TIDMKEFI
RNS Number : 9939D
Kefi Minerals plc
04 February 2015
4 February 2015
KEFI Minerals plc
("KEFI" or the "Company")
INDEPENDENTLY VERIFIED jorc COMPLIanT INDICATED resource
reporting on TULU KAPI GOLD DEPOSIT in ETHIOPIA
KEFI Minerals plc (AIM: KEFI), the gold exploration and
development company with projects in the Kingdom of Saudi Arabia
and the Democratic Republic of Ethiopia, is pleased to announce an
independently verified updated Indicated Resource of 18.8 Mt at
2.67 g/t Au for 1.62 Moz Au, reported in accordance with the JORC
Code (2012), at its Tulu Kapi project in Ethiopia. This compares
with the previous Indicated Resource estimate in August 2014 of
18.4 Mt at 2.57 g/t for 1.52 Moz Au.
The updated Indicated Resource is part of the refined Definitive
Feasibility Study ("DFS") for financing, which is undergoing
completion. The updated resource was derived from "wireframing" the
mineralised structures to create orebody solids as a cross-check
against the previous "indicator model", and will now be used as a
base for further refined pit design, mine scheduling and Ore
Reserve estimation. The project remains on schedule for
construction to commence in Q4 2015.
KEFI is the manager and operator of the project under the
Company's wholly-owned KEFI Minerals (Ethiopia) Limited ("KME").
The Competent Persons for the Resources are Simon Cleghorn,
Resource Manager of KEFI, and Lynn Olssen, General Manager
Geosciences and Senior Principal Consultant of Snowden Mining
Industry Consultants Pty Ltd ("Snowden"). The estimate of Inferred
Resource will also be updated (expected to occur within the next
couple of months), but it does not form part of mine planning.
HIGHLIGHTS
-- The new Indicated Mineral Resource of 1.62 Moz Au (18.8 Mt at
2.67 g/t Au), is reported in accordance with the JORC Code (2012)
and provides an update to previous estimates reflecting further
interpretation, refinement and validation procedures conducted by
KEFI management and its independent advisers. This compares closely
with KEFI's previous estimate in August 2014 reporting 18.4 Mt at
2.57 g/t Au for 1.52 Moz Au and compares favourably with that of
the project vendor's most recent reporting in October 2012 of 14.6
Mt at 2.36 g/t Au for 1.11 Moz Au.
-- The new wireframed resource will provide the basis for a new
reserve estimate and re-affirms the integrity of KEFI's
interpretations and resource estimation models published since the
acquisition of Tulu Kapi in December 2013.
-- Total Indicated Resource above 1,400m relative level ("RL")
and in the potential open pit area is 17.7 Mt at 2.49 g/t Au for
1.42 Moz Au (August 2014 estimate was 17.3 Mt at 2.37 g/t Au for
1.31 Moz Au) and high grade mineralisation of 1.08 Mt at 5.63 g/t
Au for 0.20 Moz Au (August 2014 estimate was 1.07 Mt at 5.88 g/t Au
for 0.20 Moz Au) in underground potential, immediately below the
planned open pit.
-- KEFI will now further optimise and update mine design, mining
plans and consequential updated Independent Ore Reserves. Studies
being updated as part of this process include geotechnical, mine
dilution, mine planning and the verification of local input
costs.
-- KEFI has adopted a reiterative approach to reporting of
Mineral Resources and Ore Reserves as a part of its systematic
overhaul of the Tulu Kapi project. The Company is driving hard to
ensure robust and financeable economics in the context of current
gold prices and capital markets. As part of this, KEFI has recently
opened discussions with selected candidates for contract mining and
with the vendors of process plants that are suitable for relocation
and refurbishment.
