TIDMKEFI
RNS Number : 1140E
Kefi Gold and Copper PLC
28 June 2023
28 June 2023
KEFI Gold and Copper plc
("KEFI" or the "Company")
Positive PFS and Associated Studies for Hawiah Copper-Gold
Project ("Hawiah")
Highlights
-- The Pre-Feasibility Study ("PFS") on the Hawiah open-pit and
associated studies on the underground mine have provided a positive
foundation for the optimisation and development of Hawiah, in Saudi
Arabia;
-- Project NPV(8) of US$301 million and post-tax IRR of 75%,
based on mining current Indicated and Inferred Resources, Life of
Mine ("LOM") revenue of US$2.7 billion, operating cashflow of
US$1.1 billion and pre-production capital expenditure of US$295
million. These estimates are based on spot gold prices as at 30
April 2023 and an assumed mining rate starting at 2 million tonnes
per annum ("Mtpa") and peaking at 3 Mtpa over 10 years;
-- It is envisaged that initial open pit mining will be followed
by, and complemented by, underground mining. Metallurgical test
results, based on limited samples to date, indicate that a
conventional processing flowsheet provides high metal recoveries to
a c.25% copper concentrate and a c.50% zinc concentrate and gold
doré; and
-- Optimisation studies will in due course consider a range of
scenarios including various aggregate production rates and the
ideal timing for starting-up the underground operation. For the
time being, unit costs of production have been based on an assumed
production rate of 2 Mtpa and the sequential mining of underground
after an open cut phase.
KEFI Executive Chairman, Harry Anagnostaras-Adams,
commented:
"The PFS demonstrates an attractive project at Hawiah.
"To date we have only tested a small part of the Hawiah district
and we already have a project that can be optimised for
development.
"Following the recent capital-raise, work is already underway on
the +50,000 metre drilling programme which will complement the
Hawiah PFS and associated studies. We look forward to reporting
exploration results as we establish a globally significant VMS
project at Hawiah. We are also wrapping up a 13,000 metre programme
at Jibal Qutman Gold and assessing initial results from
reconnaissance over the fourteen exploration licences granted in
the past eighteen months to our operating joint venture company.
This is a truly exciting rate of progress in what today is perhaps
the world's most exciting jurisdiction for minerals
exploration.
"KEFI has now established its leadership position in the
Arabian-Nubian Shield and has assembled development finance at the
subsidiary and project levels for all three advanced projects which
have combined c.5 million ounces gold-equivalent resources which
remain open for extensional drilling.
"The aggregate NPV of our three advanced projects is
approximately GBP318 million or about ten times the Company's
current market capitalisation, providing a preliminary indicator of
the upside value potential as we de-risk the projects and add more
value through exploration and development."
Summary
KEFI Gold and Copper (AIM: KEFI), the gold and copper
exploration and development company with a leadership position in
the high-growth Arabian Nubian Shield, is pleased to announce the
positive assessment of the PFS for Hawiah, the largest discovery to
date by KEFI's 27%-owned Saudi Arabian joint-venture Gold and
Minerals Company Limited ("GMCO").
Hawiah is a part of a larger mineralised system and the January
2023 Mineral Resource Estimate ("MRE") contains a total of 258,000
tonnes (569 million lbs) of copper, 272,000 tonnes (600 million
lbs) of zinc, 620,000 ounces of gold and 9.4 million ounces of
silver. Hawiah already ranks amongst the top three base metal
projects in Saudi Arabia and the largest 15% VMS ("Volcanogenic
Massive Sulphide") systems globally.
KEFI also announced a maiden MRE for the nearby (12km from
Hawiah) Al Godeyer deposit of 1.35Mt at 0.6% copper, 0.54% zinc,
1.4g/t gold and 6.6g/t silver on 3 April 2023.
