REG - Kefi Gold and Copper - Saudi Arabia Development Update

KEFI Gold and CopperAnnouncement

16/06/2022 07:00

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RNS Number : 0530P  Kefi Gold and Copper PLC  16 June 2022

16 June 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 on the Company's Gold and
Minerals Limited ("G&M") Hawiah Copper-Gold Project ("Hawiah") and Jibal
Qutman Gold Project ("Jibal Qutman") in Saudi Arabia. G&M is owned 30% by
KEFI and 70% by its partner Abdul Rahman Saad Al Rashid and Sons Ltd
("ARTAR").

Highlights

Hawiah:

·    Hawiah Exploration Licence ("EL") has been renewed for five years

·    Drilling programmes are proceeding as planned at both Hawiah and
adjacent Al Godeyer ELs, with four drilling rigs operating across the licences

·    On track to complete new Mineral Resource Estimates and Hawiah
Preliminary Feasibility Study ("PFS") in Q4-2022

Jibal Qutman:

·    Discussions with the Ministry of Industry and Mineral Resources
regarding G&M's Jibal Qutman licence applications continue, and the
Company remains hopeful this this matter will be resolved in the near future

·    Accordingly, G&M have initiated actions which will allow this
project to be advanced rapidly. These include:

o  Independent audit of Mineral Resource Estimate;

o  Detailed mine planning and scheduling;

o  Engagement of Lycopodium to complete a 2 Mtpa carbon-in-leach ("CIL")
Detailed Feasibility Study ("DFS") by December 2022; and

o  Updating the environmental and social studies to comply with new
legislation.

·    The intent is to be in a position to trigger project financing
formalities for development commitments as soon as the necessary clarification
is obtained

·    A relatively quick financing and development schedule is targeted
because the Saudi Government has simplified and sped up regulatory clearances
for development and the financing thereof

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

"In Saudi Arabia, we now have two development projects in progress after being
held up for many years awaiting a regulatory overhaul. We are looking to
develop our Jibal Qutman Gold Project and then to follow with the start-up of
the Hawiah Copper-Gold Project. Both projects are growing, but already in the
feasibility study stage and, combined, the KEFI interest therein is already
projected to exceed that of the Company's Tulu Kapi Gold Project in Ethiopia
in terms of NPV and cash flow generation.

"Drilling at Hawiah during 2022 should not only further grow the copper-gold
resources but also upgrade the classification to the confidence required for
mine planning in the PFS, to be completed by the end of this year. Drilling at
Hawiah and the nearby Al Godeyer Prospect is also targeted to provide
additional near-surface oxide gold resources to be mined first in open pits,
expediting first revenue, prior to the underground mine and base metal
processing facility being developed.

"With recent encouragement from the Saudi Government, Jibal Qutman is likely
to be developed first as KEFI has already commenced work to update the PFS
completed in 2014. The preferred development approach for Jibal Qutman is now
likely to be a straight-forward CIL gold processing plant, at a larger scale
than previously envisaged, as the economics for mining and processing the
whole resource now are much more robust at the higher current gold prices.
Another important consideration is that project financing in Saudi Arabia will
not require foreign banks and that Jibal Qutman will not require the
resettlement of communities.

"Our teams in Saudi Arabia and Ethiopia are all working hard towards
potentially developing both Jibal Qutman and Tulu Kapi in 2023 and then Hawiah
shortly afterwards."

Hawiah

Hawiah was discovered in September 2019 and now ranks in the top three base
metal projects in Saudi Arabia and one of the top 15% VMS projects worldwide.
The G&M team is progressing at great speed on this exciting project which
is located close to major infrastructure.

G&M has recently received confirmation from the Saudi Government that the
Hawiah EL has been renewed for five years to 2027. This follows the granting
in December 2021 of the two Al Godeyer ELs which are located immediately west
of the Hawiah EL.

G&M is now well placed to complete the work required to apply for a Mining
Licence at Hawiah in 2023. Integral to the Hawiah Mining Licence application
will be the Preliminary Feasibility Study and updated Mineral Resource
Estimates that the G&M team are working towards completing in late 2022.

The required work is proceeding as planned with:

·        completion of initial geotechnical drilling and hydrology
drilling programmes;

·        drilling of the Central Zone and the Oxide/Transition Zones
now well advanced;

·        ongoing metallurgical test work to determine the preferred
flowsheets, including on the bulk samples of the oxide mineralisation from
trenches across the Camp and Crossroad Lodes;

·        commencement of preliminary underground, open-pit, and
surface infrastructure designs; and

·        evaluation of building an oxide gold circuit that would add
early cash flow.

Initial exploration of the Al Godeyer ELs has confirmed similar copper-gold
mineralisation to the Hawiah VMS deposit and indicated good continuity of the
mineralised horizon.

Trenching across the extensive Al Godeyer gossans has been completed as well
as an initial 19 drill Reverse Circulation ("RC") holes targeting oxide and
transitional mineralisation. Assays from the samples collected are awaited.
Diamond drilling is currently ongoing, targeting deeper portions of the
sulphide horizon.

The Al Godeyer exploration focus for the remainder of 2022 will be on drilling
to define near-surface oxide gold resources that would contribute to early
open-pit production at Hawiah.

Jibal Qutman

Jibal Qutman was KEFI's first discovery in Saudi Arabia with Mineral Resources
in excess of 700,000 ounces of gold. Drilling undertaken by G&M identified
gold resources in six areas - Main Zone, West Zone, South Zone, 3K Hill, 4K
Hill and Red Hill. Given the established regional prospectivity for shallow
oxide gold deposits, EL applications have been prepared for four additional
areas near Jibal Qutman.

