Aim-listed gold and copper explorer and developer Kefi Minerals reports that financing for its Ethiopia-based flagship Tulu Kapi gold project remains on track, with the project finance consortium expecting to achieve financial close in March.

Production is expected to start in the fourth quarter of 2022.

Executive chairperson Harry Anagnostaras-Adams says that “it is all systems go in Ethiopia”.

A due diligence work programme was recently undertaken to serve the consortium. This included a site inspection and meetings with project site-based teams, the community and local government.

While there have been no material changes to the estimated capital costs of the project of $253-million, a standby facility has now been included in the finance plan to provide additional headroom.

Excluding past costs, the sources of project development funding are targeted to be 60% senior debt and 40% equity-risk capital. If past expenditure on Tulu Kapi is taken into account, then Kefi notes that the proposed debt-to-equity ratio would be in the order of 50:50.

At a gold price of $1 700/oz, and pending any refinements in the project economics at financial closing, Kefi’s beneficial interest in Tulu Kapi’s yearly gold production remains at 124 000 oz/y (65% of 190 000 oz/y).

The Tulu Kapi net present value attributable to Kefi remains estimated at $264-million, representing 9p a share.

While the project financing is being finalised, scheduled long-lead project activities are continuing, including procurement and other works for off-site infrastructure funded by the Ethiopian government as its project equity contribution.

Other activities progressing include resettlement preparations in accordance with World Bank International Finance Corporation performance standards; updates to input costs; and details of arrangements with contractors, including for the processing plant front-end engineering design for construction and local subcontractor competitive quotations, and for the mining operation, updated competitive bids for the full schedule of rates.

SAUDI ARABIA

In Saudi Arabia, Kefi is continuing with drilling to extend the known mineralisation at the Hawiah copper/gold deposit.

During the fourth quarter of 2020, Kefi commenced a 13 000 m drilling programme that aims to expand and upgrade the maiden Hawiah mineral resource estimate from the current 19.3-million tonnes at 0.9% copper, 0.8% zinc, 0.6 g/t gold and 10.3 g/t silver.

The first phase of the current drilling programme is focused on resource expansion at the Camp Lode, owing to elevated average copper grades in this area of the deposit.

Drill holes have been stepped out to significant distances to quickly confirm that the deposit extends both along strike and at depth. Drilling is progressing well with two drill rigs on site. A total of 14 diamond drill holes and 6 296 m of drilling were completed by the end of December 2020.

Massive sulphide mineralisation was intercepted in 11 drill holes and Camp Lode was extended by 470 m to a vertical depth of 570 m.

The new Saudi mining regulations that came into effect from January 1 represent the end of a five-year hiatus on the granting of exploration licences in the Kingdom, and marks the launch of an intended high-growth phase for the sector, reports Kefi.