GMCO drilling totalling 58,194 metres ("m") since discovery in
2019 has established the Hawiah MRE of 29.0 million tonnes ("Mt")
at 0.89% copper, 0.94% zinc, 0.67 g/t gold and 10.1 g/t silver (see
Company announcement on 9 January 2023). Whilst the primary focus
of the PFS was the relatively close-to-surface portion of the MRE
in the Indicated Resource category, complementary studies on the
Inferred Resource reported for the deeper part of the orebody (the
near-vertical tabular structure drill-intercepted over more than
four kilometres strike length) have allowed a clear positive
assessment to be made of Hawiah's economic merits without taking
into account expected further Resource growth.
The Definitive Feasibility Study ("DFS") will in due course
refine and optimise the entire Hawiah Complex.
Project Metrics
In order to summarise the key overall project metrics, KEFI has
combined independent PFS-level estimates for the open pit and its
own scoping-level estimates for the underground mine based on the
current Hawiah MRE. These resources total 30.35Mt, of which
Inferred Resources comprising 17.85Mt relate to the tabular orebody
to be mined by underground methods.
Set out below are the current estimates of recoverable tonnes
before infill-drilling is completed within current resources,
project design-concept finalisation, value-engineering and project
optimisation. It is also likely that the current Mineral Resources
will be increased at both Hawiah and the satellite deposit at
nearby Al Godeyer.
Please note that there is a lower level of geological confidence
associated with Inferred Resources and there is no certainty that
further drilling will result in conversion to Measured or Indicated
Resources or the ore tonnes mined in the Life-of-Mine ("LOM") plan
summarised below.
Project Physicals -LOM Totals
Total / Average
Open Pits - Oxide Ore 1.8Mt
----------------
Open Pits - Transitional and Fresh 9.5Mt
Ore
----------------
Underground - Fresh Ore 15.3Mt
----------------
Total Ore Tonnes Mined 26.5Mt
----------------
Copper Concentrate Grade 25%
----------------
Zinc Concentrate Grade 50%
----------------
Copper-Equivalent Production 290,000 t
----------------
Gold-Equivalent Production 1.36 Moz
----------------
Components of Project Operating Costs - LOM Average
Underground
US$ / Tonne of Ore Processed Open Pit Ore Ore
Mining and Rehandling $21.5 $21.0
------------- -----------
Processing $20.6 $20.6
------------- -----------
G&A $2.5 $2.5
------------- -----------
Cash Operating Cost $44.6 $45.5
------------- -----------
Sustaining Capex (excl. disposal
value on closure) $0.6 $19.0
------------- -----------
All-in Sustaining Cost (opex
and capex) $45.2 $64.5
------------- -----------
This table is based on processing 2Mt per annum of ore, which
intentionally errs on the side of conservatism for estimation of
unit costs.
All-in Sustaining Costs ("AISC") associated with mining,
processing and general & administrative ("G&A") at Hawiah
are currently estimated to be US$45/tonne for Phase 1 (open pits)
and US$64.5/tonne for Phase 2 (underground mine).
The open-pit mining cost averages US$2.21/tonne and the average
waste to ore ratio is 8.2.
Indicative Components of Project Revenue
US$ Copper Zinc Gold Silver
Spot Prices as at 30 $8,554/t $2,6466/t $1,989/oz $25/oz
April 2023*
--------- ---------- ---------- -------
RoM Grade 0.73% 0.75% 0.60g/t 8.2g/t
--------- ---------- ---------- -------
Overall Recoveries 92% 71% 77% 83%
--------- ---------- ---------- -------
Concentrate Payable
Metal 96.4% 84% 90% 90%
--------- ---------- ---------- -------
% of Total Revenue 56% 9% 29% 5%
--------- ---------- ---------- -------
At the metal prices detailed in the table above, the average Net
Smelter Return ("NSR") is US$97/tonne processed. This table is
based on processing 2Mtpa of ore.
Payable metal percentages are for copper concentrate except zinc
in the zinc concentrate. Revenue is net of freight charges and
typical treatment and refining charges.
