REG - Kefi Gold and Copper - Saudi Arabia Development Update

KEFI Gold and CopperAnnouncement

09/05/2022 07:00

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RNS Number : 7001K  Kefi Gold and Copper PLC  09 May 2022

9 May 2022

KEFI Gold and Copper plc

("KEFI" or the "Company")

Saudi Arabia Development Update

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 provide an update regarding the Company's Gold and
Minerals SLA ("G&M") joint venture projects in Saudi Arabia.

Highlights

·    Jibal Qutman Gold Project: Studies underway targeting early
recommencement and development due to new regulatory system

 

·    Hawiah Copper-Gold Project: Preliminary Feasibility Study ("PFS") and
associated exploration programmes ongoing with the following notable progress
in the last month

o  Good progress on preliminary underground, open-pit, and surface
infrastructure designs

o  Completed initial geotechnical diamond drilling programme with samples
dispatched to the laboratory in the United Kingdom

o  Completed hydrology drilling with pump testing to commence after Eid
al-Fitr

o  Commenced exploration drilling within the Central Zone; resource
classification drilling within the Oxide Zone to commence in June 2022

o  Received positive assay results for the Hawiah Phase 1 reverse circulation
("RC") Oxide drilling (for targeted open pit mining in the first phase of
development), with a weighted-average gold grade of 1.7g/t across drill
intercepts in-line with expectations

 

·    Al Godeyer Copper-Gold Prospect: Completed initial RC drilling at the
Al Godeyer prospect adjacent to the Hawiah deposit, with assays pending

 

Jibal Qutman Gold Project ("JQ") Update

As a result of the new regulatory system at the Saudi Arabian Ministry for
Industry and Mineral Resources (the "Ministry"), development planning studies
have recommenced at Jibal Qutman. The current gold price is considerably
higher than the US$1,200 used in 2015 when the Company lodged its initial
mining licence application. Alternative processing options are now viable,
which should allow for a greater portion of the ore body to be developed,
meaning a greater resource and production profile.

Prior to the commencement of field activities, several consultants have
already been engaged to work with the team to evaluate these options and
update elements of the mining licence application, including processing,
open-pit design and scheduling, metallurgy, and updating the Environmental and
Social Impact Assessment ("ESIA"). These studies are expected to be completed
this year.

While there has been no formal notification on the award of a mining licence
at Jibal Qutman, given the positive and constructive developments at the
Ministry, the decision has been taken to re-establish a base in the nearby
city of Bisha. This will be used to coordinate operations ahead of the field
camp construction should the mining licence application be approved.

Hawiah Copper Gold Project ("Hawiah") Update

Programmes supporting the ongoing Hawiah PFS are also progressing well, and
the study remains on schedule to be completed by Q4 2022.

Latest works include the completion of a 1,920m diamond drilling programme,
across 16 holes, for geotechnical testing. Sample material has been shipped to
the United Kingdom and is undergoing a testing programme, which will feed into
the open-pit and underground design works.

Hydrology drilling has also been completed with 12 testing wells developed at
strategic locations across the project site. These holes will undergo pump
testing following Eid Al-Fitr, with results set to guide the mine dewatering
and hydrogeological modelling.

Hawiah Oxides for Potential Open Pit Mining

The Phase 1 RC Oxide drilling programme has been completed for 1,772m across
46 holes, bringing drill spacing to 100m, or better, and has allowed for
gold-grade and lode thickness to be confirmed across the Hawiah oxide area.

A key area of interest has been identified to the south of the current
Crossroads open-pit boundary (see Figure 1 in the appended PDF which may be
accessed here:
http://www.rns-pdf.londonstockexchange.com/rns/7001K_1-2022-5-8.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/7001K_1-2022-5-8.pdf) . This
area, which extends for 500m along strike southwards towards the Central Zone
has returned gold grades averaging 2.3 g/t (as shown in Table 1 below) with
widths consistent to material within the pit-limits further north. This should
result in the area being included in an expanded Crossroads open pit as part
of the 2022 MRE.