Tonnes Au Ounces
Resource Category Reporting elevation (Mt) (g/t) (Moz)
------------------- --------------------- ------- ------- -------
Open Pittable
at Cut-Off Grade 0.45 g/t
---------------------------------------------------------------------
Indicated above 1,400m RL 17.7 2.49 1.42
Underground Mining
---------------------------------------------------------------------
at Cut-Off Grade 2.5 g/t
---------------------------------------------------------------------
Indicated below 1,400m RL 1.08 5.63 0.20
Total Indicated
Total Indicated Resources 18.8 2.67 1.62
Notes:
-- All figures are reported to three significant figures. This
may result in discrepancies in the table due to rounding.
-- KEFI currently owns 100% of KEFI Minerals (Ethiopia) Ltd,
which owns 100% of the Tulu Kapi gold project, and is planning to
reduce to 95% by granting a 5% free-carried interest to the
Government of Ethiopia.
Harry Anagnostaras-Adams, Executive Chairman of KEFI Minerals,
commented:
"We are pleased to report an improved Indicated Resource at our
Tulu Kapi project in Ethiopia, which has been independently
reviewed and is in accordance with the JORC Code (2012). It further
validates the opportunity that the KEFI team, led by Exploration
Director Jeff Rayner, identified and our belief that we have an
attractive open pit project and underground mining potential.
"Over the next few months we will finalise our development
plans, taking into consideration contract mining submissions and
existing process plants for sale. We are also on track for
obtaining the requisite licencing, community resettlement, team
building and financing. All this gives the Board confidence that
development will commence in 2015 leading to commissioning at the
end of 2016 for production in 2017."
Enquiries
KEFI Minerals plc
Harry Anagnostaras-Adams (Executive
Chairman) +357 99457843
Jeff Rayner (Exploration Director) +905 339281913
SP Angel Corporate Finance
LLP (Nominated Adviser)
+44 20 3470
Ewan Leggat, Katy Birkin 0470
Brandon Hill Capital Ltd (Joint
Broker)
Oliver Stansfield, Jonathan +44 20 3463
Evans 5000
finnCap Ltd (Joint Broker)
Joanna Weaving, Christopher +44 207 220
Raggett 0500
Luther Pendragon (Financial
PR)
Harry Chathli, Claire Norbury +44 207 618 9100
COMPETENT PERSONS' STATEMENTS
The information in this report that relates to input data used
for the Mineral Resources is based on, and fairly represents,
information and supporting documentation - the compilation of which
was overseen by Simon Cleghorn, Resource Manager and a full-time
employee of KEFI and a Member of The Australasian Institute of
Mining and Metallurgy. Simon Cleghorn has sufficient experience
relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to
qualify as a Competent Person as defined in the 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves'. Simon Cleghornconsents to the
inclusion in the report of the matters based on this information in
the form and context in which it appears.
The information in this report that relates to the
interpretation, estimation, classification and reporting of the
Mineral Resources is based on, and fairly represents, information
and supporting documentation - the compilation of which was
reviewed by Lynn Olssen who is a Member of The Australasian
Institute of Mining and Metallurgy and a full-time employee of
Snowden Mining Industry Consultants Pty Ltd. Lynn Olssen has
sufficient experience relevant to the style of mineralisation and
type of deposit under consideration and to the activity which she
is undertaking to qualify as a Competent Person as defined in the
2012 Edition of the 'Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves'. Lynn Olssen consents
to the inclusion in the report of the matters based on this
information in the form and context in which it appears.
Further information on KEFI Minerals is available at
www.kefi-minerals.com
BACKGROUND TO THE RESOURCE ESTIMATE
-- A number of resource estimates have been carried out at Tulu
Kapi since 2009 by various consultants with an expanding database.
There has been over 120 kilometres of drilling at Tulu Kapi and
over $50 million spent on drilling, project due diligence and
planning by previous owners.
-- The 2012 Definitive Feasibility Study resource estimate was
published by the previous owner of KME (the owner of Tulu Kapi) in
October 2012. It was carried out using a semi-constrained block
model in Datamine using the dynamic anisotropy methodology. The
Indicated Resource estimate was reported above a cut-off grade of
0.3 g/t Au and totalled 14.6 Mt at 2.36 g/t Au for 1.11 Moz Au in
the Indicated Resource.
