Beyond Tulu Kapi
On 13 October, Kefi (L:KEFI) announced that it had appointed Sedgman (AX:SDM) as its preferred processing plant contractor at Tulu Kapi. Inter alia, Sedgman’s scope of work includes an estimated cost of c US$63m for a 1.5-1.7Mtpa plant, which compares favourably with the DFS and our most recent cost estimates and throughput rates. To expedite the development of the project further, early front-end engineering and design (FEED) work is reported to have started. Similarly, on 14 October, KEFI announced that it had appointed African Mining Services (a subsidiary of Ausdrill (AX:ASL)) as its preferred mining contractor. Sedgman and Ausdrill are both established names in their respective industry specialisations with a recognised capability in Africa.
Blue sky
Two areas of incremental, blue-sky potential exist at Tulu Kapi – a potential 10- 20koz heap leach operation on low-grade, near-surface oxide material and a potential 40-50koz operation on 300koz of underground resources at a grade of c 6g/t. On the other side of the Red Sea, KEFI currently has a 40% interest in a 733koz resource at Jibal Qutman, which we estimate would be worth US$4.5m (0.17p per share) if valued at the average of its London peers, given its resource categorisations or US$2.8m (0.10pp) at the average global cost of discovery of its resources, or US$1.3m (0.05pp) if valued at KEFI’s prevailing resource multiple of US$4.18/oz (with self-evident upside potential in the event of additional, future development). In addition to Jibal Qutman, KEFI has 24 further licences pending in a newly re-emerging gold district, which management likens to Western Australia before it was pegged, including the potentially significant Hawiah VMS target.
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