Table 1 - RC drill results from the area to the south of the current
Crossroads open-pit limits

 Hole ID   From (m)      To (m)  Interval (m)      Gold ppm
 HWRC_022  24            27      3.0               0.9
 HWRC_023  17            21      4.0               0.6
 HWRC_024  18            21      3.0               2.8
 HWRC_025  17            19      2.0               1.0
 HWRC_026  25            31      6.0               4.5
 HWRC_028  22            25      3.0               1.7
                                 Weighted Average  2.3

 

The case for expansions to the existing preliminary open-pit areas within the
Central Zone is also set to be strengthened further by the planned upcoming
'Transition' and 'Fresh' domain drilling, which is being designed to follow up
on the Phase 1 Oxide drill results. This programme will include a mix of
Diamond and RC drilling.

The Phase 1 Oxide programme has also allowed for a greater level of control
over the density of the oxide material through greater sample quantity and
distribution across the entire oxide domain. A full programme of density
testing is now underway ahead of the MRE. It is expected that this will result
in an increase to the global density value currently used for the oxide
modelling and resource estimation.

The Phase 2 Oxide drilling programme is scheduled to start in June 2022 and
will target material within the defined open-pits and extension areas to
further close the drill spacing. This is designed to enable an 'Indicated'
resource classification during the 2022 MRE.

A full list of the Phase 1 Oxide drilling results is provided as an appendix
to this release.

Al Godeyer Licences (Adjacent to Hawiah)

The first phase of RC drilling at Al Godeyer has been completed with 1,169m
drilled across 19 holes. This drill programme was designed to quickly evaluate
the gold potential of the oxide/gossan cap and provide an early indication for
the enriched copper potential of the transitional zone under the Main Gossan
area (See Figure 3 in the appended PDF).  A good downhole correlation with
the surface mapping and earlier trench programmes has been observed, with the
ore horizon intersected in all holes. Assay results are pending for this round
of drilling.

A diamond drill rig continues to test both deeper portions of the deposit and
selective areas of the Transition zone to add greater geological confidence
and extend the limits of known mineralisation.

Harry Anagnostaras-Adams, Executive Chairman of KEFI, commented:

"It's great to see the continued stream of results and news coming from Saudi
Arabia as the Hawiah Copper-Gold and Jibal Qutman Gold projects push towards
development. The team is pleased to be able to deliver rapid progress across
all fronts given the very supportive stance taken by the Saudi Government
recently.

"At Hawiah, the team is progressing at great speed on this growing project. We
remain on track to complete the PFS and updated MRE in late 2022 and expect
regular updates on the exploration work that is underway. These latest results
from the gold-rich oxide domain confirm that we have a good handle on the
geological model and that the open-pit portion of the development continues to
be a robust option to generate early project revenue. It is also encouraging
to see promising results coming out of the Central Zone ahead of the drilling
programmes that are set to kick-off in the coming months.

"The Jibal Qutman Gold Project also looks like it may emerge quickly as a
larger than previously contemplated development proposition, after some years
stuck in regulatory clearances.

"Following our capital raise of £8 million in April 2022, KEFI can meet its
funding obligations in Saudi Arabia to keep up with this highly active and
aggressive growth campaign across the three licence areas within Saudi Arabia
and we can also continue the risk-managed step up of early development works
in Ethiopia. This paves the way for full construction in Ethiopia from October
2022 at the end of the local wet season, with the initial signing at end June
2022 setting out any residual conditions to be satisfied with Government."

 

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 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.

The upgraded Hawiah Mineral Resource was announced on 6 January 2022. KEFI
confirms that it is not aware of any new information or data that materially
affects the information in the above releases and that all material
assumptions and technical parameters, underpinning the estimates continue to
apply and have not materially changed. KEFI confirms that the form and context
in which the Competent Person's findings are presented have not been
materially modified from the original market announcements.

 

Hawiah Mineral Resource 2022

The upgraded Hawiah Mineral Resource announced on 6 January 2022 totals:

-      24.9 Mt at 0.90% copper, 0.85% zinc, 0.62 g/t gold and 9.81 g/t
silver.

