KEFI Minerals bounces following seven-fold increase in Ethiopian exploration ground (KEFI)

KEFI Minerals (LSE:KEFI) rose by 4.3pc this morning after announcing a seven-fold expansion to its exploration tenements in Ethiopia. It will now own around 1,900km2 of ground covering the Tulu Kapi gold project district that surrounds the 7km2 licence area already held by its subsidiary, TKGM.

TKGM is the owner Tulu Kapi, a project it has been progressing towards development since being granted a mining licence in April 2015. Estimates for output at the project include open-pit gold production of c.140,000oz per annum for a 7-year period with an all-in sustain cost of $800/oz. The project’s ore reserve estimate totals 15.4Mt at 2.1g/t gold, containing 1.1Moz.

In today’s update, KEFI said its new exploration ground encompasses all the potential satellite deposits within trucking distance of the project. It added that the area also contains several Tulu Kapi-style and volcanogenic massive sulphide prospects and additional regions of prospectivity.

KEFI expects the transfer of the new licences to complete once it has begun constructing Tulu Kapi. The firm took a significant step forward here in October when it secured a minimum of $30m worth of investment into TKGM from a local syndicate called ANS Mining Share Company. It said the money will support its existing project schedule, which will see it aim to commission gold production by the end of 2020. Today, KEFI added that it expects to use this money, alongside operational cash flow, to fund the exploration of its new acreage.

When we spoke to KEFI’s managing director Harry Anagnostaras-Adams last month, he said the business is looking forward to utilising its first-mover advantage in Ethiopia’s prospective gold sector:

‘The gold sector in Ethiopia is conspicuous by its absence, given that its geology suggests it should be a prolific producer. With that in mind, once we reach production at Tulu Kapi, we will have a first-mover advantage. When we first got the project it was nearly ready, and we have been working ever since to get it to the starting line. The first step was re-designing the mining and processing plans, which reduced the AISC to $800 from $1000. Then, we secured financing to get the equity requirement down to $50-60m. [Our most recent] funding gets us to the point where we have these funds and puts us on very steady footing moving forward.’

Author: Daniel Flynn

Disclosure: The author does not own shares in the company mentioned in this article

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