KEFI Gold and Copper plc (LON:KEFI), the gold exploration and development company with projects in the Federal Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, has provided its latest quarterly operational update.
This update encompasses the activities of KEFI Minerals (Ethiopia) Ltd and Tulu Kapi Gold Mines Share Company in Ethiopia, and Gold & Minerals Ltd in Saudi Arabia, for the period from 1 October 2022 to 31 December 2022, along with any material subsequent developments.
The Tulu Kapi Gold Project is under TKGM (planned to be c.80% owned by KEFI). The Hawiah Copper-Gold Project, the Jibal Qutman Gold Project and other Saudi projects are under GMCO (planned to be c.30% owned by KEFI). Both TKGM and GMCO are technically guided and supported by KEFI so that each of these operating joint venture companies can build a local organisation suitable to manage long-term production activities, further exploration programmes and exploit future development opportunities.
Harry Anagnostaras-Adams, Executive Chairman of KEFI Gold and Copper, commented:
“KEFI continues to progress its three advanced projects: the Tulu Kapi Gold Project in Ethiopia which is now finalising the project’s US$320 million financing, the Jibal Qutman Gold project in Saudi Arabia targeting start-up at the same time as Tulu Kapi and the Hawiah Copper-Gold project, also in Saudi Arabia, already larger than the other two projects combined and planning construction after the two gold projects have started production.
“In Ethiopia we have already launched key initial aspects of the Tulu Kapi development and intend to continue our staged build up to full launch in full collaboration and support of all key stakeholders. Our holding is now planned to be c.80%.
“In Saudi Arabia during 2023 we focus on the Definitive Feasibility Study and project financing for Jibal Qutman, the Pre-Feasibility Study for Hawiah and the regional exploration programme. Our holding is now planned to be 30%.
“It has taken a huge effort over a much longer period than we had anticipated in both countries to deal with innumerable frontier market (for mining) challenges and we greatly appreciate the patience and support of all stakeholders and, in particular, of our host governments and communities, our partners and of course our financiers and shareholders.
“We have built a growing resource inventory of c. 5 million ounces in gold-equivalent terms. That, together with the quality of our projects and our teams, is the reason we have assembled first-tier partners, contractors and financiers. We look forward to reporting more details as we advance each project.
“We also note that some international stock markets appear to be recovering and we have prioritised our planning for a dual-listing and, in particular, we are examining a dual-listing in Saudi Arabia, which is rapidly emerging with a significant role in our region of operations, especially within the minerals sector.”
The Company will soon provide a presentation and live webinar via the Investor Meet Company platform, the details of which will be announced in due course.
The presentation will be open to all existing and potential shareholders. Questions will be able to be submitted at any time during the live presentation.
Since acquiring Tulu Kapi in 2014, KEFI has completed an extensive technical re-design of the project with independent reviews by leading international experts and we supported a modernisation of the finance-related regulations and policies by the relevant authorities. We also traversed the recent unpredicted, but well-publicised, events within the country and withstood many challenges in a situation which continues to settle down.
Tulu Kapi Gold Project
The Company announced on 21 November 2022 that the finance plan for the c.US$320 million financing of Tulu Kapi had been agreed in principle by the lenders so that draft definitive agreements could be finalised for approval by syndicate members and regulators.
KEFI announced on 23 January 2023 that:
· All lead contracting and equity investment parties had agreed their draft agreements and confirmed their intention to sign.
· Likewise, for nearly all Ethiopian Government (“Government”) agencies which have to also sign agreements within the syndicate.
· The lenders have re-affirmed the financing plan in principle and have formally set out their indicative terms and conditions which include, as expected, satisfaction by all parties of their respective conditions and the receipt of all the necessary remaining Government approvals.
· To this end, during the last months of 2022 the various relevant regulatory agencies were advised of the specific conditions and clarifications required from them in order that progress can be made with the financing and definitive documentation signed.
