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 15.4-million tonnes at 2.12 g/t of gold.

Kefi has reported progress on the pre-ferred development and financing plan for the project as refined since the 2015 definitive feasibility study (DFS). The preferred development plan envisages gold production of 980 000 oz over nine years at an average of 115 000 oz/y, excluding the start-up year and the closure year. The compara-tive 2015 DFS estimates were 960 000 oz over 13 years at a steady-state average of 95 000 oz/y for the core production period. The Tulu Kapi development plan is based on a conventional openpit mining operation and a 1.5-million-tonne-a-year to 1.7-million-tonne-a-year carbon-in-leach (CIL) processing plant, with gold recoveries averaging 93.3%. Using semi-selective mining techniques, it is planned to process ore grading higher than
0.5g/t gold.

Net Present Value/Internal Rate of Return
The preferred financing plan will result in an internal rate of return of 50% and a projected net present value at the start of production at the end of 2017 of $197-million, at a discount rate of 8%.

Value
$145-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 is continuing to advance project finance syndication for its 75%-owned Tulu Kapi project. The company has estimated the total capital requirement for the project to be $145-million, including financing costs and cost-overrun facilities. Kefi is expecting to secure $65-million in senior secured debt from two banks and an export credit agency; $15-million in cost-overrun facilities and a 100 000 oz hedge facility from a specialist metals financier; and $40-million in product-linked gold finance from a specialist gold financier.

Around $25-million of the equity investment component was planned to have been invested prior to financial settlement of the project finance syndicate at the end the third quarter of this year.

Kefi has raised $5-million; the Ethiopian government, which owns a 25% interest in Tulu Kapi, had provided $20-million.

This was in addition to the $50-million invested prior to 2016. Production commissioning at Tulu Kapi remains on schedule, for the second half of 2017.

Cash flows of $135-million in the first three years of production were expected to be sufficient to repay all project debts and enable Kefi to start paying dividends. They are also expected to fund the development of the underground mine at Tulu Kapi and the start-up of the initial heap leach operation at Jibal Qutman, in Saudi Arabia, as well as the exploration programmes within the Arabian-Nubian Shield.

Combined production from the openpit and underground mine would reach about 150 000 oz/y. Underground mine development will start following repayment of development finance was well advanced during the first three years of openpit operations.

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.