TIDMKEFI
RNS Number : 6678K
Kefi Minerals plc
20 April 2015
20 April 2015
KEFI Minerals plc
("KEFI" or the "Company")
UPDATE ON project Financing and DFS FOR TULU KAPI
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
accomplishment of milestones towards the completion of an updated
Definitive Feasibility Study ("2015 DFS") to the standards required
by mining project financiers:
Independent review of Mine Plan and project costs
-- Independent verification of the Mine Plan and associated
costs by Snowden Mining Industry Consultants Pty Limited
("Snowden") after taking into account:
o Updated Mineral Resources based on better delineation of
individual ore lodes (see KEFI's announcement of 4 February
2015)
o Detailed mine design which incorporated further geotechnical
studies
o Semi-selective mining techniques and associated planning
factors such as mine dilution and ore losses
o An operating philosophy based on owner-mining and all-new
plant
-- The Mine Plan is now settled at:
o For initial 11 years, 12.0Mt ore mined at 1.2Mtpa at a head
grade of 2.5 g/t and waste:ore ratio of c. 9.9:1, as compared with
the most recently reported estimate of 13.0Mt ore mined at 1.2Mtpa
at a head grade of 2.4 g/t and a waste:ore ratio of circa
10.1:1
o For an additional 2 years, to process low-grade stocks built
up during the open-pit mining operation to increase total gold
production
o Total ore mined of 15.4Mt at 1.2Mtpa at a head grade of 2.1
g/t and a reduced overall waste:ore ratio of c. 7.5:1
o Total gold recovery now planned at approximately 960,000
ounces over 13 years compared with the previously planned 925,000
over 11 years
-- Project cost reviews (operating and capital) have been
updated to reflect the updated Mine Plan and will be further
refined as part of the 2015 DFS, after completing the final bidding
by preferred mining contractors and the value-engineering on
process plants.
-- Estimated operating costs on an owner-operator basis are
US$634/oz excluding royalty and US$721/oz including royalty. All-in
Costs are US$906/oz including initial investment and US$768/oz
excluding initial investment.
-- The independent review of the Mine Plan and project costs was
conducted by Snowden with input from the Company's other specialist
advisers Cube Consulting (grade control), Geoff Davidson (detailed
mine planning), Senet (processing), Golders (environmental and
social) and Epoch (tailings management).
Milestones for completion of 2015 DFS
The next scheduled milestones for completion of the 2015 DFS by
mid-2015 include the following:
-- Publication of updated Ore Reserves
-- Arrangement of final bids by short-listed mining contractors
-- Finalisation of value-engineering to reduce the cost of
process plant, including due diligence on available existing
processing plants
-- Review of the 2015 DFS by the project financiers' independent technical expert
Project Development Finance
The planned development expenditure for Tulu Kapi has been
reduced from the previous project owner's estimate of c. US$289
million to KEFI's estimate of c. US$143 million, which is
independently reviewed and based on KEFI's semi-selective mining
approach, assuming owner-mining and a new plant. The estimate has
been further reduced by KEFI to c. US$120 million based on initial
bids received from mining contractors and by assuming that savings
in the order of 10% on an all-new plant are achieved through the
value-engineering process. These savings are supported by the
market prices for existing plants on offer for sale. The amount of
US$120 million includes a contingency provision for plant
construction costs and also for a working capital buffer for
cost-overrun.
The development funding plan for Tulu Kapi is for KEFI to draw
down, in H2 2015, on a combination of secured finance and equity
finance. This is expected to comprise c. US$100 million of senior
secured finance and c. US$20 million equity at parent or project
level from project contractors and/or investment institutions.
KEFI's project finance adviser and arranger is Endeavour
Financial, and the Independent Technical Experts for the project
financiers have been selected and are being mobilised.
An Investor Update presentation has been uploaded to the
Company's website: www.kefi-minerals.com
Harry Anagnostaras-Adams, Executive Chairman of KEFI,
commented:
"Following the signing of the Mining Agreement last week, and
the sign-off of the Mine Plan today, KEFI is now focusing on
completing the DFS in this quarter as scheduled. We are also in the
process of selecting our preferred mining contractors and
value-engineering the process plant, which should allow us to
finalise the full development funding in Q3 2015 for major works to
commence, on schedule, in Q4 2015. KEFI would like to thank our
experienced team for ensuring that we have progressed according to
the plan that we set out at the time of the acquisition of Tulu
Kapi in December 2013, which represents a great achievement."
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 (Broker)
Oliver Stansfield, Jonathan +44 20 3463
Evans 5000
Luther Pendragon Ltd (Financial
PR)
Harry Chathli, Claire Norbury,
Oli Hibberd +44 207 618 9100
COMPETENT PERSONS' STATEMENTS
The information in this announcement 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 Cleghorn consents to the
inclusion in this announcement of the matters based on this
information in the form and context in which it appears.
The information in this announcement 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. 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 this
announcement of the matters based on this information in the form
and context in which it appears.
The Company confirms that it is not aware of any new information
or data that materially affects the information included in the
announcement dated 4 February 2015 (the "Announcement") and, in the
case estimates of Mineral Resources or Ore Reserves, that all
material assumptions and technical parameters underpinning the
estimates in the Announcement continue to apply and have not
materially changed. The Company confirms that the form and context
in which the Competent Person's findings are presented have not
been materially modified from the Announcement.
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 2Moz (95% of Tulu Kapi's 1.9Moz and 40% of Jibal
Qutman's 0.6Moz) 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:
-- Independently verified update to Ore Reserves
-- Independently updated Definitive Feasibility Study for banking purposes
-- Formalisation of bank syndicate, agreement of final terms for project finance
-- Full development funding and commencement of construction
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 95% ownership of the Tulu Kapi Mining 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
Exploration Licence that contains over 5km(2) of outcropping
gossans developed on VMS altered and mineralised rocks.
G&M holds 24 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.
-Ends-
This information is provided by RNS
The company news service from the London Stock Exchange
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