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 1.5-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 100 000 oz of gold over its ten-year mine life.

Net Present Value/Internal Rate of Return
The project has an after-tax net present value (NPV) at the start of construction of $147-million, at an 8% discount rate, based on unleveraged cash flows, a gold price of $1 250/oz and an after-tax discount rate of 8%.

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 Minerals’ Tulu Kapi project is now expected to produce about 100 000 oz/y over a ten-year period, up from the previously estimated 75 000 oz/y over a 13-year period, owing to a planned increase in process plant capacity from 1.2-million tons a year to 1.5-million tons a year.

The expanded plant capacity will not increase the assumed level of funding required to develop Tulu Kapi, construction contractors shortlisted from the eleven candidates have been invited to submit fixed price bids for the larger plant, the company said in a statement in September 2015.

“The 33% increase in planned average yearly gold production has no effect on the openpit mine plan as set out in the definitive feasibility study, as it envisaged processing stockpiles over the final three years of a 13-year mine life.

“However, we expect to reduce all-in sustaining costs from $779/oz to $760/oz,” Kefi Minerals has said.

The planned process plant expansion increased Tulu Kapi's after-tax net present value at the start of construction from $125-million to $147-million, based on unleveraged cash flows, a gold price of $1 250/oz and an after-tax discount rate of 8%.

Meanwhile, a winning bidder has emerged from the five shortlisted candidates who bid for a six-year mine operation contract.

The winning bidder and the nearest bidders have now been invited to bid for an expanded scope of work to include the premining site earthworks and the full ten years of mining the openpit. This is expected to further improve the mining costs per tonne. The company will then formalise an appointment.

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.