REG - Kefi Gold and Copper - Q4 2023 Quarterly Operational Update

KEFI Gold and CopperAnnouncement

24/01/2024 07:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240124:nRSX6775Aa&default-theme=true

RNS Number : 6775A  Kefi Gold and Copper PLC  24 January 2024

24 January 2024

KEFI Gold and Copper plc

("KEFI" or the "Company")

Q4 2023 Quarterly Operational Update

Ethiopia - Tulu Kapi Gold progressing towards launch

Saudi Arabia - Jibal Qutman Gold development scenarios being reviewed, Hawiah
- development studies progress, regional exploration 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 operational update covering the three months to
31 December 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.

ETHIOPIA

Tulu Kapi Gold Project (currently 95%-owned but planned to reduce to c.70% at
finance closing)

The three critical conditions precedent for project financing and launch, all
requiring government regulatory confirmations, were achieved by October 2023:

·   Central bank exemptions from exchange and capital controls, announced
in October 2023;

·  Government security protection for strategic mining projects, announced
earlier in 2023; and

·    Finance Ministry approval of country membership for AFC, announced
earlier in 2023

Conditional final Credit Committee approval by the lead lender has been
granted, as announced on 10 January 2024, following the Ethiopian Government's
commitment to reinforce security protection as requested at stakeholder
workshops in early December 2023.

Detailed definitive agreements for the project financing are in near-final
form with contractors, equity investors and government agencies.  Those for
the lenders have also been drafted, but await credit committee approval by the
co-lender before finalisation.

Independent confirmation was received of compliance with international banking
standards with regard to:

•     updated technical due diligence; and

•     appropriate preparations to date as regards security

As previously reported (see Q3 2023 Operational Update announced on 31 October
2023), to facilitate equity investor analyses (as compared with the
lender-dominated analyses regularly reported in respect of the open-pit), the
financial projections were updated to reflect the Company's business plan:

·   Development of the underground deposit so that it begins to contribute
to production as from Production Year 3;

·    Processing of the low-grade stockpiles at end of mine life;

·   Equity analysts' consensus long-term gold prices (as per Standard and
Poor's) now at US$1,862/oz;

·    Lifting the process rate by 20% to c, 2.4Mtpa; and

·   The intention to refinance the debt package with conventional
corporate finance during the third year of production, at which point the more
expensive components of start-up finance would be repaid.

The summary metrics are tabulated below and will be further refined during
construction at Tulu Kapi alongside in-fill grade control drilling for the
open pit and some deep-drilling of the underground resource, the last
drill-hole in which was 90m at c.3 grammes per tonne gold.

                                                                          Gold Price    Gold Price

                                                                          US$1,862/oz   US$2,020/oz
 NPV, IRR & Valuation
 Leveraged IRR @ construction start                                       36%           43%
 Leveraged NPV8% @ construction start                                     US$288.6m     US$377.4m
 Leveraged NPV8% @ production start                                       US$480.4m     US$588.0m
 EBITDA (average of first three production years)                         US$166.8m     US$192.3m
 Enterprise valuation @ 3.5x EBITDA                                       US$583.6m     US$673.1m

 Cash Cost Metrics
 AISC (US$/oz)                                                            US$908        US$919
 AIC (US$/oz)                                                             US$1,138      US$1,149
 Breakeven cost (inc everything e.g. debt repayment, taxes etc) - US$/oz  US$1,239      US$1,282

 Cash Balances & Inventory

 Cash built up in TK over life of mine                                    US$667.9m     US$812.4m
 Cash at bank in TKGM at end of year three                                US$72.4m      US$94.8m
 US$ gold content of ore on hand at end of production year three          US$51.4m      US$55.7m

 

Footnote: These metrics reflect initial modest contribution from the
underground mine, based on current indicated resources. As the orebody remains
open, the finalised plans will in due course reflect a higher expected
contribution from the underground mine. in addition, we exclude herein the
possibility of any contribution from the satellite prospects that require
follow-up exploration.

 

SAUDI ARABIA (25% owned GMCO joint venture)

Jibal Qutman Gold and Hawiah Copper-Gold Development Projects

These two discoveries are undergoing Feasibility Studies for development,
targeting commitments in 2024 and 2026 respectively.

Progress continued during Q4 2023:

·    Drilling programmes (drilling to date is 81,000m at Jibal Qutman and
101,000m at Hawiah ), to date focused primarily on establishing and upgrading
Mineral Resource and declaring maiden Ore Reserves. Today the GMCO board is
focused on selection of the preferred development plans.

·    A comprehensive exploration update (previous update was announced 6
September 2023) is being assembled for publication shortly;

 

·    Metallurgical testing for selection of preferred process flowsheet;

·    Geotechnical and hydrological drilling programmes for mine planning;

·    Initial mine planning;

·    Environmental and social responsibility plans for permitting;

·    Trenching programme over the planned locations for infrastructure to
ensure no mineralisation;

·    Evaluation water source alternatives;

·    Electricity cost optimisation studies;

·    Costings of capex and opex; and

·    Completion of the initial accommodation and works compound at site.

 

KEFI GROUP

Group Development Plan

·    The planned KEFI project development sequencing remains as follows:

o We have triggered the staged launch of the Tulu Kapi open-pit development in
Ethiopia for build-up to full construction during H1-2024, starting
commissioning eighteen months later and full production mid-2026;

Then

o H2-2024 launch Jibal Qutman open-pit development in Saudi Arabia based on
2023/24 reserves and resources and targeting first production 2026;

Then

o 2026 launch of the Hawiah development in Saudi Arabia for first production
to follow that in Tulu Kapi and Jibal Qutman;

And then

o Launch of underground mine development at Tulu Kapi.

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 340,000 ounces of gold-equivalent, of which 149,000 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 open pit is planned to
produce c.144,000 ounces gold per annum at start-up throughput rate.  By
lifting process-plant throughput by 20% to 2.4 million tonnes per annum and
feeding in the underground and low-grade stockpiles, production would be
c.165,000 ounces gold per annum at an All-In-Sustaining Costs of c.US$908 per
ounce, assuming a gold price of US$1,862/oz.  At those same prices, this
provides Net Operating Cash Flow of US$141 million per annum (100% basis) for
the first seven full years of production.

Group Working Capital

The Company working capital requirements are currently being met through:

·    ARTAR funding KEFI's GMCO joint venture contributions whilst we
optimise plans for our first development at Jibal Qutman by mid 2024. We
currently owe c. £3.5 million to ARTAR and intend to settle the amount owing
in due course rather than be further diluted in the GMCO Joint Venture.

·    Unsecured advances being provided by a UK-based lender, for general
working capital, as implemented regularly in recent years. As of December 31,
2023, the advanced amount stood at £1.5 million.

Group Exploration Project Pipeline

Ethiopia Project Pipeline

Regional exploration: subsidiary KME lodged applications for exploration
licences over other areas in Ethiopia prospective for gold, base metals and
lithium.

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 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.

Corporate Presentation

KEFI will be presenting at 121 Mining Investment Cape Town, South Africa, on 5
February 2024.  The presentation to be delivered is available on the
Company's website: https://www.kefi-goldandcopper.com
(https://www.kefi-goldandcopper.com) .

 

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 (Executive Chairman)       +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

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDBIGDBDBDDGSX