Update to Hawiah Mineral Resource

6 January 2022

KEFI Gold and Copper plc

("KEFI" or the "Company")

Update to Hawiah Mineral Resource

KEFI Gold and Copper (AIM: KEFI), the gold and copper exploration and development company with projects in the Federal Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, is pleased to announce an update to the Mineral Resource Estimate ("MRE") at the Hawiah Copper-Gold Project ("Hawiah" or the "Project"), part of the KEFI-operated Saudi Arabian joint-venture Gold and Minerals Limited ("G&M").

Highlights

·    Hawiah Mineral Resource Estimate has increased by 5.6 million tonnes ("Mt") to 24.9 Mt at 0.90% copper, 0.85% zinc, 0.62 g/t gold and 9.81 g/t silver, representing a tonnage increase of 29%.

·    The total contained metal content now stands at 223,000 tonnes of copper (up 33% from 168,000 tonnes), 210,000 tonnes of zinc (up 34% from 157,000 tonnes), 497,000 ounces of gold (up 42% from 349,000 ounces) and 7.8 million ounces of silver (up 22% from 6.4 million).

·    An upgrade in key areas from the previous Inferred category Mineral Resource with 10.9Mt now an Indicated category Mineral Resource at 0.96% copper, 0.86% zinc, 0.64 g/t gold and 9.98 g/t silver, paving the way for the completion of the Preliminary Feasibility Study ("PFS") in 2022.

·    Total Mineral Resource (Indicated and Inferred) reporting to the Open-Pit Scenario have increased from 0.1 Mt to 8.4 Mt, raising the possibility of an initial open-pit mining operation and a lower start-up capital requirement.

·    The Hawiah deposit remains largely open at depth and drilling programmes are commencing in January 2022 with a view to further increasing the Hawiah Mineral Resource, raising the likelihood of further increases to the MRE in 2022.

Harry Anagnostaras-Adams, Executive Chairman of KEFI, commented:

"The updated Mineral Resource Estimate for the Hawiah Copper-Gold Project achieves our key objectives: a tonnage increase of approximately 30% and a slightly higher overall increase in metal content due to overall improved grades, plus 10 million tonnes of the total of 25 million tonnes is now classified as an Indicated Mineral Resource, facilitating the estimation and reporting of initial Ore Reserves as part of the Preliminary Feasibility Study for potential development.

"In addition, we are also pleased to report that the Mineral Resource reporting to the Open-Pit Scenario have increased from the 0.1 Mt reported in 2020 to a total of 8.4 Mt at 0.93% copper 0.72% zinc, 0.74 g/t gold and 10.05 g/t silver. This presents as a clear opportunity for lower cost development during the early years of the Project, further strengthening the economic case.

"KEFI now has a platform of three advanced projects for development in the next few years: the Tulu Kapi Gold Project in Ethiopia which is development ready for when security and other normal conditions precedent to finance closing are satisfied; the now larger Hawiah Copper-Gold Project in Saudi Arabia; and the Jibal Qutman Gold project, also in Saudi Arabia. The Hawiah work programme will also incorporate the previously announced works that will start at the proximal Al Godeyer licence granted to G&M in December 2021. This could also be a significant potential contributor.

"We are very pleased with the updated Hawiah MRE and the priorities for the field work in Saudi Arabia will be determined this month and then commenced immediately."

Background

Following the commencement of major exploration works at the Hawiah Copper-Gold Project ("Hawiah") in early 2019, KEFI announced in August 2020 a maiden MRE of 19.3 Mt at 0.87% copper, 0.81% zinc, 0.56 g/t gold and 10.25 g/t silver.

Diamond drilling has since continued with an additional 29,892m completed, bringing the Project total to 41,841m. This latest drilling had three main objectives:

-      Upgrade existing resources in key areas of the deposit to Indicated category classification for use in the PFS for potential development;

-      Expand the known resource areas to increase the global tonnage; and

-      Increase drilling density within the copper-rich Transition Zone to demonstrate grade continuity and allow for better evaluation of an open-pit scenario.

Following the conclusion of the 2021 drilling programme, G&M appointed SRK Consulting (UK) Ltd ("SRK") as the Independent Consultants and Competent Person for the preparation of the updated MRE for the Hawiah Project. This MRE is reported in accordance with the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves, The JORC Code, 2012 Edition ("JORC Code 2012"). 

The G&M geological team have been pleased with the results of the programmes, having achieved all its objectives and with the deposit remaining open are confident that despite already presenting as a robust multi-commodity deposit, the Hawiah deposit has additional potential for further expansion.