The Mineral Resource is classified as:

-      Indicated -  10.9 Mt at 0.96% copper, 0.86% zinc, 0.64 g/t gold
and 9.98 g/t silver

-      Inferred -    14.0 Mt at 0.85% copper, 0.83% zinc, 0.61 g/t
gold and 9.67 g/t silver

And is estimated to contain a total of 223,000 tonnes (491 million lbs) of
copper, 210,000 tonnes (463 million lbs) of zinc, 497,000 ounces of gold and
7.84 million ounces of silver.

Notes to Editor

KEFI Gold and Copper PLC

KEFI now has three advanced projects in two countries that are now overtly
pro-development - a more positive and less risky position than KEFI has
confronted for many years. The Company is focussed on a sequential development
path to building a mid-cap over the next 3-4 years with aggregate project
production of 365K oz gold and gold equivalent, in which KEFI will have a
beneficial interest of c.187K oz gold and gold equivalent.

KEFI pivoted onto the front foot at the end of 2021, following the end of the
Ethiopian civil war in the north of the country and because of exploration
results and regulatory improvements in Saudi Arabia. Up until the end of 2021
KEFI had only one advanced project on a development path but it was then
severely stifled by Ethiopian geopolitics.

The underlying intrinsic value of KEFI's assets has increased over the past
year on an absolute basis (from   December 2020 to December 2021) based on
NPV 8% at 31 December 2021 Metal Prices) and also on a per share basis (from
6p to 12p), despite having made large share issues to fund progress. And after
taking into account the recently announced placing, the NPV per share remains
at 12p by measuring at today's metal prices. For the first time since its IPO
in 2006, KEFI appears to have a tail-wind on several key fronts: several
projects at an advanced stage and against a backdrop of geopolitics having
turned in our favour in both countries as have the market prices of the metals
underlying our resources.

KEFI's reported mineral resources today provide a solid starting position for
growth.  Mineral resources are now a combined 4.7 million oz gold-equivalent,
up from 3.9 at mid-2021. The Company's beneficial interest in the in-situ
metal content of the three projects is a combined 2.1 million in gold
equivalent terms.KEFI's market capitalization at the time of writing (£28
Million) is only US$18/oz gold-equivalent compared to a current gold price of
approximately US$1,880/oz.

Our operating alliances are with strong organisations at the core of our
corporate structure, as follows:

·    Partners:

o  in Saudi Arabia: 70% owned by Abdul Rahman Saad Al Rashid and Sons Ltd
("ARTAR")

o  in Ethiopia c. 30% to be owned by:

§ Federal Government of the Democratic Republic of Ethiopia

§ Oromia Regional Government

§ Local private parties

·    Principal contractors for Tulu Kapi:

o  For mining: Corica

o  For process plant: Lycopodium

·    Senior project finance lenders for Tulu Kapi:

o  East African Trade and Development Bank Ltd

o  African Finance Corporation Limited

 

The most recent economic projections prepared by the Company for the 3
advanced projects indicate combined estimated projected Average EBITDA of
US$238 to $323 million per annum (KEFI's interest being c. US$108 to $145
million per annum), once all 3  are producing based on the assumed price
range of between "31 Jan 2022 current analyst consensus long-term prices" and
"current spot prices as at 31 December 2021" being Gold US$1,607-1,830/oz,
Copper US$7,590-9,750/t, Zinc US$2,442-3,590/t, Silver US$21-23/oz.

Simultaneous with the triggering of development at Tulu Kapi and in due course
in Saudi Arabia at Jibal Qutman and then Hawiah, we will expand exploration
programs in both countries. In Ethiopia we will focus underneath the open pit
where we already have established a maiden resource for underground mining at
average grade of 5.7g/t gold and will also follow-up already-drill-intercepted
potential satellite deposits in the Tulu Kapi district if allowed to do so by
the Ministry. In Saudi Arabia, we have ambitious plans and targets in and
around our existing two projects but also at 3 other projects under
application.

