TIDMKEFI
RNS Number : 7612M
KEFI Minerals plc
18 October 2016
18 October 2016
KEFI Minerals plc
("KEFI" or the "Company")
OPERATIONAL UPDATE
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 provide an
operational update for the period from 1 July to 30 September
2016.
This update encompasses the activities of KEFI Minerals
(Ethiopia) Ltd ("KME") in Ethiopia and Gold & Minerals Ltd
("G&M") in Saudi Arabia.
Corporate
-- Raised GBP3.8 million (US$5 million) primarily for project
finance for the scheduled development activities of the Tulu Kapi
Gold Project ("Tulu Kapi" or "Project"), notably resettlement of
the Tulu Kapi community and project finance syndication closure
costs.
-- Confirmed entitlement to ETB72 million (US$3.5 million) VAT
refund from the Ethiopian tax authorities.
-- The Board of KEFI (the "Board") is considering a number of
financing proposals for the development of Tulu Kapi.
-- Strengthened the Board with the appointment of Mr Mark
Wellesley-Wood, an experienced African mining operator, as
Non-Executive Director.
-- RFC Ambrian appointed as joint broker.
Tulu Kapi Gold Project, Ethiopia
(Wholly-owned by KEFI; Government entitled to 5% free carried
interest)
-- Community resettlement, livelihood restoration and community
development programmes progressed and remain ongoing.
-- Tulu Kapi project contract drafting advanced with Ausdrill
for mining and Lycopodium for plant.
-- Progressed drafting of shareholders' agreement with the Government of Ethiopia.
-- Development Bank of Ethiopia completed its evaluation process
and the National Bank of Ethiopia (the central bank) approved the
proposed maximum senior debt-gearing.
-- Updated the Project timetable with the Government, project
contractors and potential finance syndicate and revised the date
for start-up of production to mid-2018.
-- Received formal Front End Engineering and Design ("FEED")
proposal for US$68 million from Lycopodium under its proposed fixed
price Engineering Procurement and Design ("EPC") contract. This
capital item, which is the largest single component of total Tulu
Kapi capital expenditure, has increased 4% since the tender twelve
months ago, mainly due to currency movements.
-- Reviewed other capital estimates with contractors and
financial advisers. After also adding contingencies and provisions
for non-Tulu Kapi costs, the estimated funding requirement has been
increased to c. US$150-160 million, which is fully covered by the
financing proposals being considered and remains significantly less
than the original c. US$289 million Tulu Kapi capital expenditure
estimates of the previous owner of the Project.
Gold & Minerals Ltd Joint Venture, Saudi Arabia
(40%-owned by the Company with KEFI as operator)
Encouraging signs from Government
-- New Energy, Industry and Mineral Resources Ministry created,
to be headed by Khalid al-Falih, Chairman of state oil company
Saudi Aramco.
-- Ministry will handle oil and gas extraction, power generation
and distribution, mining and industrial development.
-- KEFI and its partner ARTAR, through its G&M joint
venture, regard this as a positive sign and expect new mining
policy to be issued before year-end.
Jibal Qutman
-- KEFI's plans for developing a heap leach gold project at the
Jibal Qutman development await the outcomes of the Government
policy review.
Hawiah
-- Re-commenced fieldwork, focusing on depth-measurement of
large buried targets as a prelude to drilling.
Portfolio of Licence Applications
-- Upgraded and expanded its portfolio of licence applications
to reinforce foundations for longer term growth opportunities.
Webinar
Mr Harry Anagnostaras-Adams, KEFI's Executive Chairman, will be
hosting a live webinar at 4pm BST on Thursday 20(th) October 2016,
via:
http://webcasting.brrmedia.co.uk/broadcast/5804a464645b2ebf5620e2e2.
Listeners are encouraged to submit questions by clicking on the
link at the foot of the page or by emailing
questions@brrmedia.co.uk. The webinar will subsequently be
available on the Company's website at
http://www.kefi-minerals.com/news/videos.
ENQUIRIES
KEFI Minerals plc
Harry Anagnostaras-Adams (Executive
Chairman) +357 99457843
John Leach (Finance Director) +357 99208130
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
RFC Ambrian Ltd (Joint Broker)
Jonathan Williams
Beaufort Securities Ltd (Joint
Broker) +44 20 3440 6817
Elliot Hance +44 20 7382 8300
Luther Pendragon Ltd (Financial
PR)
Harry Chathli, Claire Norbury,
Ana Ribeiro +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 generates cash flows for further exploration and
expansion as warranted, recoupment of development costs and, when
appropriate, dividends to shareholders.
KEFI Minerals in Ethiopia
The Tulu Kapi gold project in Western Ethiopia is being rapidly
progressed towards development, following a grant of a Mining
Licence 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 All-in Sustaining Costs
(including operating, sustaining capital and closure) of
approximately US$741/oz to US$762/oz at a gold price range of
US$1,200/oz to US$1,500/oz. Tulu Kapi's Ore Reserve estimate totals
15.4Mt at 2.12g/t gold, containing 1.05Moz. The first eight
production years of the open pit are estimated to yield an average
of 115,000oz pa.
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. These plans now also
reflect the agreed construction and operating terms with project
contractors, and have been independently reviewed by experts
appointed for the project finance syndicate.
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.
At a gold price of US$1,350/oz, the projected cash flows
indicate a cash build-up in the first three production years of
US$190 million, which would be sufficient to repay all project
debts, fund the development of the underground mine and commence
paying dividends to shareholders.
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 more 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 23 EL applications that cover
an area of approximately 1,303km(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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