Work programmes including reverse-circulation and diamond drilling are now being finalised to help define additional near surface material to expand the MRE and to finalise the PFS in 2022. These programmes are alongside the exploration commencing in January 2022 at the recently granted proximal Al Godeyer Exploration Licence, which is also very prospective for volcanic massive sulphide ("VMS") mineralisation.

Updated Hawiah MRE

The updated MRE for the Hawiah deposit is detailed in Table 1 below and now the total stands at:

-      24.9 Mt at 0.90% copper, 0.85% zinc, 0.62 g/t gold and 9.81 g/t silver.

Resources are classified as:

-      Indicated -  10.9 Mt at 0.96% copper, 0.86% zinc, 0.64 g/t gold and 9.98 g/t silver

-      Inferred -    14.0 Mt at 0.85% copper, 0.83% zinc, 0.61 g/t gold and 9.67 g/t silver 

Based on this resource the Hawiah Project is estimated to contain a total of 223,000 tonnes or 491 million lbs of copper, 210,000 tonnes or 463 million lbs of zinc, 497,000 gold ounces and 7.84 million silver ounces.

Table 1 : SRK Mineral Resource Statement for the Hawiah Project,
Effective Date 16 December 2021 (see notes 1,2,3,4,5,6,7)

Notes on SRK Mineral Resource statement:

(1) Mineral Resources are not Ore Reserves and do not have demonstrated economic viability.

(2) All figures are rounded to reflect the relative accuracy of the estimate and have been used to derive sub-totals, totals and weighted averages. Such calculations inherently involve a degree of rounding and consequently introduce a margin of error. Where these occur, SRK does not consider them to be material.

(3) G&M is a joint venture partnership between ARTAR and KEFI. The Exploration Licence is held by ARTAR, under the terms of the G&M Joint Venture agreement. ARTAR currently has a 68% share of the Project, with the remainder (31.2%) owned by KEFI, where KEFI is the operating partner. The MRE is given on 100% basis.

(4) The standard adopted in respect of the reporting of Mineral Resources for the Project is in accordance with the guidelines of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code).

(5) SRK reasonably expects portions of the Hawiah deposit to be amenable to both underground and open-pit mining methods:

a. Open pit Mineral Resources include the oxide, transition and fresh material/domains, reported within an optimised open-pit shell and reported based on a Mineral Resource Net Smelter Return (NSR) cut-off of USD12/t for oxide and USD20/t for transition and fresh. Open-pit slope angles within the oxide were defined from geotechnical parameters provided by G&M and their Advisors and set to 43° in the oxide, 46° in the transition and 52° in the fresh. A revenue factor (RF) of 0.8 of the Mineral Resource commodity prices was used for selecting the final MRE open-pit shell used for reporting, as this is likely to be closer (compared with RF1.0) to the potential Ore Reserve-case pit design that will be developed as part of G&M's PFS study. The Mineral Resource is not sensitive to reporting by mining methodology.

b. Underground Mineral Resources are constrained to the transition and fresh domains, reported from within an underground reporting volume derived from underground stope optimisation wireframes (with 2m minimum mining width, and appropriate stope dimensions) and a NSR cut-off which considers mining, processing and G&A costs and 15% total dilution, totalling USD54/t for both transition and fresh material. Oxide material is currently excluded from the underground Mineral Resource reporting due to it being close to surface, its highly-weathered nature and associated uncertainty with respect to geotechnical stability during underground mining.

(6) The Mineral Resource NSR cut-off calculation has been determined based on metal price forecasts*, metallurgical testwork results and assumptions **, mining costs, processing costs, general and administrative (G&A) costs, and other NSR factors.  The final Mineral Resource NSR calculation is based on average assumptions for the deposit and applied using the following formulae:

a. Mineral Resource NSR (USD) for oxide material = (CU_PCT*0) + (ZN_PCT*0) + (AU_PPM*43.6528) + (AG_PPM*0.1217)

b. Mineral Resource NSR (USD) for transition and fresh material = (CU_PCT*71.9407) + (ZN_PCT*14.4408) + (AU_PPM*41.7501) + (AG_PPM*0.6582)

* Metal price forecasts (with appropriate uplift for assessing Mineral Resources) considered for the calculation of Mineral Resource NSR (USD): Gold (USD1,820/oz), Silver (USD26/oz), Copper (USD9,200/t), Zinc (USD3,000/t).

** Resource NSR cut-off calculations assume average metallurgical recoveries of  Copper (0%), Zinc (0%), Gold (75%), Silver (15%) for oxide, and Copper (92%), Zinc (71%), Gold (74%), Silver (84%)  for transition and fresh (sulphide) material.

