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UK-based developer to further develop Ethiopian gold project

ETHIOPIAN ENDEAVOUR
The government of Ethiopia is keen for Kefi Minerals to expedite the financing of the Tulu Kapi gold project

ETHIOPIAN ENDEAVOUR The government of Ethiopia is keen for Kefi Minerals to expedite the financing of the Tulu Kapi gold project

7th March 2014

By: Ilan Solomons

Creamer Media Staff Writer

  

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Exploration and development company Kefi Minerals has started a $3-million programme of trenching, reverse-circulation drilling and engineering at its newly acquired Tulu Kapi gold project, 28 km east of the town of Ayra-Gulliso, in Ethiopia’s Oromia state, as a precursor to the planned mine development, currently estimated to cost $140-million.

Having attended the Investing in African Mining Indaba to discuss its development plans with key industry players, Kefi Minerals explained at the indaba that the upcoming programme was being conducted to refine a December 2012 definitive feasibility study (DFS) for a three-ton-a-year gold plant planned for development in 2015.

The earlier DFS estimated Joint Ore Reserves Committee-compliant resources of 25 t inferred and indicated resources at 2.34 g/t of gold and probable reserves of 17 t at 1.82 g/t of gold.

Work undertaken by the previous owner in 2012 to compile the earlier DFS involved more than 120 000 m of drilling and capital expenditure of more than $50-million. 

Kefi Minerals chairperson Harry Anagnostaras-Adams told Mining Weekly on the sidelines of the conference in February that the company had bought its 75% stake in the Tulu Kapi gold project in December.

The company paid £1.5-million in cash to East African gold exploration and development company Nyota Minerals and issued 116.67-million ordinary shares in Kefi Minerals at an agreed price of 3p a share.

Kefi Minerals has conditionally raised £4.5-million through the placement of 225-million new ordinary shares, at a price of 2p a share, to fund the cash element of the consideration. The company also has pre-emptive rights over the remaining 25% interest owned by Nyota.

“The Ethiopian government will receive, without cost, a 5% participation interest when a mining licence is issued,” highlighted Anagnostaras-Adams.

He added that the Ethiopian government was keen for Kefi Minerals to expedite the financing of the project and trigger the development of the mining operation, as the project was expected to be at the development stage by this month. However, there were delays, owing to Nyota Minerals’ inability to attract the required development finance for the project.

Ethiopian Prospects

Anagnostaras-Adams pointed out that Ethiopia fell within the minerals-rich Arabian-Nubian Shield (ANS), which has high prospective concentrates of gold and copper deposits. Gold is Ethiopia’s main mineral export, with exports having risen exponentially from $5-million in 2001 to $602-million in 2012.

There are 136 companies working on 246 mining licences in the country.

“Ethiopia possesses diverse untapped mineral resources and is actively encouraging the exploration and development of these resources. Gold miner Midroc’s Lega Dembi mine, also in Ethiopia’s Oromia state, is the country’s largest mine, with a production rate of about 135 000 oz/y,” he said.

Further, Anagnostaras-Adams noted that the government of Ethiopia had, in the last five years, implemented policies and regulations that helped to attract mining investors.

“These include the 10% reduction in income tax, which dropped from 35% to 25% in July 2013 and a reduction in gold royalty rates,” he said.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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