Summary of Project Economics - LOM Totals (Metal prices as at 30
April 2023)
US$ Total
Revenue - at Spot Prices as at 30 April
2023 * $2,696M
--------
Operating Costs - ** $1,149M
--------
Sustaining CapEx - mostly underground
mine development $339M
--------
Operating Cash Flow $1,208M
--------
Total Net Free Cash Flow After Royalties
and Tax *** (pre-debt) $689M
--------
Total Net Free Cash Flow After Royalties
and Tax *** (post-debt) $579M
--------
After-tax NPV (8% discount rate)**** $301M
--------
After-tax IRR (assuming 75% project debt
against capex and DFS) 75%
--------
Pre-production Capital Expenditure $295M
--------
* Metal Prices: for consistency with KEFI's recent 2022 Annual
Report published 9 June 2023, these tabulations are based on spot
prices as at 30 April 2023 of US$1,989/ounce for gold,
US$3.88/pound for copper, US$1.20/pound for zinc and US$25/ounce
for silver.
**Operating Costs: production costs estimated as set out in the
foregoing tables. Closure costs offset by disposal value at end of
LOM based on current MRE, assumed at 10% of original capex.
Considered conservative for a fully equipped licenced site in an
under-explored VMS district.
*** Income tax rate in Saudi Arabia is 20% and applicable
royalties are 2.0% for zinc and 1.5% for copper, gold and
silver.
**** approximately 10-year LOM has been assumed, by compressing
the approximately 14-year of LOM of the PFS, reflecting annual
output building up to 3Mtpa rather than 2Mtpa, by concurrently
mining, rather than sequentially mining, the open pit and
underground. This and other planning assumptions will be finalised
upon completion of the DFS.
The next study phase is optimisation on several key levels.
Portfolio Economics for KEFI
The following is an overview of the high-level economic metrics
(Net Present Values are at 8% discount rate on net after tax cash
flows to equity - NPV (8) ) for the group's three advanced
projects, ignoring any contribution by the exploration pipeline.
This aggregates all projects, based on the most recent published
resource estimates and KEFI's currently targeted ownership of each
project.
Tulu Kapi NPV (KEFI c.74% share) US$243M
Jibal Qutman's (KEFI c.27% share) US$73M
--------
Hawiah's NPV (KEFI c.27% share) US$81M
--------
Aggregate NPV (KEFI share in USD) US$397M
--------
Aggregate NPV (KEFI share in GBP at US$1.25:GBP1.00) GBP318M
--------
The above aggregate NPV of GBP318 million is c. 10 times KEFI's
current market capitalisation and is based on:
-- 2023 PFS on Hawiah open pit aggregated with scoping-level
analyses on the underground mine, as summarised herein.
And, as presented in the recently published 2022 KEFI Annual
Report:
-- 2023 Mine Plan for Tulu Kapi, for which the open pit is
considered bankable and contributes c.980,000 oz of aggregate
production and the underground mine contributes c.220,000 oz of
aggregate production and is considered at Preliminary Economic
Assessment ("PEA") status;
-- 2022 PEA-level modelling for Jibal Qutman. Alternative
development scenarios are currently being assessed prior to
finalising the direction of the DFS aimed at fast-tracking
development.
KEFI Group Development Funding Strategy
-- KEFI's policy is that development capital requirements be, in
so far as is reasonable, met at the subsidiary or project level
through a combination of project debt finance and subsidiary-level
equity funding. This has been overwhelmingly successful at Tulu
Kapi.
-- The same policy applies in Saudi Arabia, where good progress is being made:
o GMCO is already liaising with the Ministry of Industry and
Mines ("MIM") and other Saudi Government regulators as regards
development permitting on completion of the DFS, and also with the
Saudi Industrial development Fund ("SIDF") regarding project
financing. SIDF provides up to 75% of aggregate DFS and
construction costs.
o The licences for the two advanced projects are now in the
process of transfer from ARTAR into GMCO and its project companies
in preparation for project financing. This is standard project
financing procedure, as was done in Ethiopia as a precursor to
development financing at the level of the project subsidiary
company.
