AMN - ETHIOPIA: Tulu Kapi DFS update complete

Completion of the Definitive Feasibility Study (DFS) Update for KEFI Minerals’ Tulu Kapi Gold Project in Ethiopia takes the company another step closer to finalising project finance. The update, which incorporates due diligence and improvements to the 2015 DFS, provides increased confidence in KEFI’s plans to develop the project.

Completed by Lycopodium Minerals Pty Limited and approved by KEFI, the update is now the base case for overlaying the funding commitments, while higher targets will be set for business planning purposes. Endeavour Financial has prepared the financial analyses.

KEFI’s executive chairman Harry Anagnostaras-Adams said, “By publishing an updated DFS we are pleased to have completed another vital step towards finalising funding arrangements. Total funding requirements of approximately US$160 million and other key aspects remain consistent with recent guidance.

“Comparison with KEFI’s 2015 DFS summarises the myriad of refinements since then, such as detailed operational plans with project contractors including accelerated ore processing that increase annual gold production to 115,000 ounces, thus improving profitability and cash flows.

“The update also details the technical rigour behind the improvements made to the project since KEFI assumed control in 2014,” he said.

Key points of the update:

• Average head grade 2.1 g/t gold
• Total gold production 980,000 ounces, up from 961,000 due to improved metallurgical recovery
• Annual ore processing rate 1.7 million tonnes, up from 1.2 million
• Average annual gold production, first 8 years, 115,000 ounces, up from 95,000
• Cash operating costs US$684 per ounce, up from US$661
• All-in Sustaining Costs US$777 per ounce, down from US$780, ranking Tulu Kapi in the lowest quartile of gold producers globally.
• All-in costs, including initial capex, US$933 per ounce, up from US$906.
• NPV at start of production (8% real discount rate) US$272 million, up from US$256 million.
• Payback 3 years, up from 2.5 years
• Net annual operating cash flow (average for first 8 years) US$55 million, up from US$50 million.

These economic metrics are for contract mining of the open pit only, and are based on a gold price of US$1250 flat over the life of mine and are on an unleveraged and after-tax basis.

Initial capital expenditure is estimated at US$145 million for a 1.5-1.7 million tonnes per annum ore processing plant on a contract mining basis. The lower 2015 DFS estimate was for a 1.2 million tonne plant.

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