-- After acquiring 75% of KME in late December 2013, KEFI
updated the existing database in January 2014 to incorporate 71
drillholes, totalling over 16,000m of drilling that were drilled by
the previous controller, post the cut-off date of the October 2012
resource estimate.
-- KEFI published its first resource update on 12 March 2014.
KEFI used the same October 2012 resource estimation methodology
after including more structural data, a corrected database and
mining block estimates with the following dimensions: 5.0m(X) by
5.0m(Y) by 1.0m(Z), with 1.0m composited samples in drillholes.
KEFI's March 2014 Mineral Resource was reported in accordance with
JORC Code (2012) above a 0.3 g/t Au cut-off with an upgrade to 21.2
Mt Au at 2.73 g/t Au for 1.86 Moz in Indicated Resource. The March
Mineral Resource was independently reviewed by AMC Consultants Pty
Ltd, Australia and all aspects were taken into account in the
subsequent August 2014 and February 2015 Mineral Resources.
-- KEFI continually refined the resource estimate using
additional structural data based on surface mapping and trenching
plus a small programme of additional Reverse Circulation (RC)
targeted at infill drilling and maximising structural
interpretation. This work was performed during March to June
2014.
-- KEFI's resources update published today incorporates
geostatistical parameters agreed with Snowden, after rigorous peer
review of various aspects including variography, top-cuts and block
sizing.
-- The block model was created within the interpreted wireframes
with block sizes: 10.0m(X) by 10.0m(Y) by 1.0m(Z), and grade
estimation was carried out using 1.0m composited samples in
drillholes.
TECHNICAL NOTES ON THE RESOURCE ESTIMATE
-- The Tulu Kapi gold deposit is an orogenic gold deposit
located in an area consisting of rocks ranging from Pre-Cambrian to
Tertiary in age. The gold mineralisation at Tulu Kapi is hosted by
an Upper Proterozoic age intrusive, which comprises a coarse
grained syenite pluton. These rocks have been intruded into a
volcano-sedimentary sequence that was subsequently metamorphosed to
mafic and sericitic schists. Primary mineralisation is hosted in
mafic syenite.
-- The input data for the estimate comprised 722 drillholes
totalling 118,738.3m including 298 diamond drillholes (NQ, HQ and
PQ diameter) for 72,032.9m, 342 RC drillholes for 45,611m and 82
trenches for 1,094.4m. All drilling and sampling was carried out
using industry standard methods. Diamond drilling was sampled using
half core while RC samples were riffle split prior to crushing and
grinding. Analysis was by fire assay using a 50 g charge and AAS
finish.
-- Industry standard QAQC sampling and analysis was carried out
which indicates that there are acceptable levels of precision and
accuracy.
-- Mineralisation domains were interpreted and wireframed as a
series of lodes following a general gold grade indicator of 0.3 g/t
with appropriate adjustments to maintain continuity of grade and
structure. The lodes typically strike to the north, dipping around
30 degrees to the west.
-- 1m composites were coded within the mineralised domain and by
major fault block ("Central Zone" and "UNDP Zone"). Given the
shallow oxidation profile, no separation was carried out by
oxidation domain.
-- The data distributions are highly skewed and typically have a
high (>1.5) coefficient of variation (CV - ratio of standard
deviation to the mean). As a result, top cuts were applied to
prevent overestimation and smearing of the comparatively high
values into surrounding blocks. Top cuts were 70 g/t Au for the
Central and UNDP domains and impact on less than 1% of the grade
population.
-- Grade estimation was carried out in CAE Studio 3 (Datamine)
using ordinary kriging (OK) with dynamic anisotropy to align the
estimation with the local dip and strike of the mineralisation
trends, into 10mE by 10mN by 1.0mRL parent cells. Block
discretisation was set to 4 by 4 by 2.