· Whilst the Government is clarifying the outstanding regulatory matters, it is also reorganising its systems around the Project, including for upgraded security and for preparing the community for resettlement.
Following the completion of these steps, and the receipt of final credit committee approval by the lenders, KEFI will call a General Meeting of KEFI shareholders to seek formal shareholder approval for the transaction, in particular any convertibility rights (into KEFI shares) embedded in the financings at the KME level by regional investors as previously outlined.
The Company expects all outstanding issues to be addressed imminently, the exact timing of which will largely be driven by the Government process, so that final lender documentation can be completed, and signing can take place, enabling the KEFI General Meeting to be called, funds to flow and full Project launch to proceed.
The principal tasks required to commence development of Tulu Kapi are expected to be completed in the following sequence:
· Principal Government regulatory confirmations:
o Central bank: Approve final financing and bank account terms and conditions.
o Ministry of Mines: confirm tenure of production and exploration licences.
· Final lender credit approval and signing by all parties of lender-approved definitive documents.
· Independent confirmation of compliance with international banking standards for:
o Upgraded security systems in project area and transport routes.
o Upgraded community preparations for resettlement and compensation.
· Approval at KEFI General Meeting of any conversion rights into KEFI shares.
· Equity funds flow.
· Commence procurement, community resettlement, site works, exploration.
KEFI and the full syndicate remain focused on achieving full Project launch as soon as practicable. KEFI remains focused on achieving full production from the open pit operations in 2025 and from the combined open pit-underground operation a few years later for combined gold exports approaching 200,000 oz per annum (KEFI beneficial interest 80% or approaching 160,000 oz per annum).
Whilst awaiting regulatory permission to re-activate the Company’s Ethiopian exploration, which is critical for long-term planning for all stakeholders in the community, as well as the Company, the exploration focus was successfully switched to Saudi Arabia at what appears to have been a particularly propitious time. Saudi Arabia is taking off as a global mining destination and KEFI’s GMCO is at the forefront.
GMCO is rapidly becoming a leading explorer/developer/producer in the fast-emerging Saudi minerals sector with:
· one of the largest exploration teams in the country; and
· two major projects advancing towards development:
o Hawiah Copper Gold Project at the Preliminary Feasibility Study (‘PFS’) stage; and
o Jibal Qutman Gold Project at the Definitive Feasibility Study (‘DFS’) stage.
GMCO’s growth has coincided with the Saudi Government’s widely publicised recent initiatives to welcome international expertise and fast-track the growth of its mining sector.
Going forward the Company’s Saudi assets are expected to have relatively short gestation, approval, financing and development schedules given:
· GMCO’s long-established proprietary database and successful exploration teams;
· there is no need to resettle communities;
· less restrictive security protocols; and
· established capital markets and funding options.
GMCO’s activities during Q4 2022 continued to show rapid progress, as outlined below.
Jibal Qutman Gold Project – Our First Discovery
Due to the improved gold price since this discovery approximately 10 years ago, our initially contemplated heap-leach development of Jibal Qutman producing 30,000 oz per annum over six years has been enlarged to a 50,000 oz per annum production plan over 10 years, based on a conventional open pit/CIL (Carbon-in-Leach process).
The three Jibal Qutman Exploration Licences (“EL’s”) cover an area of over 270km2. An area of 26km2 within the southern portion of the main Jibal Qutman EL contains the principal discovery area and the previously reported 733,000 oz gold resource. Exploration programmes targeting other known gold occurrences within the expanded land package will commence in Q1 2023 and aims to significantly increase the overall resource.
Field programmes are progressing since site access was obtained in November 2022, including the construction of the pioneer’s camp and environmental baseline studies, as well as geotechnical and metallurgical diamond drilling. Work is simultaneously underway to upgrade areas of Inferred Resources to Indicated classification for inclusion in the Ore Reserve.
Read More:KEFI Gold and Copper continues to progress its three advanced projects