Appendix

Table 2 - RC Assay results from the Phase 1 Hawiah Oxide programme

 Hole ID    Total Depth  From (m)  To (m)  Downhole Interval (m)  Est TW (m)  Cu %  Zn %  Au g/t  Ag g/t  Lode / area      Mineralisation style
 HWRC_001   39.00        22.00     25.00   3.00                   2.30        0.11  0.21  0.57    7.70    Camp Lode        Oxide
 HWRC_002   33.00        11.00     16.00   5.00                   3.80        0.10  0.06  1.56    9.10    Camp Lode        Oxide
 HWRC_003   42.00        17.00     25.00   8.00                   6.50        0.09  0.07  1.14    6.31    Camp Lode        Oxide
 HWRC_004   36.00        15.00     20.00   5.00                   4.5         0.08  0.08  4.69    9.62    Camp Lode        Oxide
 HWRC_005   33.00        10.00     22.00   12.00                  10.20       0.15  0.04  1.05    3.32    Camp Lode        Oxide
 HWRC_006   40.00        16.00     21.00   5.00                   3.90        0.11  0.10  0.79    2.08    Camp Lode        Oxide
 HWRC_006   40.00        27.00     34.00   7.00                   6.20        0.83  0.35  1.10    11.96   Camp Lode        Transition
 HWRC_007   16.00        13.00     16.00   3.00                   2.90        0.26  0.13  0.90    2.50    Camp Lode        Re-drilled
 HWRC_007B  42.00        14.00     19.00   5.00                   2.90        0.17  0.10  1.18    2.27    Camp Lode        Oxide
 HWRC_007B  42.00        25.00     33.00   8.00                   6.70        0.19  0.04  1.73    15.91   Camp Lode        Transition
 HWRC_008   42.00        22.00     34.00   12.00                  11.00       0.63  0.05  0.65    11.96   Camp Lode        Transition
 HWRC_027   16.00        14.00     16.00   2.00                   4.50        0.11  0.18  1.00    2.40    Camp Lode        Re-drilled
 HWRC_027B  36.00        12.00     18.00   6.00                   4.50        0.10  0.13  0.36    1.25    Camp Lode        Oxide
 HWRC_046   42.00        20.00     23.00   3.00                   2.20        0.07  0.05  0.94    26.40   Camp Lode        Oxide
 HWRC_009   35.00        16.00     17.00   1.00                   0.80        0.12  0.11  0.98    0.50    Central Zone     Oxide
 HWRC_010   39.00        21.00     33.00   12.00                  8.80        0.26  0.05  1.33    9.48    Central Zone     Oxide
 HWRC_011   43.00        24.00     31.00   7.00                   4.90        0.07  0.04  2.72    55.24   Central Zone     Oxide
 HWRC_012   45.00        20.00     21.00   1.00                   0.70        0.08  0.05  0.39    0.70    Central Zone     Oxide
 HWRC_012   45.00        34.00     37.00   3.00                   2.90        0.10  0.05  0.87    26.07   Central Zone     Oxide
 HWRC_013   45.00        6.00      9.00    3.00                   2.70        0.13  0.07  3.03    6.13    Central Zone     Oxide
 HWRC_013   45.00        20.00     24.00   4.00                   3.20        0.10  0.08  1.16    0.58    Central Zone     Oxide
 HWRC_014   42.00        17.00     18.00   1.00                   0.70        0.03  0.03  0.38    0.90    Central Zone     Oxide
 HWRC_014   42.00        27.00     31.00   4.00                   2.70        0.10  0.06  0.55    2.15    Central Zone     Oxide
 HWRC_015   36.00        10.00     12.00   2.00                   1.40        0.02  0.04  1.46    3.85    Central Zone     Oxide
 HWRC_015   36.00        24.00     26.00   2.00                   1.40        0.04  0.02  1.14    50.20   Central Zone     Oxide
 HWRC_016   36.00        12.00     18.00   6.00                   5.00        0.03  0.04  1.07    1.29    Central Zone     Oxide
