d605e77f-5cf5-4d52-bb95-1ebffba088c4.pdf
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
E M E R G I N G G O L D M I N E R
ANNUAL REPORT 2015
KEFI Minerals Plc ANNUAL REPORT 2015 Page 1
ANNUAL REPORT 2015
Table of Contents
Highlights of 2015 2
Executive Chairman's Report 3
Robust Gold Project - Tulu Kapi 3
Oxide Gold Project - Jibal Qutman 5
Outlook 5
Exploration Director's Report 6
Ethiopia - Further Potential at Tulu Kapi 6
Saudi Arabia - Adding to Project Pipeline at Jibal Qutman and Hawiah 6
Focus on Arabian-Nubian Shield 7
Chief Operating Officer's Report 8
Sustainability Activities for the Tulu Kapi Project 10
Ethiopia 12
Tulu Kapi - Background 12
Tulu Kapi - Permits and Mining Agreement 13
Tulu Kapi - Geology 13
Tulu Kapi - Resources and Reserves 14
Tulu Kapi - Definitive Feasibility Study and Subsequent Optimisation 14
Tulu Kapi - Development 15
Tulu Kapi - Potential for Underground Mine 16
Tulu Kapi - Regional Exploration Potential 17
Saudi Arabia 18
Saudi Arabia - Jibal Qutman 19
Saudi Arabia - Hawiah 22
Saudi Arabia - Exploration Licence Applications 25
Glossary and Abbreviations 26
Competent Person Statement 27
Strategic Report, Directors' Report and Consolidated Financial Statements 29
Highlights of 2015
(Includes post-period highlights in early 2016)
Ethiopia - Progressing Tulu Kapi into development
February 2015 - Updated Mineral Resource of 20.2Mt at 2.65g/t gold, containing 1.72 million ounces. April 2015 - Mining Agreement signed and Mining Licence granted.
April 2015 - Updated Probable Ore Reserve of 15.4Mt at 2.12g/t gold, containing 1.05 million ounces. June 2015 - Definitive Feasibility Study completed.
October 2015 - Appointed mining contractor and process plant construction contractor. December 2015 - Preferred finance syndicate selected
Ethiopia - Optimising Tulu Kapi open-pit production
December 2015 - Feedback from project contractors, financiers and partners was incorporated into an improved project development plan:
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Increased forecast production to 115,000 ounces per year at All-in Sustaining Costs of US$746/oz
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Projected net operating cash flow has increased to US$58 million per annum at US$1,250/oz
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After-tax NPV (8% discount rate) of US$153 million (c. £96 million) at commencement of construction.
Ethiopia - Defining further value
March 2016 - Completed preliminary economic assessment ("PEA") of Tulu Kapi's underground mining potential:
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Based on the 2014 Mineral Resource, the underground mining inventory of 1.3Mt at 5.17g/t gold adds
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50,000 ounces p.a. over four years.
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Identified exploration potential for tripling the current 330,000 ounce underground Mineral Resource to
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1 million ounces.
Saudi Arabia
April 2015 - Geophysics delineated strongly conductive zones below 6-km long gossan at Hawiah.
May 2015 - PEA confirmed sufficient oxide gold resource for heap leach development at Jibal Qutman.
Corporate
May 2016 - KEFI received formal confirmation from the Government of Ethiopia of its commitment to invest equity capital of US$20 million in Tulu Kapi.
June 2016 - Tulu Kapi funding requirement reduced to an estimated US$130 million.
June 2016 - Finance plan now based on project equity of US$20 million from the Government of Ethiopia, project debt of US$95 million and residual US$15 million to be optimised in Q3-16.
Executive Chairman's Report
Our assets provide a healthy platform to deliver shareholder value by developing profitable mines in Ethiopia and Saudi Arabia.
During 2015, KEFI Minerals made substantial progress towards becoming a gold producer and continued to make discoveries in one of the world's great under-developed minerals provinces - the Arabian-Nubian Shield ("ANS").
We work closely with a first-tier syndicate for Tulu Kapi's construction, mining and financing. Accordingly, our Tulu Kapi Gold Project remains on track for construction commencement in late 2016 and to start production commissioning towards the end of 2017. Initial open-pit gold production is projected at 115,000 ounces per annum. Tulu Kapi's Ore Reserves of
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million ounces and Mineral Resources of 1.7 million ounces have significant upside potential.
At our Jibal Qutman Gold Project in Saudi Arabia, we are at the stage of submitting the Mining Licence Application for the planned heap-leach operation.
The robust economics of KEFI Minerals' two development projects are clear from the following table:
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Tulu Kapi
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Jibal Qutman
|
|
Project Stage
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Funding
|
PEA
|
|
Gold Production
|
Ounces per annum
|
115,000
|
30,000
|
|
All-in Sustaining Costs ("AISC")
|
US$/oz
|
746
|
600
|
|
Operating Margin
|
US$/oz
|
504
|
650
|
|
Operating Margin
|
US$ million per annum
|
58
|
19
|
|
Operating Margin
|
%
|
40%
|
52%
|
|
All-in Costs ("AIC")
|
US$/oz
|
869
|
815
|
|
Project Margin
|
US$/oz
|
381
|
435
|
|
Initial Life-of-Mine Production
|
Ounces
|
980,000
|
139,000
|
|
Project Margin - Life of Mine
|
US$ million
|
373
|
59
|
|
Project Margin
|
%
|
30%
|
35%
|
|
Initial Capital Payback
|
Years
|
|
|
Note: the above parameters are based on a gold price of US$1,250/oz. AISC and AIC are per the World Gold Council Standard. The AIC includes each project's initial capital and excludes financing costs and income taxes.
The above metrics demonstrate that:
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The AISC/oz place both projects in the bottom cost quartile of existing gold producers;
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Strong margins provide substantial annual cash flows;
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Both projects can comfortably debt-fund the majority of the initial capital required; and
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Both projects rapidly repay the initial capital.
Both of these development projects are surrounded by exciting potential for further growth through exploration.
Robust Gold Project - Tulu Kapi
Great strides have been made over the past year to optimise Tulu Kapi and progress this project towards development. Our team has significantly reduced the anticipated capital expenditure, increased the head grade of gold-bearing ore and improved estimated project returns.
Progress over the past year includes:
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An updated Ore Reserve which included a high-grade portion of 12.0 million tonnes at 2.52g/t gold, containing
0.98 million ounces;
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Completion of the 2015 Definitive Feasibility Study ("2015 DFS") in mid-2015;
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Independent technical experts reviewing the DFS on behalf of potential financiers;
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Mining contractor and processing plant construction contractor selection; and
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Refinement of the 2015 DFS costs and mine plan.