-- KEFI plans minimal reliance, if any, on the public equity
stock markets for development finance.
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 and Joint Broker) +44 (0) 20 3470 0470
Jeff Keating, Adam Cowl
Tavira Securities Limited (Joint 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)
Tim Metcalfe, Florence Chandler +44 (0) 20 3934 6630
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 and development projects in the Kingdom of Saudi
Arabia, also in the Arabian-Nubian Shield. KEFI targets that Tulu
Kapi Gold, along with its two most advanced Saudi projects Jibal
Qutman Gold and Hawiah Copper-Gold will come into production over
the period 2025-2027 and will generate cash flows for capital
repayments, further exploration and dividends to shareholders.
Background on the Hawiah Project and the PFS
In order to expedite the PFS, the timetable required that most
of the detailed work was based on the January 2022 Hawiah MRE.
Given that the Mineral Resources have increased significantly since
that MRE, the outcomes presented herein are based on:
-- PFS level operating and capital cost estimates for the open pit ore and processing plant;
-- Scoping Study level operating and capital cost estimates for the underground mine; and
-- Scoping Study level mining schedules derived from the current
29.0Mt Hawiah resource plus the maiden Al Godeyer 1.35Mt
resource.
There remains considerable potential to increase both of these
resources as well as discovering further satellite orebodies.
The Project area is located approximately 30 km east-south-east
of the regional town of Turbah and can be accessed via a
high-quality tarred road (Highway 273) which passes within 20km of
the licence area. Access to site is via graded tracks suitable for
two-wheel drive vehicles.
The small, semi-abandoned village of "Khumrah" is c. 6 km from
the project site. This village is the closest permanent settlement
to the project area and serves as a base for GMCO's contractors.
Amenities including grid power and water pumped from local wells
for both local needs and exploration activities.
Located at an elevation of approximately 1,150m above sea level,
the climate is relatively mild by Saudi Arabian standards with
daytime temperatures ranging from a minimum of 7 degrees Celsius in
the winter to in excess of 40 degrees Celsius in mid-summer. This
region is inhabited by the local Bedouin who are nomadic herders
and as such they move across the region on a regular basis.
Hawiah is located within the Wadi Bidah Mineral District
("WBMD") in the southwest of the Arabian Shield. The WBMD is a
120-kilometre-long belt which hosts over 20 Volcanic Massive
Sulphide ("VMS") known occurrences and historic workings for copper
and gold.
GMCO commenced drilling the Hawiah deposit in September 2019 and
quickly confirmed a large-scale VMS style of deposit underlying the
outcropping 4.5km long gossanous ridge.
Whilst mineralisation is continuous across the 4.5Km strike
length, three distinct massive sulphide 'lodes' have been
delineated, representing areas of greater sulphide thickness. The
polymetallic massive sulphide mineralisation comprises copper,
gold, zinc and silver with intercepts of up to 5% copper
equivalent.
Diamond drilling has shown that the unweathered subsurface
extension of the ridgeline is comprised of massive sulphide hosted
within a greenschist altered volcanic package. This package near
surface has been subject to variable supergene alteration as a
result of rock-groundwater interactions. This has resulted in three
weathering/alteration domains across the length of the
ridgeline:
-- Oxide (0-35m depth) - preferentially enriched in gold
-- Transitional (35-70m depth) - preferentially enriched in copper
-- Fresh (>70m depth) - representing 88% of the known deposit
Since the commencement of major exploration works at Hawiah in
early 2019, KEFI announced a maiden MRE in August 2020 which formed
the basis for the mine plan in the 2020 PEA.
