KEFI Gold and Copper (KEFI) has approved detailed planning for a second mine at Tulu Kapi in Ethiopia after an updated standalone Preliminary Economic Assessment (PEA) confirmed the potential for a high-return underground operation.
The new Tulu Kapi Underground Mine is expected to lift combined steady-state production at Tulu Kapi to around 180,000 oz of gold per year, alongside the open-pit mine and processing facility, whose development is already underway.
The updated PEA is based on the Mineral Resources beneath the open-pittable Ore Reserves. Underground decline development is targeted to begin as the open pit is commissioned and starts production in mid-2028, with the first development year including underground drilling platforms, infill and extensional drilling, and trial production.
The underground mining inventory has increased to 2.38 Mt at 3.30 g/t gold, containing around 253,000 oz of gold.
At a gold price of US$2,350/oz and a 1.45 g/t cut-off grade, the underground mine has a post-tax NPV5% of US$274.1 million, an IRR of 220% and a payback period of nine months on a standalone incremental basis.
Steady-state underground production is targeted at around 500,000 tpa, with underground ore to be blended with open-pit feed.
Combined production is expected to reach around 1.2 million oz of recovered gold over eight years.
Pre-production underground development capital is estimated at US$8.09m, while maximum cash drawdown is expected to be around US$10.5m. KEFI expects to optimise the timing of this expenditure in 2028 as Tulu Kapi approaches production and fund it from open-pit operating cash flow, with no new equity assumed.
At gold prices of US$3,000-5,000/oz, combined open-pit and underground cost (AISC) is estimated at around US$1,100-1,300/oz, reflecting the impact of government royalties at higher gold prices.
Engineering work for the underground mine will begin immediately and is targeted for completion in Q4 2027.
KEFI Executive Chairman Harry Anagnostaras-Adams said: "At Tulu Kapi we are in month six of the development schedule to start production in mid-2028. We have procured the fabrication of plant at international specialty workshops, and at site we remain focused on community resettlement and mobilisation for construction, which is scheduled to accelerate in the imminent dry season.
"The PEA confirms that we can now add this second mine at Tulu Kapi using existing mineral resources and the existing plant with minor, already considered modifications. It is therefore timely to commence a parallel stream of preparatory work for the second mine at Tulu Kapi, the Tulu Kapi Underground Mine.”
View from Vox
The updated PEA adds a compelling second phase to Tulu Kapi, with strong economics, rapid payback and substantial underground growth potential complementing the open-pit development already underway.