As a result of the new regulatory system and positive developments at the
Saudi Arabian Ministry for Industry and Mineral Resources, development
planning studies have recommenced at Jibal Qutman, and indications from Saudi
Arabia's Government are that the Mining Licence will progress in 2022.

The current gold price is considerably higher than the US$1,200/ounce used in
2015 when the Company lodged its initial Mining Licence application. Several
alternative processing options are likely to have become more attractive since
2015, which may enable more of the known gold deposits to be economically
mined. This would result in a larger resource and production profile.

Prior to receiving formal regulatory approvals which will enable the
commencement of field activities, several consultants have been engaged to
evaluate processing options for Jibal Qutman and update elements of the Mining
Licence application. This work includes open-pit design and scheduling,
metallurgy, processing options and updating the Environmental and Social
Impact Assessment.

Given the higher gold price and increased Mineral Resources since studies were
completed in 2015, the preferred development option is currently a 2 Mtpa
open-pit mining operation feeding a standard CIL gold processing plant.
Subject to metallurgical testwork confirming that more of the unoxidized gold
mineralisation has good recoveries, the processing rate may double from that
previously envisaged with a commensurate increase in gold production.

Lycopodium has been engaged to complete a Detailed Feasibility Study for Jibal
Qutman by December 2022. The DFS will be essential to secure project finance
with Saudi financial institutions (including the Saudi Industrial Development
Fund (SIDF)) and build a mine.

Drilling at Jibal Qutman for the remainder of 2022 is aimed at collecting data
required for the DFS:

·       geotechnical data;

·       metallurgical samples; and

·       testing key areas to improve geological knowledge.

There is excellent potential to expand the Jibal Qutman Mineral Resources with
drilling programmes to test various gold mineralised zones now being planned.
The current Mineral Resource estimate for Jibal Qutman totals 28.4 million
tonnes at 0.80g/t gold, containing 733,045 ounces, with the majority of the
Mineral Resource in the Indicated category.

The G&M Board believes that this work will place them in a strong position
to rapidly develop the Jibal Qutman project and, should regulatory approvals
be granted, allow the Company to commence gold production in 2024.

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.

 

Notes to Editor

KEFI Gold and Copper PLC

Mission

 

The mission of KEFI is to discover and acquire economic gold and copper
mineralisation and follow through with cost-effective responsible exploration,
mine development and production in compliance with local laws and
international best practice.

 

Our geological region of focus is the Arabian-Nubian Shield, due to its
outstanding prospectivity for gold and copper.

 

Our activities provide a strong project pipeline covering the spectrum from
our Tulu Kapi Gold Project at the funding stage in Ethiopia, to our Hawiah
Copper-Gold and Jibal Qutman Gold Projects at the feasibility study stage in
Saudi Arabia, and to walk-up drill targets in both countries.

 

Since incorporation 16 years ago, KEFI has invested some £72 million in these
activities and today the Company sits with advanced projects that have project
NPV's that are already multiples of the amount invested. KEFI has a leading
position in the two countries that contain the majority of the Arabian-Nubian
Shield. We now have three advanced projects in these now strongly
pro-development countries and are focused on a sequential mine development
path to build a mid-tier mining company over the next few years.

 

Approach

 

KEFI was launched in 2006 as a £2.5 million initial public offering ("IPO")
on the AIM Market of the London Stock Exchange and was then led by exploration
specialists. The 2014 acquisition of the Tulu Kapi Gold Project triggered the
appointment of management with track records in developing and operating mines
in Africa. KEFI partners with appropriate local organisations, such as Abdul
Rahman Saad Al Rashid and Sons Limited ("ARTAR") in the Kingdom of Saudi
Arabia in our Gold and Minerals Limited ("G&M") joint venture and with the
Federal Government and the Oromia Regional Government in Ethiopia for our TKGM
joint venture.

 

Our community plans are in accordance with the International Finance
Corporation (World Bank) Performance Standards and Equator Principles.
Operationally, we align with industry specialists such as Lycopodium Limited
("Lycopodium") - our principal process plant contractors in both Ethiopia and
Saudi Arabia.

 

Some elements of Tulu Kapi's development commenced in Q4-2019 and were stalled
repeatedly by civil disturbance. These have now re-started and full
construction is planned to begin in October 2022 once the local dry season
begins. Annual gold production remains projected at 140,000 ounces from the
Tulu Kapi open pit to increase to c.190,000 ounces when the underground mine
starts up a few years later.

 

In Saudi Arabia, we now have two development projects in progress after being
held up for many years awaiting a regulatory overhaul. We look to develop our
Jibal Qutman Gold Project ("Jibal Qutman") and then to follow with the startup
of the Hawiah Copper-Gold Project ("Hawiah"). Both projects are now in the
feasibility study stage and are projected, between them, to add similar scale
of gold-equivalent production to that projected for Tulu Kapi in Ethiopia.
Copper will provide the majority of Hawiah's revenue.

 

We have also registered applications in Saudi Arabia for exploration of
prospects selected from our proprietary database, covering four major new
project areas and aggregating more than 1,000 square kilometres.

 

Timing

 

KEFI's objective is to have three projects in production by 2026 at a net
production rate of c.4,000 gold-equivalent ounces (KEFI beneficial interest
200,000 oz gold-equivalent).

 

The potential net operating cash flow from these projects is currently
estimated to exceed £137 million (US$185 million) per annum. The next few
years will be focused on multi-pronged development and exploration during
which our cash flow production should commence and escalate.

 

The operating environment for KEFI has improved considerably in recent times.
Since H1-2020, the estimated net present value ("NPV") of our assets has
tripled to £348 million (c.9 pence per share, based on today's issued
capital) due to exploration and permitting success in Saudi Arabia and an
expected greater equity interest in Tulu Kapi. KEFI's current market
capitalisation is c.£30 million (at 0.7 pence per share).

 

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