(7) Initial metallurgical testwork has been completed for the transitional and fresh (sulphide) mineralisation at Hawiah, comprising flotation and cyanide leach methods. No metallurgical testwork results are available for the oxide mineralisation; however, metallurgical parameters have been approximated based on similar deposit types/styles located within Saudi Arabia and SRK's experience. Once additional testwork is completed, if the metallurgical recovery results change significantly from the current values, this would impact the parameters used to report the Mineral Resource, which, in turn, could also impact the tonnages and grades considered to have 'reasonable prospects for eventual economic extraction' for reporting in the Mineral Resource Statement.

Mineral Resource Estimation comparison and future expansion

The updated MRE represents a significant increase to the tonnage from 19.3 Mt to 24.9 Mt, an increase in copper and zinc grades from 0.87% Cu to 0.90% Cu and from 0.81% Zn to 0.85% Zn, an increase in gold grade from 0.56 g/t Au to 0.62 g/t Au and a reduction in silver grade from 10.3 g/t Ag to 9.8 g/t Ag (Table 2) .

Table 2 - 2020 MRE and Updated MRE comparison - Grade and Tonnage.

The additional resource tonnage is largely driven by:

-      expansion of the Camp Lode at depth

-      expansion of Crossroads Extension at depth

-     inclusion of a greater portion of the oxide material based on updated optimisation parameters used to generate the open-pit Resource open-pit shell

As predicted by the geological model, the depth extension of the Camp Lode portion of the orebody has an elevated copper grade, on average 1.2% Cu, making it the highest copper grade area outside of the copper enriched transition zones. The final and deepest drillhole into the mineralisation within this area (HWD 092) intersected 5.45m (estimated true width of 4.4m) at approximately 1.6% copper, demonstrating that this high-grade area of the Hawiah deposit remains open at depth (down plunge) in the Camp Lode.

Whilst the lower limits of the Crossroads Extension present with a lower average copper grade, when combined with the zinc, gold and silver grades, this results in the majority of the additional mineralisation defined in this area of the Hawiah deposit reporting to the underground Mineral Resource reported under the parameters of the resource estimation model (and underground stope optimisation), again demonstrating the potential for expansion in this area.

The early phases of exploration in 2022 will focus on resource definition within the Central Zone portion of the orebody (see Figure 1 in Appendix B), where only limited drilling has currently taken place, as well as resource classification upgrade drilling within the oxide portions of the deposit to aid with the open-pit study as part of the PFS.

Open-Pit Scenario

G&M is also pleased to report that the Mineral Resource reporting to the Open-Pit Scenario have been expanded from the previous 0.1 Mt reported in 2020 to a total of 8.4 Mt at 0.93% copper 0.72% zinc, 0.74 g/t gold and 10.05 g/t silver (see Figure 2 in Appendix B).

This presents as a clear opportunity for lower cost development during the early years of the project, further strengthening the economic case. This Open-Pit Scenario will be fully evaluated during the PFS.  Drilling programmes are set to start in January 2022 to increase drilling density in the areas of the Inferred Resource that report to the Open-Pit Scenario.

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

Enquiries

Competent Person Statement

The information in this announcement that relates to Mineral Resources is based on information reviewed and compiled by a team of consultants from SRK, overseen by Mr Mark Campodonic who is a Member with Chartered Professional Status (Geology) of the Australian Institute of Mining and Metallurgy ("AusIMM"). Mr Campodonic is a full-time employee of SRK and is the Competent Person for this Mineral Resource estimate. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Campodonic consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to exploration results is based on information compiled by Mr Tomos Bryan, Exploration Manager G&M. Mr Bryan is a member of the AusIMM. Mr Bryan is a geologist with sufficient relevant experience for Company reporting to qualify as a Competent Person as defined in the JORC Code 2012. Mr Bryan consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears.

Notes to Editor

KEFI Gold and Copper plc

KEFI is focused primarily on the development of the Tulu Kapi Gold Project in Ethiopia and its pipeline of highly prospective exploration projects in the Arabian-Nubian Shield. KEFI targets that production at Tulu Kapi will generate cash flows for capital repayments, further exploration and dividends to shareholders.

KEFI Gold and Copper in Ethiopia

Ethiopia is currently undergoing a remarkable transformation both politically and economically.

The Tulu Kapi gold project in western Ethiopia is being progressed towards development, following a grant of a Mining Licence in April 2015.

