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LONDON (Alliance News) - KEFI Minerals PLC saw its shares fall Wednesday morning, even though it said metallurgical test work and an enlarged oxide resource indicated the economic viability of developing a low cost heap leach operation at the Jibal Qutman gold project in Saudi Arabia.
The gold explorer said it now intends to start a preliminary feasibility study in the third quarter of 2015, which it expects to complete in the middle of 2016, after it expanded the JORC compliant mineral resource at the project and released the early results of metallurgical heap leach testing.
KEFI is focusing on the possibility of an open cut heap leach operation at Jibal Qutman in order to lower capital requirements and expedite the potential development timetable. It said development of the project would need an investment of about USD30 million in 2017, comprised of a USD22.5 million local development loan and equity of USD7.5 million, with KEFI accountable for 40% of the equity portion. The project is part of the Gold and Minerals Joint Venture company with local partner Abdul Rahman Saad Al-Rashid & Sons Co Ltd.
It said the total mineral resource for the project is now 28.4 million tonnes at 0.80 grammes per tonne of gold for 733,045 contained gold ounces. That's up from the previous resources of 22.0 million tonnes at 0.90 grammes a tonne for 633,461 contained gold ounces. It said the expanded resource notably contains an oxide resource of 11.1 million tonnes at 0.80 grammes a tonne of gold for 287,329 contained gold ounces.
The explorer said it has received "positive" metallurgical heap leach test work results from coarse crush cyanide leach on four of the main oxide deposits, averaging 69% gold recovery over a five-day leach time. Column leach test work is ongoing and is expected to support the coarse crush results, it added.
KEFI said preliminary pit shells at a price of USD1,250 an ounce of gold have been designed on the oxide resource, indicating a potential open cut mineable resource of 6.6 million tonnes at 0.95 grammes a tonne of gold for 201,600 ounces of gold. An internal preliminary assessment using 69% gold recovery and local costs suggests an operating cash cost of USD597 an ounce on a 1.5 million tonne a year heap leach mine, it added.
"The metallurgical test work and enlarged oxide resource indicate the economic viability of the development of a low cost heap leach operation that could generate early cash flow to fund our Saudi exploration program. With our Tulu Kapi project in Ethiopia on schedule to commence gold production in 2017 and Jibal Qutman in Saudi Arabia expected to transition to the development phase shortly thereafter, we are well-positioned to benefit from being one of the first companies exploring the enriched Arabian Nubian Shield," Exploration Director Jeff Rayner said.
Still, KEFI Minerals shares were down 5.7% at 0.943 pence Wednesday morning.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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