaining a mining licence, closing project
finance within Saudi Arabia and starting development in 2024, with
the exact timing depending upon these reviews and regulatory
processes.
Hawiah Copper-Gold Project
Hawiah DFS
Hawiah sits at the northern end of the 120Km(2) long Wadi Bidah
Metallogenic Belt (WBMB), in which GMCO has five additional
Exploration Licences.
Since the discovery of Hawiah in 2019 GMCO has drilled a total
of 80,000 metres of diamond core (DD) and 5,500m of Reverse
Circulation (RC) drilling and has established a Mineral Resource
Estimate ("MRE") of 29.0 million tonnes ("Mt") at 0.89% copper,
0.94% zinc, 0.67g/t gold and 10.1g/t silver (see KEFI announcement
dated 9 January 2023). This MRE contains a total of 258,000 tonnes
(569 million lbs) of copper, 272,000 tonnes (600 million lbs) of
zinc, 620,000 ounces of gold and 9.4 million ounces of silver.
Whilst GMCO believes that the current Mineral Resource has
further expansion potential, it already ranks amongst the top three
base metal projects in Saudi Arabia and in the top 15% of VMS
("Volcanogenic Massive Sulphide") deposits globally by tonnage.
During Q2 2023, KEFI announced the following was achieved by
GMCO:
-- a maiden MRE for the nearby (12km from Hawiah) Al Godeyer
deposit of 1.35Mt at 0.6% copper, 0.54% zinc, 1.4g/t gold and
6.6g/t silver (see the Company's announcement on 3 April 2023);
and
-- Hawiah Pre-Feasibility Study ("PFS") outcomes on the open-pit
and associated studies on the underground mine (see the Company's
announcement on 28 June 2023).
-- Commencement of the 50,000m drilling programme for resource category upgrade and expansion.
The full mine development concept is still being finalised, but
it is envisaged that initial open pit mining will be followed by,
and complemented by, an underground operation. Mining optimisation
studies will, in due course, consider a range of scenarios
including various aggregate production rates and the ideal timing
for starting-up the underground operation.
Metallurgical test results, based on limited samples to date,
indicate that a conventional processing flowsheet provides good
recovery to a c.25% copper concentrate and a c.50% zinc concentrate
along with gold doré. However, other processing flowsheets remain
under consideration.
Whilst the primary focus of the PFS was limited to the
relatively near surface portion of the MRE within the Indicated
Resource category, complementary studies on the deeper Inferred
portions of the Mineral Resource have allowed a positive internal
preliminary assessment to be made of Hawiah's economic
potential.
Hawiah Exploration and resource development
In addition to the 50,000m Hawiah infill and expansion
programme, GMCO have also focused on upgrading and expanding the
existing Al Godeyer resource (12km west of Hawiah) through diamond
drilling, whilst simultaneously conducting earlier stage
exploration at Abu Salal (50km south of Hawiah) and mapping within
the wider WBMB project area.
Al Godeyer
The first phase of the 2023 Al Godeyer drilling programme, which
was completed in August, aimed at upgrading the maiden MRE and
brings the project total meters to 4,230m of DD and 1,700m of RC
drilling. A follow up phase of drilling is planned to commence
following receipt and interpretation of pending assays with the
target continuing to be the upgrade and expansion of the 1.35Mt
Inferred Mineral Resource to an c.2Mt Mineral Resource at an
Indicated classification. This would allow the defined Resources to
support the planned Hawiah DFS, as a satellite open-pit.
Abu Salal
At Abu Salal, a total of 30 trenches have been excavated across
the gossanous horizons which outcrop discontinuously over a 5km
strike. Thicknesses of the logged gossans have ranged from 12-13
metres down to 0.5 meters, with multiple horizons intersected in
several trenches. Assay results have been received for 17 of the
trenches which indicates consistent gold mineralisation within the
gossans. Gold grades reached up to a maximum of 3.01 g/t over a
five-meter interval in AST_002, with an average of 0.6 g/t across
all gossan intervals. Copper and zinc have been noted on the flanks
of the gossan with grades of up to 5% copper noted in AST_017,
indicating the presence of base metals at depth.
The culmination of the geological mapping, self-potential (SP)
geophysics and the logging and these new trench results have
clearly demonstrated the potential for massive sulphide
mineralisation within a westward dipping sequence in
meta-volcanics, with a similar presentation to that of Hawiah and
Al Godeyer.
An initial 2,000m scout drilling programme at Abu Salal
commenced in late September to test key areas of the outcropping
gossans at depth for thickness and grade. The historic mineral
occurrence at Abu Salal has never been subjected to systematic
exploration or subjected to any form of drilling.