An updated MRE of 24.9Mt at a 0.90% copper, 0.85% zinc, 0.62 g/t
gold and 9.8 g/t silver was finalised in December 2021 which formed
the basis for the mine planning in this PFS for the open pit and
the scoping-level work for the underground.
Diamond and reverse circulation ("RC") drilling have since
continued, bringing the Project total to 58,194m of drilling by the
end of 2022. Drilling during 2022 had three main objectives:
-- Improve the level of geological control in the upper portion
of sparsely explored Central Zone and northern portion of the Camp
Lode;
-- Explore the Crossroads Extension Lode and further define the
deeper portion of the orebody; and
-- Better define the upper oxide and transition zones and increase the known gold resource.
These objectives were achieved and with the deposit remaining
open at depth, the Hawiah orebody has additional potential for
further expansion.
Following the conclusion of the 2022 drilling programme, an
updated Hawiah Mineral Resource was estimated to total 29.0 million
tonnes at 0.89% copper, 0.94% zinc, 0.67 g/t gold and 10.1 g/t
silver.
This MRE is reported in accordance with the JORC Code and is
classified as:
-- Indicated - Open Pit - 9.2 Mt at 0.88% copper, 0.70% zinc, 0.84 g/t gold and 9.9 g/t silver
-- Indicated - Underground - 3.2 Mt at 0.82% copper, 1.07% zinc,
0.59 g/t gold and 9.5 g/t silver
-- Inferred - Open Pit - 1.8 Mt at 0.99% copper, 1.02% zinc, 0.67 g/t gold and 12.4 g/t silver
-- Inferred - Underground - 14.7 Mt at 0.90% copper, 1.05% zinc,
0.58 g/t gold and 10.1 g/t silver
This Hawiah MRE contains a total of 258,000 tonnes (569 million
lbs) of copper, 272,000 tonnes (600 million lbs) of zinc, 620,000
ounces of gold and 9.4 million ounces of silver.
Total Indicated and Inferred Resources reporting to the Open-Pit
Scenario have increased to 11.1Mt (up 32% from 8.4Mt).
Further information on this MRE is detailed in KEFI's
announcement "Hawiah Mineral Resource increased by 16% to 29
million tonnes" dated 9 January 2023.
Ongoing drilling at Hawiah is aimed at extending planned mine
life by further increasing the Mineral Resource and converting more
Inferred Resources to the Indicated category.
It is notable that in gold-equivalent terms, the Hawiah resource
is already larger than Tulu Kapi and Jibal Qutman combined before
any further resource uplift.
Hawiah's Exploration Potential
The Hawiah massive sulphide deposit remains open along strike
and down-plunge, with the deepest mineralised intercept of 590
metres below surface.
The massive sulphides at Hawiah show evidence of being
mechanically transported from the source vent structures. Breccia
clasts of sulphides, sedimentary structures and the lack of
hydrothermal alteration in the immediate footwall rocks under the
sulphides indicates that the areas of the deposit drilled to date
likely formed on the flank of a laterally extensive, linear rift.
Massive sulphides are interpreted to have accumulated in
extensional rifts parallel to these rift sites, with evidence of
secondary mineralising enrichment post deposition.
VMS deposits are well understood to form in clusters, and Hawiah
is no exception. A number of gossans have been identified in the
areas immediately surrounding the Hawiah deposit.
Exploration commenced the nearby Al Godeyer Project in early
2022 and drilling under gossan quickly confirmed similar
copper-gold mineralisation to the Hawiah VMS deposit. A maiden MRE
for Al Godeyer was announced in April 2023 of 1.35Mt at 0.6%
copper, 0.54% zinc, 1.4g/t gold and 6.6g/t silver. Further
information on the Al Godeyer MRE is in the announcement "Maiden Al
Godeyer Resource to contribute to the Hawiah Project Open Pittable
Resources" dated 3 April 2023.
