TIDMKEFI
RNS Number : 6775A
Kefi Gold and Copper PLC
24 January 2024
24 January 2024
KEFI Gold and Copper plc
("KEFI" or the "Company")
Q4 2023 Quarterly Operational Update
Ethiopia - Tulu Kapi Gold progressing towards launch
Saudi Arabia - Jibal Qutman Gold development scenarios being
reviewed, Hawiah - development studies progress, regional
exploration progress
KEFI (AIM: KEFI), the gold and copper exploration and
development company, has focused on the Arabian-Nubian Shield since
2008, assembling a pipeline of projects in the Kingdom of Saudi
Arabia and in the Federal Democratic Republic of Ethiopia, with the
most advanced being the shovel-ready, high-grade Tulu Kapi Gold
Project ("Tulu Kapi") in Ethiopia which is being prepared for its
launch.
We are pleased to provide this operational update covering the
three months to 31 December 2023 and more recent developments. This
update encompasses the activities of the Company, as well as wholly
owned KEFI Minerals (Ethiopia) Ltd ("KME"), majority-owned Tulu
Kapi Gold Mines Share Company ("TKGM") in Ethiopia, and
minority-owned Gold & Minerals Ltd ("GMCO") in Saudi Arabia
.
ETHIOPIA
Tulu Kapi Gold Project (currently 95%-owned but planned to
reduce to c.70% at finance closing)
The three critical conditions precedent for project financing
and launch, all requiring government regulatory confirmations, were
achieved by October 2023:
-- Central bank exemptions from exchange and capital controls, announced in October 2023;
-- Government security protection for strategic mining projects, announced earlier in 2023; and
-- Finance Ministry approval of country membership for AFC, announced earlier in 2023
Conditional final Credit Committee approval by the lead lender
has been granted, as announced on 10 January 2024, following the
Ethiopian Government's commitment to reinforce security protection
as requested at stakeholder workshops in early December 2023.
Detailed definitive agreements for the project financing are in
near-final form with contractors, equity investors and government
agencies. Those for the lenders have also been drafted, but await
credit committee approval by the co-lender before finalisation.
Independent confirmation was received of compliance with
international banking standards with regard to:
-- updated technical due diligence; and
-- appropriate preparations to date as regards security
As previously reported (see Q3 2023 Operational Update announced
on 31 October 2023), to facilitate equity investor analyses (as
compared with the lender-dominated analyses regularly reported in
respect of the open-pit), the financial projections were updated to
reflect the Company's business plan:
-- Development of the underground deposit so that it begins to
contribute to production as from Production Year 3;
-- Processing of the low-grade stockpiles at end of mine life;
-- Equity analysts' consensus long-term gold prices (as per
Standard and Poor's) now at US$1,862/oz;
-- Lifting the process rate by 20% to c, 2.4Mtpa; and
-- The intention to refinance the debt package with conventional
corporate finance during the third year of production, at which
point the more expensive components of start-up finance would be
repaid.
The summary metrics are tabulated below and will be further
refined during construction at Tulu Kapi alongside in-fill grade
control drilling for the open pit and some deep-drilling of the
underground resource, the last drill-hole in which was 90m at c.3
grammes per tonne gold.
Gold Price Gold Price
US$1,862/oz US$2,020/oz
NPV, IRR & Valuation
Leveraged IRR @ construction start 36% 43%
Leveraged NPV8% @ construction start US$288.6m US$377.4m
Leveraged NPV8% @ production start US$480.4m US$588.0m
EBITDA (average of first three production years) US$166.8m US$192.3m
Enterprise valuation @ 3.5x EBITDA US$583.6m US$673.1m
Cash Cost Metrics
AISC (US$/oz) US$908 US$919
AIC (US$/oz) US$1,138 US$1,149
Breakeven cost (inc everything e.g. debt repayment, US$1,239 US$1,282
taxes etc) - US$/oz
Cash Balances & Inventory
Cash built up in TK over life of mine US$667.9m US$812.4m
Cash at bank in TKGM at end of year three US$72.4m US$94.8m
US$ gold content of ore on hand at end of production US$51.4m US$55.7m
year three
Footnote: These metrics reflect initial modest contribution from
the underground mine, based on current indicated resources. As the
orebody remains open, the finalised plans will in due course
reflect a higher expected contribution from the underground mine.
in addition, we exclude herein the possibility of any contribution
from the satellite prospects that require follow-up
exploration.
SAUDI ARABIA (25% owned GMCO joint venture)
Jibal Qutman Gold and Hawiah Copper-Gold Development
Projects
These two discoveries are undergoing Feasibility Studies for
development, targeting commitments in 2024 and 2026
respectively.
