By Ian Lyall |

KEFI Minerals (LON:KEFI) is advancing rapidly towards the mine development phase at Tulu Kapi, its flagship gold project in Ethiopia.

This morning it revealed the resource base had increased again, although the confirmatory work around this update has wider ramifications.

“It’s set the scene for final mine plans to be optimised from a much better starting position,” chairman Harry Anagnostaras-Adams told Proactive Investors.

“The way we have done all our work is now bankable from all points of view because of the quality of the due diligence, the methodologies and the independent sign-offs.”

The work the chairman is referring to is confirmatory analysis that verified the JORC resource at an indicated 1.62mln ounces.

Not only is this 100,000 ounces higher than the previous estimate, the grade, at 2.67 grams a tonne, is superior to the last released figure.

And since taking control of the asset, KEFI’s team has presided over a 50% rise in the resource base with an increase, rather than fall in the grade.

In its update earlier, KEFI also revealed a potential open pit down to 1,400 metres  modelled by KEFI estimated to host 1.42mln ounces, while the firm has identified a high-grade mineralisation of almost 1.1mln ounces at 5.88 grams per tonne.

The mine developer took the latest step forward after ‘wire-framing’ the mineralised structures to create what it describes as ore-body solids, which was used to cross-check against the previous model.

“Since acquiring the Tulu Kapi project, KEFI Minerals has made considerable progress on expanding the resource base and advancing plans for mine development,” said the resources boutique SP Angel.

The plan is to begin mine construction in the final quarter of year and Anagnostaras-Adams said “we are pretty well smack in line” with that deadline

Licensing is in the “final stages of documentation” with the government, the community resettlement programme should be signed off soon and “detailed discussions” with financial advisers and bankers are also underway, the KEFI chairman revealed.

He said in December the group was talking to the “natural funders” for projects of this type, with those negotiations expected to notch up a gear when the firm receives the mining licence.

By the middle of next year prospective lenders should be ready to go to their credit committees, while the development plan should also have been finalised.

Of course there is the issue of finding equity funding for the project; but there are options at “project or parent company level”, Anagnostaras-Adams said in December’s interview.

KEFI, since it took a majority stake in Tulu Kapi in late 2013, has gone about ‘crafting and sculpting’ the project to make it a cheaper, but economically more enticing proposition.

Now, the investment required to get it into production will be US$120-150mln, or roughly half the figure proposed by its former owner.

Okay, output will be lower than first projected (around 10% lower at an annual 92,000 ounces ignoring the start-up and close-down years), but the mine will be one of the cheapest gold producers in the world.

If construction gets underway on schedule then first gold should be poured in late 2016.

Source: Proactive Investors – UK

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