- KEFI Minerals reveals positive results of the preliminary economic assessment of the underground mining potential at the Tulu Kapi gold project underneath the planned open pit.

KEFI says there is the potential to increase annual Tulu Kapi gold production to 150,000oz from the open pit and underground .

As stated previously, KEFI's board continues to pursue its growth strategy of maintaining exploration activities in the Arabian-Nubian Shield focused on identifying the company's next value-adding stages beyond the construction and start-up of the Tulu Kapi open pit.

This PEA, which is a study of the resource potential at Tulu Kapi beneath the open pit mine, is the first stage in the implementation of that strategy. KEFI anticipates commencing development of the underground mine after Tulu Kapi has begun generating positive cash flows from the open pit mine and repaying its development finance, with a view to introducing underground production around the third year of the open pit operation.

This assessment indicates that the total production of Tulu Kapi (combining the open pit mine and underground mine) could approximate 150,000oz pa. This production capacity would result in aggregate net operating cash flow of c. US$100 million pa and KEFI's share of the estimated project NPV being US$150 million (£100 million) assuming a gold price of US$1,250/oz, an 8% discount rate applied against after tax cash flows and KEFI's beneficial ownership being 75%.

The estimated Tulu Kapi open pit cash flows (based on a gold price of USD1,250/oz), as confirmed by the independent technical experts for the Company's finance lenders for Tulu Kapi, project a cash build-up during the first three production years of USD135 million, which would be sufficient for the full repayment of project loans as well as the provision of returns to shareholders and the funding of the underground development (assuming it is triggered during that period).

Exploration director Jeff Rayner said: "As we continue to make excellent progress on financing and preparing for the development of the Tulu Kapi open pit mine, we are pleased with the positive results of our preliminary economic assessment for the underground mine potential. When combined, the estimated total annual gold production increases to approximately 150,000oz. We expect the development of the underground mine to commence after the open pit has begun generating cash flow and repayment of development finance, and so it will increase the net operating cash flow of the project, thereby strengthening the economic potential of Tulu Kapi. We look forward to reporting progress on this, and other exploration targets that stand to leverage the Tulu Kapi infrastructure, in due course."

At 9:08am: [LON:KEFI] KEFI Minerals PLC share price was +0.05p at 0.41p

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