Name of the Project
Tulu Kapi gold project.

Location
Ethiopia.

Project Owner/s
Kefi Minerals.

The Tulu Kapi Mines Share Company 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 TSF 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

recasting the 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 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% in the 2017 DFS .

Payback is three years.

Capital Expenditure
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.

Planned Start/End Date
Construction of Tulu Kapi is expected to start in early 2019 and commissioning is expected for the second half of 2020.

Latest Developments
Kefi Minerals has received the last remaining federal government consent for the financing and development of the Tulu Kapi project.

The National Bank of Ethiopia has finally provided its formal approval of the terms of the proposed full project finance package, an approval that the bank had initially held back until it also approved a policy director for general public application.

The full project finance package includes the right to use leasing as a form of finance, a debt-to-equity capital ratio of up to 70:30, recognition of historical expenditure in the calculation of the capital ratio, the right to use gold price hedging and the application of market-based long-term fixed interest rates.

The way is now paved for Kefi’s project-level partners to subscribe for Tulu Kapi shares for their combined $58-million equity investment and also for the mandated $160-million infrastructure financing.

Meanwhile, Kefi has also obtained the two other third-party approvals that it needs.

Sanderson Capital Partners has agreed to security sharing arrangements with ANS Mining Share Company, which is Kefi’s private-sector project equity partner in the Tulu Kapi project. This facilitates Kefi’s working capital arrangements and the project equity funding for the first part of the 24-month project development programme.

Additionally, Kefi’s government partner in Tulu Kapi, the Ethiopian Ministry of Finance, has also agreed to the undertakings requested by ANS Mining.

Consequently, upon finalising subscriptions by all three partners in Tulu Kapu, the first ANS Mining equity instalment of $11-million is now allowed.

The Tulu Kapi project may now proceed on the ground with the community and local authorities. The development schedule of the project provides for a cautious build-up of site activities, while site security, detailed engineering and the first small community resettlement are carefully dealt with.

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.