Progress continued during Q4 2023:
-- Drilling programmes (drilling to date is 81,000m at Jibal
Qutman and 101,000m at Hawiah ), to date focused primarily on
establishing and upgrading Mineral Resource and declaring maiden
Ore Reserves. Today the GMCO board is focused on selection of the
preferred development plans.
-- A comprehensive exploration update (previous update was
announced 6 September 2023) is being assembled for publication
shortly;
-- Metallurgical testing for selection of preferred process flowsheet;
-- Geotechnical and hydrological drilling programmes for mine planning;
-- Initial mine planning;
-- Environmental and social responsibility plans for permitting;
-- Trenching programme over the planned locations for
infrastructure to ensure no mineralisation;
-- Evaluation water source alternatives;
-- Electricity cost optimisation studies;
-- Costings of capex and opex; and
-- Completion of the initial accommodation and works compound at site.
KEFI GROUP
Group Development Plan
-- The planned KEFI project development sequencing remains as follows:
o We have triggered the staged launch of the Tulu Kapi open-pit
development in Ethiopia for build-up to full construction during
H1-2024, starting commissioning eighteen months later and full
production mid-2026;
Then
o H2-2024 launch Jibal Qutman open-pit development in Saudi
Arabia based on 2023/24 reserves and resources and targeting first
production 2026;
Then
o 2026 launch of the Hawiah development in Saudi Arabia for
first production to follow that in Tulu Kapi and Jibal Qutman;
And then
o Launch of underground mine development at Tulu Kapi.
Group Metrics
Aggregate Mineral Resources across all three projects are 4.7
million ounces of gold-equivalent in-situ, of which KEFI's
beneficial interest is 2.0 million ounces.
Aggregate annual production from the three advanced projects is
currently projected at 340,000 ounces of gold-equivalent, of which
149,000 ounces is KEFI's beneficial interest, over an initial
seven-year period.
The Tulu Kapi open pit is already bankable with a 1 million
ounce Ore Reserve. Combined with the first preliminary planned
250,000 ounce minable resource contribution from the underground
mine. Tulu Kapi open pit is planned to produce c.144,000 ounces
gold per annum at start-up throughput rate. By lifting
process-plant throughput by 20% to 2.4 million tonnes per annum and
feeding in the underground and low-grade stockpiles, production
would be c.165,000 ounces gold per annum at an All-In-Sustaining
Costs of c.US$908 per ounce, assuming a gold price of US$1,862/oz.
At those same prices, this provides Net Operating Cash Flow of
US$141 million per annum (100% basis) for the first seven full
years of production.
Group Working Capital
The Company working capital requirements are currently being met
through:
-- ARTAR funding KEFI's GMCO joint venture contributions whilst
we optimise plans for our first development at Jibal Qutman by mid
2024. We currently owe c. GBP3.5 million to ARTAR and intend to
settle the amount owing in due course rather than be further
diluted in the GMCO Joint Venture.
-- Unsecured advances being provided by a UK-based lender, for
general working capital, as implemented regularly in recent years.
As of December 31, 2023, the advanced amount stood at GBP1.5
million.
Group Exploration Project Pipeline
Ethiopia Project Pipeline
Regional exploration: subsidiary KME lodged applications for
exploration licences over other areas in Ethiopia prospective for
gold, base metals and lithium.
In addition, we have commenced administrative proceedings in
respect of our long-standing proximal Exploration Licenses ("ELs")
surrounding the Tulu Kapi Project Mining Licence area, in order to
continue exploration programmes and community development which
have always complemented the Tulu Kapi project. During an overhaul
of the title-regulatory system in 2022, these ELs were over-pegged
by a Hong Kong shell company owned by a British Virgin Islands
shell company. We are confident that this situation can be resolved
satisfactorily.
Saudi Project Pipeline
Following the expansion of GMCO's exploration portfolio covering
four project areas of more than 1,000km(2) , regional exploration
teams have mobilised to the new ELs. As was the case at Jibal
Qutman and Hawiah, many of these ELs have abundant evidence of
historical workings and surface expression of mineralisation.
Corporate Presentation
KEFI will be presenting at 121 Mining Investment Cape Town,
South Africa, on 5 February 2024. The presentation to be delivered
is available on the Company's website:
https://www.kefi-goldandcopper.com .
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 (Executive Chairman) +357 99457843
John Leach (Finance Director) +357 99208130
SP Angel Corporate Finance LLP (Nominated
Adviser) +44 (0) 20 3470 0470
Jeff Keating, Adam Cowl
Tavira Securities Limited (Lead Broker) +44 (0) 20 7100 5100
Oliver Stansfield, Jonathan Evans
IFC Advisory Ltd (Financial PR and IR) +44 (0) 20 3934 6630
Tim Metcalfe, Florence Chandler
3PPB LLC (Institutional IR)
Patrick Chidley +1 (917) 991 7701
Paul Durham + 1-203-940-2538
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