KEFI Gold & Copper (KEFI ) is to proceed with development of the Jibal Qutman gold project in Saudia Arabia.
The development comes under the auspices of KEFI’s joint venture Gold and Minerals Company Limited (GMCO), in which it owns a 13% stake.
KEFI’s long-standing partner in GMCO is the Saudi industrial conglomerate ARTAR.
Phase one of the development of Jibal Qutman, referred to as JQ1, will cost approximately US$87 million capital.
Development is expected to commence during the fourth quarter of this year, although certain procedural requirements remain to be satisfied.
The principal outstanding requirement is the granting of a mining licence by the newly appointed Saudi Arabian Minister of Industry and Mineral Resources.
JQ1 is GMCO’s first development within its substantial Saudi Arabian portfolio, which contains aggregate mineral resources of approximately four million ounces of gold equivalent.
The portfolio comprises the Jibal Qutman gold project and the Hawiah copper-gold project, both of which are expected to be developed in stages.
The plan is to mine the oxide ore at Jibal Qutman, utilising conventional carbon-in-leach processing, with an estimated seven-year operating period and recovery of approximately 258,000 ounces of gold.
At gold prices of between US$3,000 and US$5,000 per ounce, JQ1 is estimated to generate a post-tax net present value at a 5% discount rate of between US$141 million and US$275 million and an internal rate of return (IRR) of between 23% and 60%.
KEFI’s 13% contribution will amount to between US$10 million and US$12 million over 24 months, if all contributed as equity.
Based on current discussions, it is expected that approximately 50% of the total capital requirements will be provided on commencement of development.
“The conditional approval of the development of Jibal Qutman Stage 1 is an important milestone for GMCO and for KEFI's interests in Saudi Arabia,” said Harry Anagnostaras-Adams, executive chairman of KEFI Gold and Copper.
“With the remaining procedural requirements expected to be completed shortly, we look forward to the commencement of development during the fourth quarter of this year. Jibal Qutman Stage 1 is an attractive project in its own right, and its wider significance lies in establishing the first producing operation within GMCO's substantial portfolio of gold and copper assets. We anticipate that the cash flows generated by this initial development will provide an important foundation for funding GMCO’s exploration activities and the progressive development of identified further projects at Jibal Qutman and Hawiah. For KEFI, our interest in GMCO provides exposure to a significant and growing Saudi Arabian mining business, alongside our principal development activities in Ethiopia. The joint venture's stand-alone management structure and our flexibility regarding future funding commitments allow us to participate in this opportunity while maintaining our focus on starting up Tulu Kapi, where we are recommencing a re-set development program following the recent security incident, commencing with community priorities.”
View from Vox
Saudi Arabia has always been a strong aspect of the KEFI portfolio, occasionally overshadowed by the larger opportunity at Tulu Kapi, but never forgotten. KEFI itself has blazed a trail in Saudi Arabia, and has played a prominent role in opening the country up to mining. Now, it’s beginning to reap the rewards. JQ1 is intended to establish the operating and financial platform for subsequent developments at Jibal Qutman and Hawiah, with cash flows from the initial operation expected to underpin future exploration and sequential project developments. It should set things up very nicely indeed.