TIDMKEFI
RNS Number : 0308C
KEFI Minerals plc
13 October 2015
13 October 2015
KEFI Minerals plc
("KEFI" or the "Company")
TULU KAPI GOLD PROJECT UPDATE
APPOINTMENT OF PREFERRED PLANT CONTRACTOR
KEFI Minerals (AIM: KEFI), the gold exploration and development
company with projects in the Kingdom of Saudi Arabia and the
Federal Democratic Republic of Ethiopia, is pleased to announce the
appointment of Sedgman Limited (www.sedgman.com) as the preferred
contractor for Plant Construction & Start-up for its Tulu Kapi
Gold Project in Ethiopia.
Preferred Plant Construction and Start-Up Contractor
Sedgman is an industry specialist, based in Australia, with
strong African operations and a successful track record. The
principal terms and consequences of this appointment are set out
below, which are subject to full detailed documentation.
Scope of work under the proposed contractual arrangements will
cover:
-- detailed equipment specification and procurement - with a
Front End Engineering Design ("FEED") stage to commence this
quarter;
-- construction to occur under a fixed-price lump sum contract
(Engineering, Procurement and Construction);
-- start-up management;
-- estimated cost of c. US$63 million for 1.5-1.7 million tonnes
per annum depending on ore-type from year to year to be refined
during the FEED stage; and
-- performance guarantees:
o to remain in place until the end the first year of production;
and
o to ensure successful start-up before the final contractual
retention sums are paid by KEFI.
This compares favourably with the previous estimate, in the
Definitive Feasibility Study ("2015 DFS"), of a total cost of US$61
million for a 1.2 million tonne per annum plant. The 2015 DFS also
did not anticipate a fixed-price lump sum contract for construction
with performance guarantees.
Project Economics and Next Steps
Based on the proposal from Sedgman, expected production in the
first five years has been increased to an average of 105,000oz per
annum.
The consequence of the planned project contractors' arrangements
is that KEFI's peak funding requirement remains at c. US$120
million (plus provisions for cost-overruns and finance charges).
The planned sources of funds remain unchanged, being a combination
of debt and gold streaming finance of US$100 million together with
project-level equity of $20 million from the Government of
Ethiopia.
The Company anticipates the next steps for the project to
comprise the following:
-- commence the "FEED stage" of plant planning, involving
detailed engineering and procurements;
-- procurement planning will allow potential involvement of the
Government export credit agencies of Australia and South Africa, to
help minimise financing costs and risks;
-- appoint the contractor for Mine Establishment and Operation;
-- update the debt-financiers' independent technical experts for
debt-providers' formal credit approvals;
-- complete legal documentation for approval by all syndicate
members, including Government of Ethiopia; and
-- during 2016, KEFI will initiate drill-out of potential
satellite deposits to identify any opportunities to further expand
production. KEFI has already revised its plans to lift production
from the initially contemplated c. 80,000oz per annum to c.
105,000oz per annum.
Wayne Nicoletto, Chief Operating Officer of KEFI Minerals,
commented: "The intense competition during the contract tendering
process, culminating in today's appointment of Sedgman as preferred
contactor for the plant, demonstrates the industry's recognition of
the potential of Tulu Kapi and of its successful overhaul by
KEFI."
Harry Anagnostaras-Adams, Executive Chairman of KEFI Minerals,
added: "The project has robust economics and the support of major
industry players. Our finance team can now move on to finalising
the financing package and syndicate for Government approval, and
progress towards the construction phase."
ENQUIRIES
KEFI Minerals plc
Harry Anagnostaras-Adams (Executive
Chairman) +357 99457843
SP Angel Corporate Finance
LLP (Nominated Adviser)
Ewan Leggat, Jeff Keating +44 20 3470 0470
Brandon Hill Capital Ltd (Joint
Broker)
Oliver Stansfield, Alex Walker,
Jonathan Evans +44 20 7936 5200
Beaufort Securities Ltd (Joint
Broker)
Elliot Hance +44 20 7382 8300
Luther Pendragon Ltd (Financial
PR)
Harry Chathli, Claire Norbury,
Oliver Hibberd +44 20 7618 9100
Further information can be viewed on KEFI's website at
www.kefi-minerals.com
NOTES TO EDITOR
KEFI Minerals plc
KEFI is the operator of two advanced gold development projects
within the highly prospective Arabian-Nubian Shield, with an
attributable 1.93Moz (100% of Tulu Kapi's 1.72Moz and 40% of Jibal
Qutman's 0.73Moz) gold Mineral Resources (JORC 2012) plus
significant resource growth potential. KEFI targets that production
at these projects generate cash flows for further exploration and
expansion as warranted, recoupment of development costs and, when
appropriate, dividends to shareholders.
Expected milestones for the remainder of 2015 at Tulu Kapi
include:
-- Formalisation of project contracting, senior secured financing and equity funding;
-- Formalised development funding and commencement of site activities.
In addition, during 2015 KEFI anticipates that through its joint
venture company in Saudi Arabia, Gold & Minerals Ltd
("G&M"), it will commence drilling at new licence Hawiah and
assemble a Mining Licence Application for its discovery at Jibal
Qutman in Saudi Arabia.
KEFI Minerals in Ethiopia
The Tulu Kapi gold project in Western Ethiopia is being rapidly
progressed towards development with the Mining Licence being
granted in April 2015.
KEFI's Definitive Feasibility Study was then completed and the
Company is now refining contractual terms for project construction
and operation. Latest estimates for annual gold production are c.
100,000oz pa for a 10-year period and for all-in sustaining costs
(including operating, sustaining capital and closure) are c.
US$760/oz (excluding initial investment). Tulu Kapi's Ore Reserve
estimate totals 15.4Mt at 2.12g/t gold, containing 1.05 million
ounces.
KEFI Minerals in the Kingdom of Saudi Arabia
In 2009, KEFI formed G&M in Saudi Arabia with local Saudi
partner Abdul Rahman Saad Al-Rashid & Sons Company Limited
("ARTAR"), to explore for gold and associated metals in the
Arabian-Nubian Shield. KEFI has a 40% interest in G&M and is
the operating partner. To date, G&M has conducted preliminary
regional reconnaissance and has had five exploration licences
("ELs") granted, including Jibal Qutman and the recently granted
Hawiah EL that contains over 6km strike length of outcropping
gossans developed on altered and mineralised rocks with all the
hallmarks of a copper-gold-zinc VHMS deposit.
At Jibal Qutman, G&M's flagship project, Mineral Resources
are estimated to total 28.4Mt at 0.80g/t gold for 733,045 contained
ounces. The shallow oxide portion of this resource is being
evaluated as a low capital expenditure heap-leach mine
development.
ARTAR, on behalf of G&M, holds 24 EL applications that cover
an area of approximately 1,484km(2) . ELs are renewable for up to
three years and bestow the exclusive right to explore and to obtain
a 30-year exploitation (mining) lease within the area.
The Kingdom of Saudi Arabia has instituted policies to encourage
minerals exploration and development and KEFI Minerals supports
this priority by serving as the technical partner within G&M.
ARTAR also serves this government policy as the major partner in
G&M, which is one of the early movers in the modern resurgence
of the Kingdom's minerals sector.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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