KEFI GROUP
Group Development Plan
-- The planned KEFI Group project development sequencing remains as follows:
o 2023 trigger of staged launch of Tulu Kapi open-pit
development in Ethiopia for build-up to full construction over the
following few months, commissioning production end-2025 based on
2023 reserves and resources;
o 2024 launch Jibal Qutman open-pit development in Saudi Arabia
based on 2023/24 reserves and resources and targeting first
production 2026;
o 2025-26 launch of the Hawiah open-pit in Saudi Arabia for
first production to follow that in Tulu Kapi and Jibal Qutman;
and
o 2026 and thereafter launch of underground mine development at
Tulu Kapi and at Hawiah for first production two years later.
Group Metrics
Aggregate Mineral Resources across all three projects are 4.7
million ounces of gold-equivalent in-situ, of which KEFI's
beneficial interest is 2.0 million ounces.
Aggregate annual production from the three advanced projects is
currently projected at 326,000 ounces of gold-equivalent, of which
148,000 ounces is KEFI's beneficial interest, over an initial
seven-year period.
The Tulu Kapi open pit is already bankable with a 1 million
ounce Ore Reserve. Combined with the first preliminary planned
250,000 ounce minable resource contribution from the underground
mine. Tulu Kapi is planned to produce c.144,000 ounces gold per
annum at start-up throughput rate. By lifting process-plant
throughput by 20% to 2.4Mtpa, production would be c. 165,000 gold
per annum at an All-In-Sustaining Costs of c.US$900 per ounce,
assuming a gold price of US$1,600-2,000 per ounce. At those same
prices, this provides Net Operating Cash Flow of US$112-156 million
per annum (100% basis) for the first seven full years of production
(2026-2032).
Group Working Capital
KEFI has working capital in place to underpin its planned runway
to the intended launch of the Tulu Kapi Project finance in the
coming months.
This follows the Company's repayment of all debts in June 2023
upon completing an equity placing that raised gross proceeds of
GBP7.2 million via a GBP5.5 million Firm Placing, GBP0.7 million
Conditional Subscription, GBP0.24 million Retail Offer and GBP0.75
million Issue of Remuneration Shares in lieu of cash to senior
executives. The issue of the Conditional Subscription, Retail Offer
and Remuneration Shares were approved at the Company's Annual
General Meeting on 30 June 2023 and these shares have subsequently
been issued.
Group Exploration Project Pipeline
Ethiopia Project Pipeline
We have registered a number of applications for new exploration
licences. In addition, we have commenced administrative proceedings
in respect of our long-standing proximal Exploration Licenses
("ELs") surrounding the Tulu Kapi Project Mining Licence area, in
order to continue exploration programmes and community development
which have always complemented the Tulu Kapi project. During an
overhaul of the title-regulatory system in 2022, these ELs were
over-pegged by a Hong Kong shell company owned by a British Virgin
Islands shell company. We are confident that this situation can be
resolved satisfactorily.
Saudi Project Pipeline
Following the expansion of GMCO's exploration portfolio to 15
ELs covering four project areas of more than 1,000km(2) , regional
exploration teams have mobilised to the new ELs. As was the case at
Jibal Qutman and Hawiah, many of these ELs have abundant evidence
of historical workings and surface expression of
mineralisation.
GMCO has begun comprehensive mapping and sampling campaigns over
the newly awarded licences. The outcomes of this fieldwork will be
to ground-truth historical data, assess the surface mineralisation
and describe the structural framework controlling mineralisation.
These programmes are expected to build into progressively advanced
exploration works, including geophysics and trenching.
During the quarter, regional sampling of the Umm Al Khabath EL
(located at the southern end of the Wadi Bidah Mineral Belt)
returned anomalous gold and base metals. These results strongly
support the interpretation that the Umm Al Khabath EL contains VMS
style mineralisation, commonly found in the Wadi Bidah.
INVESTOR WEBINAR
The next open-forum investor webinar will be held in early
December 2023 to coincide with the planned Ethiopian Government's
MineExpo and will focus on Tulu Kapi Project Syndicate activities
and announcements. Details of these two events will be announced in
due course.
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
IFC Advisory Ltd (Financial PR and IR) +44 (0) 20 3934 6630
Tim Metcalfe, Florence Chandler
3PPB LLC (Institutional IR)
Patrick Chidley +1 (917) 991 7701
Paul Durham + 1-203-940-2538
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END
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