TIDMKEFI
RNS Number : 3021M
Kefi Minerals plc
06 May 2015
6 May 2015
KEFI Minerals plc
("KEFI" or the "Company")
EXPLORATION UPDATE AT JIBAL QUTMAN, Saudi Arabia
Positive Preliminary Economic Assessment based on increase in
JORC Mineral Resource and favourable metallurgical heap leach test
results
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 an
expansion of JORC (2012) Compliant Mineral Resources and the early
results of metallurgical heap leach testing for its Jibal Qutman
project in Saudi Arabia. As with all KEFI's activities in Saudi
Arabia, the Jibal Qutman project is part of the Gold and Minerals
Joint Venture company ("G&M").
The December 2014 Mineral Resource has been updated and upgraded
via introduction of exploration data from activities carried out
until end March 2015. The Company is focusing on the possibility of
an open cut heap leach operation at Jibal Qutman in order to lower
capital requirements and expedite the potential development
timetable.
Highlights of Preliminary Economic Assessment
-- The additional resource is a JORC compliant Indicated and Inferred Resource category
-- The total Mineral Resource, including the additional November
2014 resource, is 28.4 Mt at 0.80 g/t Au for 733,045 contained gold
ounces (previously 22.0 Mt at 0.90 g/t Au for 633,461 contained
gold ounces), both at a cut-off grade of 0.2 g/t Au
-- The expansion of Mineral Resource notably includes an oxide
resource of 11.1Mt at 0.80 g/t Au for 287,329 contained gold
ounces
-- Positive metallurgical heap leach test work results have been
received from coarse crush cyanide leach on four of the main oxide
deposits, averaging 69% gold recovery over a 5-day leach time.
Column leach test work is ongoing and is expected to support the
coarse crush results
-- Preliminary pit shells at a price of $1,250/oz Au have been
designed on the oxide resource indicating a potential open cut
mineable resource of 6.6Mt at 0.95 g/t Au for 201,600 oz Au
-- An internal preliminary assessment using 69% Au recovery and
local costs suggests an operating cash cost of $597/oz on a 1.5Mt
per annum heap leach mine
Conclusion and Next Steps
-- These results indicate the economic merit of development
-- The Company intends to commence a Preliminary Feasibility
Study ("PFS") in Q3 2015, which it expects to complete in
mid-2016
-- The development of the project would require an investment of
approximately $30m in 2017, to be comprised of a local development
loan of $22.5m and equity of $7.5m (with KEFI being accountable for
40% of the equity portion)
Jeff Rayner, Exploration Director of KEFI Minerals,
commented:
"We are very encouraged by these latest results at our Jibal
Qutman project. The metallurgical test work and enlarged oxide
resource indicate the economic viability of the development of a
low cost heap leach operation that could generate early cash flow
to fund our Saudi exploration program. With our Tulu Kapi project
in Ethiopia on schedule to commence gold production in 2017 and
Jibal Qutman in Saudi Arabia expected to transition to the
development phase shortly thereafter, we are well-positioned to
benefit from being one of the first companies exploring the
enriched Arabian Nubian Shield."
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
Background:
Metallurgical Test Work
Samples of oxide mineralisation from diamond drill core at 4 of
the main Jibal Qutman deposits; Main Zone, West Zone, South Zone
and 3K Hill were sent to ALS Metallurgy in Perth, Australia. The
samples were crushed, assayed, composited and separated into 4
crush sizes (<50mm, 25mm, 12.5mm and 6.5mm) for each deposit
area and subjected to standard cyanide leach bottle roll test work
over a 5 day period. Gold recoveries in the <12.5mm and
<6.5mm crush sizes ranged from 66.3% to 71.5% with an average of
69.0%.
Column leach test work has been initiated and confirmatory
results are expected within two months.
Internal Economic Assessment
Pit optimization studies have been applied to the oxide
resources at Jibal Qutman. Initial results show a potential
mineable resource in a series of shallow open pits of 6.6Mt at 0.95
g/t Au for an in-situ 201,600 oz.
