Name of the Project
Tulu Kapi gold project.

Location
Ethiopia.

Client
Kefi Minerals.

The Tulu Kapi Mines Share Company (TKGM) will hold the Tulu Kapi project. 

Project Description
A definitive feasibility study (DFS) update for the project was completed in May 2017.

The 2017 DFS incorporates due diligence and refinements since the 2015 DFS, and provides increased confidence in the company’s plans to develop the project.

The 2017 DFS has similar outcomes to those of the 2015 DFS.

The mining method planned is conventional openpit drill-and-blast, load-and-haul, reflecting a semiselective mining approach, whereby a bulk mining approach is applied to 79% of ore, or 95% of all material, and a selective mining approach to 21% of ore, or 5% of all material.

The processing plant comminution circuit, refined and primary semiautogenous (SAG) mill, and secondary ball mill circuit have been replaced with a larger SAG‐only circuit. The DFS‐approved grind size for the processing plant has increased from P80 = 75 μm to 150 μm.

The designs for the tailings storage facility (TSF) and water storage dams have also been revised. The TFS has been relocated downstream to reduce capital costs, with no reduction in capacity for a neutral balance.

New access roads have also been refined to decrease capital costs.

Key planning assumptions that have been introduced since the 2017 DFS include:
 

reworked production plans for years 1 to 3, with forecast gold production expected to expand from 115 000 oz/y in the 2017 DFS to 145 000 oz/y;

expanding the capacity of the project’s processing plant to between 1.9-million and 2.1-million tonnes a year, depending on the hardness of the ore; and

the recasting of mining plans to allow for faster mining, intensified grade-control drilling and enhanced flexibility to switch between bulk mining and selective mining.

Various components remain unchanged from the 2015 DFS, including geology and mineralisation (ore reserves and mineral resources); metallurgical testwork data, and environmental and social permitting.

Mining the underground deposit below the planned openpit has not yet been fully considered and will be addressed in due course.

A preliminary economic assessment completed in early 2016 evaluating the current indicated resource – 1.1-million tonnes grading 5.6 g/t gold – has indicated that the addition of an underground mine has the potential to increase total openpit and underground gold production to more than 150 000 oz/y over four years.

The orebody remains open and further potential will be added.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The net present value (NPV) of the project at the start of construction on a 100% basis is estimated at $175-million. The internal rate of return has increased from 22% in the 2015 DFS to 60%.

Payback is three years.

Value
The $160-million total funding requirement for the project is consistent with Kefi’s recent guidance for required funding.

The additional $12-million funding required for the reworked production plans, and the plant and infrastructure expansion announced at the end of October 2017, have been offset by other savings and financier Oryx Management’s offering to expand its facility from $135-million to $140-million.

In addition, the reworked estimates also reflect the strategy agreed with Oryx Management to install greater processing capacity from the outset to achieve: 
• a quicker cash flow from the openpit and capacity to process additional ore from targeted satellite deposits, and
• greater protection against downside risks by facilitating the faster processing of lower-grade ore from the openpit.

Duration
Construction of Tulu Kapi is expected to start early in 2019 and commissioning is expected for the second half of 2020.

Latest Developments
Kefi Minerals made progress with preparations for the development of its Tulu Kapi project in the third quarter ended September 30.

Project development funding has been secured through the Ethiopian government, which has committed $20-million from 2019 to 2020 to fund construction of offsite infrastructure.

Additionally, funding has been secured through ANS Mining Share Company, which has committed between $30-million and $38-million to be released in increments – $9-million in December and $21-million to $29-million at the closure of full development funding in early 2019.

Kefi has also secured bonds totalling $160-million, of which $110-million will be used to fund construction of on-site infrastructure and the balance set aside for financing costs during the construction period and reserves.

The company has a working capital line through a stockpile financing facility for up to $20-million.

During the third quarter, Tulu Kapi also received approval of its development, operational, environmental and social plans; the investment and shareholders agreement for jointly-owned project company TKGM; capital ratios, hedging and bank account arrangements for TKGM; and community resettlement dates and planned actions.

Outstanding consents or permits include the registration of equity subscriptions, of which most has been endorsed by the Ministry of Mines the endorsement of updated project plans, and approval of finance documentation and underlying security arrangements by the National Bank of Ethiopia.

Kefi will start its community resettlement programme in the first quarter of 2019, along with detailed engineering and procurement, to be undertaken over three months.

Key Contracts and Suppliers
Ausdrill (mine services).

On Budget and on Time?
Too early to state.

Contact Details for Project Information
Kefi Minerals, tel +90 232 381 9431, fax +90 232 381 9071 or email info@kefi-minerals.com.