Located only 12km from the proposed Hawiah processing plant,
there is excellent potential for Al Godeyer to provide additional
ore. The Al Godeyer deposit has only been drill tested to a
vertical depth of 200 metres below the surface and it remains open
at depth and along strike to the southeast.
Exploration activities at Abu Salal South, located approximately
50km south of Hawiah , have recently included geological mapping of
the main gossan ridgeline and the completion of a self-potential
("SP") geophysical survey. The geological mapping has established
two significant north-south trending outcropping gossans which
appear to be situated on the same paleohorizon. This horizon
extends beyond the Abu Salal South EL northern boundary into the
recently granted Abu Salal North EL where outcropping gossans have
also been confirmed. Gossans widths range from 40m down to several
centimetres, with the SP survey demonstrating a robust and
continuous anomaly across the 1.6km strike length of the northern
gossan suggesting mineralisation is continuous at depth. The
shorter strike length southern gossan has returned a less
encouraging geophysical response. Rock chip sampling of these
gossans has confirmed gold mineralisation with grades of up to 4.75
g/t Au. Trenching and scout drilling of these gossans is planned to
be undertaken later this year.
Al Godeyer and Abu Salal are both high-priority exploration
projects as potential satellite ore sources for the Hawiah
processing plant.
Appendix A - Glossary of Technical Terms
Ag Silver
AAS Atomic Absorption Spectroscopy
--------------------------------------------------
AIC All-in Costs
--------------------------------------------------
Arabian-Nubian The Arabian-Nubian Shield is a large area
Shield or ANS of Precambrian rocks in various countries
surrounding the Red Sea
--------------------------------------------------
ARTAR Abdul Rahman Saad Al Rashid & Sons Company
Limited
--------------------------------------------------
Au Gold
--------------------------------------------------
Cu Copper
--------------------------------------------------
DFS Definitive Feasibility Study
--------------------------------------------------
g/t Grams per tonne
--------------------------------------------------
Gossan An iron-bearing weathered product overlying
a sulphide deposit
--------------------------------------------------
ICP-AES Inductively Coupled Plasma-Atomic Emission
Spectroscopy
--------------------------------------------------
IDW Inverse Distance Weighted
--------------------------------------------------
IP Induced polarisation - a ground-based geophysical
survey technique measuring the intensity
of an induced electric current, used to
identify disseminated sulphide deposits
--------------------------------------------------
JORC Joint Ore Reserves Committee
--------------------------------------------------
JORC Code 2012 Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves
--------------------------------------------------
m Metres
--------------------------------------------------
Massive sulphide Rock comprised of more than 40% sulphide
minerals
--------------------------------------------------
Mt Million tonnes
--------------------------------------------------
Mtpa Million tonnes per annum
--------------------------------------------------
MRE Mineral Resource Estimate
--------------------------------------------------
NSR Net Smelter Return
--------------------------------------------------
oz Troy ounce of gold
--------------------------------------------------
PCT Percent
--------------------------------------------------
PEA Preliminary Economic Assessment
--------------------------------------------------
PFS Pre-Feasibility Study
--------------------------------------------------
PPM Parts per million
--------------------------------------------------
Precambrian Era of geological time before the Cambrian,
from approximately 4,600 to 542 million
years ago
--------------------------------------------------
VMS deposits Volcanogenic massive sulphides; refers
to massive sulphide deposits formed in
a volcanic environment with varying base
metals (copper, lead and zinc) often with
significant additional gold and silver
--------------------------------------------------
Zn Zinc
--------------------------------------------------
Appendix B - Diagrams - to access Appendix B click here
http://www.rns-pdf.londonstockexchange.com/rns/1140E_1-2023-6-27.pdf
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
MSCZZGZVRNRGFZM
(END) Dow Jones Newswires
June 28, 2023 02:00 ET (06:00 GMT)
Kefi Gold And Copper (LSE:KEFI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Kefi Gold And Copper (LSE:KEFI)
Historical Stock Chart
From Jul 2023 to Jul 2024