Name and Location
Tulu Kapi gold project, Ethiopia.

Client
Kefi Minerals.

Project Description
Tulu Kapi has a current mineral resource estimated at 20.2-million tonnes grading at 2.65 g/t of gold, and a reserve estimate of 15.5-million tonnes at 2.12 g/t of gold.

The project’s definitive feasibility study (DFS) is based on a conventional openpit drill-and-blast, and load-and-haul mining operation on 7.5 m benches, as well as a 1.2-million-tonne-a year carbon-in-leach processing plant, with gold recoveries averaging 91.5%.

Using semiselective mining techniques and 120 t backhoe configured excavators, it is planned that process ore will be mined above a cutoff of 0.9 g/t of gold for the first ten years, with ore mined between 0.5 g/t, and 0.9 g/t of gold being stockpiled for later processing.

The project is expected to produce 961 000 oz of gold over its 13-year mine life.

Net Present Value/Internal Rate of Return
The project has a leveraged net present value (NPV) at the start of construction of $120-million, at an 8% discount rate, and a leveraged internal rate of return of 52%, with a payback of 4.5 years.

At the start of production in 2017, the NPV is estimated at $180-million.

Value
Total capital for the project is estimated at $129.6-million.

Duration
Commissioning of the processing plant is expected to start in the fourth quarter of 2016, with gold production expected to start in 2017.

Latest Developments
Kefi is in the final stages of selecting two principal contractors and the shortlisted financiers for the mining and processing plant development at the 1.2-million-ton-a-year Tulu Kapi gold mine.

The group has said it is “refining and confirming” the contracting terms to select the preferred mining and plant construction engineering, procurement and construction management contractors within the current quarter.

Major works on the project are expected to start in the fourth quarter of this year, with Kefi expecting commissioning of the 80 000 oz/y to 90 000 oz/y gold operation by the end of 2016.

Kefi is also considering potential opportunities to further reduce peak capital requirements from the 2015 DFS estimate of $129.6-million, executive chairperson Harry Anagnostaras-Adams has said.

“We expect to reduce [peak capital needs] to below $120-million, depending on the final contracting terms agreed with preferred contractors, the detailed engineering and procurement of the plant and the extent, if any, of government funding of infrastructure to be constructed within the public domain,” he has explained.

Kefi has noted that the contractors under consideration will also propose targeted cost‐savings and contribute to the development funding.

Meanwhile, the project’s financing arrangements will be concluded by the third quarter of this year, as shortlisted financiers are engaged to optimise the funding mix and terms between the financiers, the contractors and the Ethiopian government.

To ensure “robust planning” in the short-term market environment, Kefi has noted that financing scenarios are being stress-tested at gold spot prices down to $850/oz, while the project’s DFS assumed a $1 250/oz long-term gold price.

“Kefi's confidence regarding the project economics vis-à-vis the future gold price is also reinforced by the gold price outlook in Ethiopia birr, which has increased from Birr16 800/oz five years ago to Birr22 600/oz at present,” the company has said.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Kefi Minerals (Ethiopia), tel +251 11647 9976/73 or fax +251 11647 9975.