The following parameters were applied to the preliminary,
internal economic assessment, some of which were derived from
G&M's 2014 technical study of the potential CIL operation at
Jibal Qutman and also from case examples of similar currently
operating heap leach mines: mining cost $1.60/t; heap leach
processing cost $5.50/t; general and administration $2.00/t;
average gold recovery 69%; mining dilution 10% and Au price
$1,250/oz.
Based on the Company's preliminary economic assessment of these
results, the project now warrants a PFS to confirm the basis for a
mine licence application. Results to date indicate gold production
139,000 oz over an initial 4.5 years life of mine, at an average
grade of 0.95 g/t Au, Au recovery of 69% and a strip ratio of 2.18.
Opex would be in the order of $597/oz. Such a development, if
validated by independent studies, approved by the authorities and
committed by G&M, would involve an investment of $30m,
potentially funded as 75% by local finance institutions with KEFI's
40% share of equity funding being $3m. This potential development
would be a source of funding of G&M's regional exploration
programs and its timing could be along the lines of completing the
technical studies and permitting in 2016/17 and development
thereafter.
The Company expects to continue to define additional oxide
resources in the licence area and on adjoining licence application
areas. Cash flow from the heap leach could fund the addition of a
carbon in leach (CIL) circuit for mining and processing of the
sulphide mineralisation.
Resource Update
In March 2014, the Company reported a JORC Compliant Resource of
495,194 oz and the resource model was independently verified. A non
JORC-Compliant resource upgrade of 633,461 oz was estimated
internally and reported by the Company in December 2014.
A new JORC-Compliant resource estimated has been completed by
the Company in April 2015. The additional resources are classified
as Indicated and Inferred and have been primarily derived from
expanding previous deposits along strike and from the new
discoveries at Red Hill.
The total JORC (2012) Mineral Resource is now 28.4 Mt at 0.80
g/t Au for 733,045 ounces contained gold.
Geological interpretation and construction of orebody solids,
which constrain mineralised intercepts at a 0.2 g/t grade boundary,
was performed in Surpac. Block model construction, variography,
geostatistics studies and grade estimation were carried out in CAE
Studio 3 (Datamine) and Advanced Geostatistics Modules mining
software using dynamic anisotropy to align the estimation with the
local dip and strike of mineralisation trends.
Top cuts were applied to prevent over estimation and smearing of
comparatively high values relative to the dataset. Top cutting was
based upon continuity in log probability plots and carried out by
individual domain.
The estimate was carried out in a three pass Ordinary Kriging
plan, where successive search volumes were 2 and 4 factors larger
than the initial search ellipse. Final tonnes and grade reported on
the kriged estimate from CAE Studio 3.
OXIDE RESOURCE SULPHIDE RESOURCE OXIDE + SULPHIDE RESOURCE
ZONE TONNES GRADE OZ TONNES GRADE OZ TONNES GRADE OZ
3K 1,607,964 0.99 51,027 2,320,780 0.99 74,139 3,928,745 0.99 125,166
SC 2,887,929 0.69 63,775 4,915,937 0.79 125,392 7,803,866 0.75 189,167
4K 1,646,603 0.62 32,765 2,156,146 0.50 34,690 3,802,749 0.55 67,454
Main 1,452,188 0.89 41,406 1,302,766 0.77 32,323 2,754,954 0.83 73,729
West 2,581,090 0.87 72,361 5,282,494 0.86 145,712 7,863,584 0.86 218,073
Red Hill 832,564 0.89 23,880 1,300,354 0.79 32,989 2,132,918 0.83 56,869
Pyrite Hill 134,308 0.49 2,114 33,980 0.43 471 168,288 0.48 2,585
TOTALS 11,142,647 0.80 287,329 17312457 0.80 445716 28,455,104 0.80 733,045
Numbers may not add up due to rounding
Visual comparison of composite sample grade and block grade were
conducted in cross section and in plan. Visually the model was
considered to spatially reflect the composite grades. Statistical
analysis of the block model was carried out for comparison against
the composited drill hole data. The validation and checking of the
block model confirms that it performs as expected globally and
locally in plan and section within the 2015 drill database and
structural comparison with surface and trench mapping confirm
mineralised zones to outcrop where expected and be the approximate
thickness as indicated by the block model.
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