-- A kriging neighbourhood analysis (KNA) was carried out to
determine optimal block size and estimation parameters. The
estimation was performed on the mineralised and non-mineralised
material defined within each domain (Central and UNDP).
-- Estimation was run in a three pass kriging plan, the second
and third passes using progressively larger search radii to enable
the estimation of blocks un-estimated on the previous pass. The
search parameters were derived from the variogram analysis, with
the first search distances corresponding to the distance at half of
the variogram sill value and the second search distance
approximating up to the variogram range.
-- Blocks were estimated using a minimum of 8 with a maximum of
24 samples (6 minimum and 24 maximum for pass 2) and a maximum of 4
composites allowed per drillhole.
-- The maximum distance of extrapolation points within the method was 80m.
-- A global (dry) density value of 1.5 t/m(3) was used for all
saprolite material. A global (dry) density value of 2.74 t/m(3) was
used for all fresh material.
-- For the Central Zone, search radii used during grade
estimation were used together with a wireframe encompassing high
confidence mineralisation to define classification. Consistent
areas of blocks estimated in the first and second searches (within
the variogram range) were classified as Indicated Resources and
blocks consistently estimated in the third search pass with less
confidence in the geological continuity were classified as Inferred
Resources. The areas of Indicated Resources are typically drilled
out on a 40m by 40m grid with areas of 20m by 20m.
-- The majority of Mineral Resources contained within the north
fault block (UNDP) are classified as Inferred Resources, except for
a portion representing more closely spaced drilling (approximately
40m by 40m), which was mainly estimated in the first and second
search passes.
-- The Mineral Resource has been reported as mineable by open
pit methods above 1,400mRL, which is the bottom out elevation for
the pit optimisation shells generated as part of the definitive
feasibility study. Below 1,400mRL the Mineral Resource is reported
as potentially mineable by underground methods.
-- The updated Indicated Resources have been reported at a
cut-off grade of 0.45 g/t Au above the 1,400mRL to represent open
pittable resources and at a cut-off grade of 2.50 g/t Au below the
1,400mRL to represent potential underground mineable resources
(tabulated above). Average surface RL in the planned pit is
1,750mRL. These cut-off grades were based on appropriate
computerised optimisation techniques after taking into account the
final determination of internal dilution of the Mineral Resources,
which were completed as part of the Definitive Feasibility Study
carried out during 2012.
-- Snowden has independently validated the estimate and checked
each stage of the estimation process including review of all
parameters, macros and classification criteria. Snowden considers
that there are no material issues with the estimate.
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 1.6 Moz (95% of Tulu Kapi's 1.9 Moz and 40% of Jibal
Qutman's 0.5 Moz) Au Mineral Resources (JORC 2012) plus significant
resource growth potential. KEFI is targeting for production at
these projects to 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:
-- Independent verification of refined mine plan
-- Independent verification of refined estimates for capex, opex and closure
-- Independent verification of updated Ore Reserves
-- Assembly of bank syndicate and agreement of indicative terms sheet for project finance
-- Receipt of Mining Licence in Q1 2015 (application suspended
mid-2013 by previous owner of the asset)
In addition, during 2015 KEFI anticipates submitting a Mining
Licence Application for Jibal Qutman in Saudi Arabia through its
joint venture company, Gold & Minerals Ltd ("G&M").
KEFI in Ethiopia
KEFI has 100% ownership of the Tulu Kapi licence in western
Ethiopia and is at an advanced stage in refining the development
plan for the project, aimed at reducing the previously planned
capital and operating expenditure. Detailed research has yielded
encouraging results and has been summarised in recent Company
announcements.
At the end of 2013, the Ethiopian Government improved the fiscal
regime applying to the gold sector, and Tulu Kapi in particular.