 HWRC_017   35.00        16.00     19.00   3.00                   2.00        0.03  0.03  1.47    2.80    Central Zone     Oxide
 HWRC_018   39.00        26.00     27.00   1.00                   0.70        0.03  0.02  0.35    9.80    Central Zone     Oxide
 HWRC_019   39.00        21.00     24.00   3.00                   2.10        0.04  0.04  3.59    0.73    Central Zone     Oxide
 HWRC_020   39.00        24.00     26.00   2.00                   1.50        0.04  0.04  0.43    0.05    Central Zone     Oxide
 HWRC_021   39.00        18.00     21.00   3.00                   2.00        0.03  0.04  0.28    0.20    Central Zone     Oxide
 HWRC_022   42.00        24.00     27.00   3.00                   2.20        0.02  0.01  0.86    0.68    Central Zone     Oxide
 HWRC_023   39.00        17.00     21.00   4.00                   3.10        0.05  0.03  0.64    0.75    Central Zone     Oxide
 HWRC_024   36.00        18.00     21.00   3.00                   2.00        0.04  0.06  2.78    0.83    Central Zone     Oxide
 HWRC_025   36.00        17.00     19.00   2.00                   1.50        0.12  0.07  0.98    1.70    Central Zone     Oxide
 HWRC_026   40.00        25.00     31.00   6.00                   4.20        0.06  0.06  4.64    1.81    Central Zone     Oxide
 HWRC_036   30.00        13.00     16.00   3.00                   1.50        0.07  0.05  0.37    0.33    Crossroads Ext   Oxide
 HWRC_037   30.00        14.00     15.00   1.00                   0.65        0.08  0.06  3.52    20.10   Crossroads Ext   Oxide
 HWRC_038   30.00        11.00     13.00   2.00                   1.20        0.16  0.32  0.09    0.05    Crossroads Ext   Oxide
 HWRC_039   45.00        20.00     21.00   1.00                   0.80        0.01  0.01  1.00    3.40    Crossroads Ext   Oxide
 HWRC_040   42.00        22.00     23.00   1.00                   0.75        0.01  0.01  0.35    0.60    Crossroads Ext   Oxide
 HWRC_041   39.00        23.00     24.00   1.00                   0.80        0.01  0.01  2.70    2.40    Crossroads Ext   Oxide
 HWRC_042   36.00        14.00     16.00   2.00                   1.50        0.03  0.02  3.86    1.05    Crossroads Ext   Oxide
 HWRC_043   39.00        30.00     31.00   1.00                   0.70        0.08  0.03  0.18    0.00    Crossroads Ext   Oxide
 HWRC_028   39.00        22.00     25.00   3.00                   2.30        0.01  0.03  1.70    0.80    Crossroads Lode  Oxide
 HWRC_029   33.00        13.00     16.00   3.00                   2.30        0.03  0.05  9.70    1.77    Crossroads Lode  Oxide
 HWRC_030   36.00        16.00     19.00   3.00                   2.30        0.01  0.04  0.39    3.63    Crossroads Lode  Oxide
 HWRC_031   42.00        20.00     24.00   4.00                   2.20        0.02  0.04  1.76    18.90   Crossroads Lode  Oxide
 HWRC_032   39.00        20.00     23.00   3.00                   2.40        0.02  0.02  1.27    4.20    Crossroads Lode  Oxide
 HWRC_033   39.00        22.00     23.00   1.00                   0.80        0.02  0.03  3.30    9.50    Crossroads Lode  Oxide
 HWRC_034   39.00        15.00     17.00   2.00                   1.30        0.03  0.02  3.61    8.30    Crossroads Lode  Oxide
 HWRC_035   27.00        10.00     16.00   6.00                   4.50        0.06  0.07  3.35    1.02    Crossroads Lode  Oxide
 HWRC_044   33.00        14.00     16.00   2.00                   1.40        0.01  0.06  0.54    1.60    Crossroads Lode  Oxide
 HWRC_045   48.00        29.00     36.00   7.00                   5.00        0.05  0.02  3.61    17.97   Crossroads Lode  Oxide/Transition

 

 

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