REG - Kefi Gold and Copper - Tulu Kapi Gold Project Update

KEFI Gold and CopperAnnouncement

14/02/2022 07:00

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RNS Number : 5091B  Kefi Gold and Copper PLC  14 February 2022

 

14 February 2022

KEFI Gold and Copper plc

("KEFI" or the "Company")

Tulu Kapi Gold Project 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 announce an update in respect of the Company's
Tulu Kapi Gold Project (the "Project" or "Tulu Kapi"), part of the
KEFI-operated Ethiopia joint-venture Tulu Kapi Gold Mines Share Company
("TKGM").

KEFI subsidiary TKGM has worked intensely with the Ethiopian Ministry of Mines
(the "Ministry") to expedite the Project and the Ministry has allowed until 8
July 2022 for full Project financing and launch commitments to be achieved.

H.E Minister Eng., Takele Uma, commented:

"We look forward to monthly progress reports from TKGM and to getting Tulu
Kapi into production. Developing the world class minerals potential of
Ethiopia is one of our country's priorities."

KEFI Executive Chairman, Harry Anagnostaras-Adams, commented:

"We thank the Minister for his vision, patience and support. And we are proud
to have the support of the Ethiopian Ministry of Mines. Our common agenda is
to expedite development, production and economic benefits. I have no doubt
that Ethiopia's minerals sector has an exciting future.

"To have turned the corner in Ethiopia at the same time as our Saudi venture
is taking off makes for a very promising 2022."

Additional Project Updates

Security:

·    the civil war has abated since peaking at the end of December 2021
and the Ethiopian state of emergency has been lifted;

·    intense policing operations are being conducted in the areas around
Tulu Kapi and other mining projects, which reflects the close collaboration
between the authorities and the emerging minerals sector; and

·   as from this month TKGM will recommence the Project development
activities that were suspended in 2021 as a precautionary measure due to the
security situation.  Activities will include preparation of new host lands
for resettling households and also accommodation for construction personnel.
 An appropriate security system is being installed in readiness for
construction and operations.

Launch of the Project requires the following matters to be completed, which
are all in process:

·   external independent security assessment of the Project site, district
and transport routes, over several months of uninterrupted Project preparation
activities.  This is expected to be possible from later this month given the
situation on the ground;

·   completing administrative arrangements with the Government regarding
the Tulu Kapi project finance plans.  These procedural matters include: (a)
endorsement by the Ministry of the US$70 million which has historically been
expended on exploration, pre-development costs and development; (b) direct
agreement between the Ministry and the senior lenders in respect of their
security over the Tulu Kapi mining licence; (c) confirmation by the Ministry
of the areas in which KEFI subsidiary, KEFI Minerals (Ethiopia) Limited, has
the right to conduct follow-up exploration on its historical discoveries to
supplement the Mineral Resources of Tulu Kapi; and (d) the Government to
confirm the right of both development banks to operate in Ethiopia as senior
lenders under the same terms;

·    the finance syndicate remains in place and on standby to finalise
documents for signing. Subject to final construction pricing and document
execution, capital requirements have already been catered for within the
syndicate; and

·    development management: the Ethiopia-based planning and permitting
team was recently replaced by the development team in preparation for Project
launch and building of the required c.1000-strong workforce over the next
eighteen months.

 

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

 

Notes to Editor

KEFI Gold and Copper plc

KEFI is focused primarily on the development of the Tulu Kapi Gold Project in
Ethiopia and its pipeline of highly prospective exploration projects in the
Arabian-Nubian Shield. KEFI targets that production at Tulu Kapi will generate
cash flows for capital repayments, further exploration and dividends to
shareholders.

The following tabular summary presents KEFI's updated estimated share of the
project NPV's :

                              Tulu Kapi                Hawiah        Jibal Qutman  Total         Issued        Pence Per
                              NPV                      NPV           NPV           NPV           Shares        Share
 Net Present Value for KEFI
     30/06/2020               £114m                    0             0             £114m         1,867m        6
     31/12/2020               £164m                    £80m          0             £244m         2,137m        11
     30/06/2021               £205m                    £74m          0             £279m         2,153m        13
     31/12/2021               £191m                    £128m         £29m          £348m         2,939m        12
 Footnotes:
 Assumed exchange rate was rate US$1.35:£1.00
 31 December 2021 Metal Prices:
 Gold Price is US$1,830/oz
 Copper Price is: US$9,750/t
 Zinc Price is US$3,590/t
 Silver Price is US$23/oz

 Explanatory Notes:
 * NPV is derived by KEFI using independently created financial models of net
 cash flows after tax
 and debt service, using a discount rate of 8%;
 * Tulu Kapi open pit model is based on the Definitive Feasibility Study
 ("DFS") as updated for any
 refinements during project contracting and in-country experience;
 * Tulu Kapi underground mine model is based on the internal Preliminary
 Economic Assessment ("PEA");
 * Hawiah assumes preliminary mine modelling for open pit and underground
 because the MRE has only recently been updated. Also includes preliminary debt
 leverage;
 * Jibal Qutman model is based on the internal PEA, preliminary debt-leverage
 applied.

 

KEFI Gold and Copper in Ethiopia

Ethiopia is currently undergoing a remarkable transformation both politically
and economically.

The Tulu Kapi gold project in western Ethiopia is being progressed towards
development, following a grant of a Mining Licence in April 2015.

The Company has now refined contractual terms for project construction and
operation. Estimates include open pit gold production of c. 140,000oz pa for a
7-year period. All-in Sustaining Costs (including operating, sustaining
capital and closure but not including leasing and other financing charges)
remain c. US$800/oz. Tulu Kapi's Ore Reserve estimate totals 15.4Mt at 2.1g/t
gold, containing 1.1Moz.

All aspects of the Tulu Kapi (open pit) gold project have been reported in
compliance with the JORC Code (2012) and subjected to reviews by appropriate
independent experts.

A Preliminary Economic Assessment has been published that indicates the
economic attractiveness of mining the underground deposit adjacent to the Tulu
Kapi open pit, after the start-up of the open pit and after positive cash
flows have begun to repay project debts. An area of over 1,000 square
kilometres adjacent to Tulu Kapi has been reserved for exploration by KEFI's
wholly-owned Ethiopian subsidiaries upon commencement of development by TKGM,
with a view to adding satellite deposits to development and production plans.

KEFI Gold and Copper in the Kingdom of Saudi Arabia

In 2009, KEFI formed Gold & Minerals Limited ("G&M") in Saudi Arabia
with local Saudi partner, ARTAR, to explore for gold and associated metals in
the Arabian-Nubian Shield. KEFI has a 31.2% interest in G&M and is the
operating partner.

ARTAR, on behalf of G&M, and G&M directly hold over 16 Exploration
Licence (EL) applications pending the introduction of the new Mining Law.
These new regulations have recently been proclaimed and G&M now holds 3
EL's.  ELs are renewable for up to three years and bestow the exclusive right
to explore and to obtain a 30-year exploitation (mining) licence within the
area.

In addition, G&M has a Mining Licence Application over the Jibal Qutman
Gold Project which recent informal indications by the authorities provide some
confidence that the licence will be granted in 2022.

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