Tulu Kapi is located within the highly prospective Arabian-Nubian Shield and has an attributable gold mineral resource of 1.72Moz plus significant resource growth potential

Ethiopia – Gold exploration and development company Kefi Minerals has increased its planned production at Tulu Kapi to an average of 100 000 ozpa over a 10-year period.

This is a 33% increase in planned average annual gold production from the company’s previous estimate of 75 000 ozpa over a 13-year period.

The expansion in anticipated production is a result of a planned increase, based on the company’s ongoing discussions with potential project contractors, in process plant capacity from 1.2 Mtpa to 1.5 Mtpa.

Based on the bids received from construction contractors, this expanded plant capacity does not increase the assumed level of funding required to develop Tulu Kapi and the construction contractors short-listed from the eleven candidates have now been invited to submit fixed price bids for the larger plant.

“This 33% increase has no effect on the open-pit mine plan as set out in the recently-released 2015 definitive feasibility study (DFS), as the 2015 DFS envisaged processing stockpiles over the final three years of 13 years of gold production,” Kefi said in a statement on Monday.

However, KEFI expects it to reduce all-in sustaining costs from US$779/oz, as estimated in the 2015 DFS, to $760/oz.

The planned process plant expansion increases Tulu Kapi’s after-tax net present value (NPV) 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%. At the current spot price of US$1 122/oz, the NPV is $90 million on the same basis.

Meanwhile, a winning bidder has emerged from the tender for the mining contract from the five short-listed candidates who were asked to bid on a 6-year mine operation contract.

The five candidates had previously been reduced from ten candidates, all of whom are international leaders and experienced in Africa. The tender’s result has also re-affirmed the assumptions underlying the cash flow estimates for the period of the planned banking arrangements covering two years of construction plus six years of operation.

The winning bidder and the nearest under bidders have been invited to bid for an expanded scope of work to include the pre-mining site earthworks and the full 10 years of mining the open pit. This is expected to further improve the mining cost per ton after which the company will then formalise an appointment.

“We are pleased to report an increase in Tulu Kapi’s planned gold production and, in particular, that it is likely to have a favourable impact on the all-in sustaining costs and cash flow, thereby further improving the economics of the project.

“The emergence of the least-cost mining contractor, who will now need to bid for an expanded scope of work, also represents an important step towards reaching the development stage,” says Kefi Minerals executive chairman Harry Anagnostaras-Adams.

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