This included lowering the income tax rate for mining (to 25% from
35%); settling of repayment schedule for inherited VAT liability
(over three years rather than up-front); the removal of VAT on
future exploration drilling expenditure; lowering royalty on gold
mining (to 7% from 8%); accelerating the depreciation of historical
and future capital expenditure (over four years); and clarifying
the workings of the Government's 5% free-carried interest so that
it does not impede conventional project financing terms.
KEFI 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
Shield. KEFI has a 40% interest in the G&M and is the operating
partner. To date, the G&M has conducted preliminary regional
reconnaissance and has had five Exploration Licences ("EL")
granted, including Jibal Qutman and the recently granted "Hawiah
EL" that contains over 5km of outcropping gossans developed on VMS
altered and mineralised rocks.
G&M holds 23 Exploration Licence 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.
DEFINITIONS OF EXPLORATION RESULTS, RESOURCES & RESERVES
EXTRACTED FROM THE JORC CODE: (December 2012) (www.jorc.org)
A 'Mineral Resource' is a concentration or occurrence of
material of intrinsic economic interest in or on the Earth's crust
in such form, quality and quantity that there are reasonable
prospects for eventual economic extraction. The location, quantity,
grade, geological characteristics and continuity of a Mineral
Resource are known, estimated or interpreted from specific
geological evidence and knowledge. Mineral Resources are
sub-divided, in order of increasing geological confidence, into
Inferred, Indicated and Measured categories.
An 'Inferred Mineral Resource' is that part of a Mineral
Resource for which quantity and grade (or quality) are estimated on
the basis of limited geological evidence and sampling. Geological
evidence is sufficient to imply but not verify geological and grade
(or quality) continuity. It is based on exploration, sampling and
testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill
holes. An Inferred Mineral Resource has a lower level of confidence
than that applying to an Indicated Mineral Resource and must not be
converted to an Ore Reserve. It is reasonably expected that the
majority of Inferred Mineral Resources could be upgraded to
Indicated Mineral Resources with continued exploration.
An 'Indicated Mineral Resource' is that part of a Mineral
Resource for which quantity, grade (or quality), densities, shape
and physical characteristics are estimated with sufficient
confidence to allow the application of Modifying Factors in
sufficient detail to support mine planning and evaluation of the
economic viability of the deposit. Geological evidence is derived
from adequately detailed and reliable exploration, sampling and
testing gathered through appropriate techniques from locations such
as outcrops, trenches, pits, workings and drill holes, and is
sufficient to assume geological and grade (or quality) continuity
between points of observation where data and samples are gathered.
An Indicated Mineral Resource has a lower level of confidence than
that applying to a Measured Mineral Resource and may only be
converted to a Probable Ore Reserve.
A 'Measured Mineral Resource' is that part of a Mineral Resource
for which quantity, grade (or quality), densities, shape, and
physical characteristics are estimated with confidence sufficient
to allow the application of Modifying Factors to support detailed
mine planning and final evaluation of the economic viability of the
deposit. Geological evidence is derived from detailed and reliable
exploration, sampling and testing gathered through appropriate
techniques from locations such as outcrops, trenches, pits,
workings and drill holes, and is sufficient to confirm geological
and grade (or quality) continuity between points of observation
where data and samples are gathered. A Measured Mineral Resource
has a higher level of confidence than that applying to either an
Indicated Mineral Resource or an Inferred Mineral Resource. It may
be converted to a Proved Ore Reserve or under certain circumstances
to a Probable Ore Reserve.
An 'Ore Reserve' is the economically mineable part of a Measured
and/or Indicated Mineral Resource. It includes diluting materials
and allowances for losses, which may occur when the material is
mined or extracted and is defined by studies at Pre-Feasibility or
Feasibility level as appropriate that include application of
Modifying Factors. Such studies demonstrate that, at the time of
reporting, extraction could reasonably be justified. The reference
point at which Reserves are defined, usually the point where the
ore is delivered to the processing plant, must be stated. It is
important that, in all situations where the reference point is
different, such as for a saleable product, a clarifying statement
is included to ensure that the reader is fully informed as to what
is being reported.
-Ends-
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