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LONDON (Alliance News) - KEFI Minerals PLC Monday said it has now updated its project costs for the Tulu Kapi project in Ethiopia after an independent review of the mine plan was completed, meaning it's on track to complete the definitive feasibility study for the project this quarter.
The precious metals explorer said the mine plan for Tulu Kapi is now settled, with total gold recovery now planned at approximately 960,000 ounces over 13 years compared with the previously planned 925,000 ounces over 11 years.
It said the estimated operating costs on an owner-operator basis are USD634 an ounce excluding royalty and USD721 an anounce including royalty. All-in costs are USD906 an ounce including initial investment and USD768 an ounce excluding initial investment.
The planned development expenditure for Tulu Kapi has been reduced from the previous project owner's estimate of about USD289 million to KEFI's estimate of about USD143 million, it said. The estimate has been further reduced by KEFI to about USD120 million based on initial bids received from mining contractors and by assuming that savings in the order of 10% on an all-new plant are achieved through the value-engineering process.
"These savings are supported by the market prices for existing plants on offer for sale. The amount of USD120 million includes a contingency provision for plant construction costs and also for a working capital buffer for cost-overrun," it said.
Its plan for development funding for the project is to draw down a combination of secured finance and equity finance in the second half of 2015. This is expected to comprise about USD100 million of senior secured finance and about USD20 million equity at parent or project level from project contractors and/or investment institutions.
"KEFI is now focusing on completing the definitive feasibility study in this quarter as scheduled. We are also in the process of selecting our preferred mining contractors and value-engineering the process plant, which should allow us to finalise the full development funding in the third quarter of 2015 for major works to commence, on schedule, in the fourth quarter of 2015," Chairman Harry Anagnostaras-Adams said in a statement.
The next milestones for completion of the definitive feasibility study are publication of updated ore reserves, arrangement of final bids by short-listed mining contractors, the finalisation of value-engineering to reduce the cost of process plant, including due diligence on available existing processing plants, and a review of the study by the project financiers' independent technical expert.
Kefi Minerals shares were flat at 1.10 pence in London Monday morning.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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