The Company has now refined contractual terms for project construction and operation. Estimates include open pit gold production of c. 140,000oz pa for a 7-year period. All-in Sustaining Costs (including operating, sustaining capital and closure but not including leasing and other financing charges) remain c. US$800/oz. Tulu Kapi's Ore Reserve estimate totals 15.4Mt at 2.1g/t gold, containing 1.1Moz.

All aspects of the Tulu Kapi (open pit) gold project have been reported in compliance with the JORC Code (2012) and subjected to reviews by appropriate independent experts.

A Preliminary Economic Assessment has been published that indicates the economic attractiveness of mining the underground deposit adjacent to the Tulu Kapi open pit, after the start-up of the open pit and after positive cash flows have begun to repay project debts. An area of over 1,000 square kilometres adjacent to Tulu Kapi has been reserved for exploration by KEFI upon commencement of development, with a view to adding satellite deposits to development and production plans.

KEFI Gold and Copper in the Kingdom of Saudi Arabia

In 2009, KEFI formed Gold & Minerals Limited ("G&M") in Saudi Arabia with local Saudi partner, ARTAR, to explore for gold and associated metals in the Arabian-Nubian Shield. KEFI has a 31.2% interest in G&M and is the operating partner.

ARTAR, on behalf of G&M, holds over 16 Exploration Licence ("EL") applications currently subject to approval from the various ministries as required under the new Mining Law. ELs are renewable for up to fifteen years and bestow the exclusive right to explore and to obtain a 30-year exploitation (mining) lease within the area.

The Kingdom of Saudi Arabia has announced policies to encourage mineral exploration and development, and KEFI Minerals supports this priority by serving as the technical partner within G&M. ARTAR also serves this government policy as the major partner in G&M, which is one of the early movers in the modern resurgence of the Kingdom's minerals sector.

Background - Hawiah VMS deposit

The Hawiah deposit is located within the Wadi Bidah Mineral District ("WBMD") in the southwest of the Arabian Shield. The WBMD is a 120-kilometre-long belt which hosts over 20 Volcanic Massive Sulphide ("VMS") known occurrences and historic workings for copper and gold.

G&M commenced drilling at Hawiah in September 2019 and quickly confirmed that large-scale VMS style of mineralisation underlies the gossanous ridgeline at surface.

A total of 193 diamond drillholes have led to the definition of the following three copper-zinc-gold-silver massive sulphide lodes that remain largely open at depth (see Figure 3 in Appendix B):

·    The deepest massive sulphide intersection at the Camp Lode is at a vertical depth of 590m where 4.4m true width of massive sulphide was intersected, this extends the total plunging strike length of mineralisation to 1.2km from the surface, with mineralisation remaining open. The average true width of the 'Camp Lode' is 7m with the widest intersection of 20m found at a depth of 90m;

·    The 'Crossroads Lodes': 1.1km long, with an average width of 5m with the widest intersection being 10m true width; and

·    The 'Crossroads Extension Lode': 0.7km long, with an average width of 5m with the widest intersection being 13m true width. This lode has been explored to a maximum vertical depth of 390m where 5.4m of massive sulphide was intersected, open at depth.

Drilling spans over 5 kilometres of strike length at a drill spacing on the Camp and Crossroads Lodes at approximately 40-60m within areas reporting to Indicated classification and 120-140m for areas reporting to Inferred classification.

Drilling within the Central Area is limited and yet to be fully defined - as such only the oxide potions of this area qualify for Inferred classification.

Summary of Resource Estimate Parameters and Reporting Criteria

In accordance with the JORC Code (2012 Edition), a summary of the material information used to estimate the Mineral Resource is detailed below (for further information please refer to Table 1 in Appendix C).

Geology and Geological Interpretation

The Hawiah VMS deposit is located on the eastern limb of a regional-scale antiform in within the locally know, 'Group 2' mafic volcanics of the Wadi Bidah Mineral Belt.

The Hawiah deposit forms a prominent north-south trending ridgeline, exposed over a total length of approximately 4,500m with a thickness that typically varies from 1-15m. The ridge has been interpreted by G&M as the modern-day expression of the original VMS palaeohorizon. The rock package comprises a suite of gossanous ex-massive sulphides, chert breccias, banded ironstones and intermediate volcanic breccias. The deposit has been subject to varying degrees of supergene alteration as a result of groundwater interactions.

The deposit comprises of three main weathering/alteration domains; oxide, transitional and fresh, within which different resulting facies are described. The oxide domain typically shows supergene gold enrichment, while large portions of the transitional domain shows copper enrichment. The fresh mineralised domain appears to be a dominantly pyritic stratiform massive sulphide body.

Sampling Techniques and Hole Spacing

A total of 193 diamond drillholes (41,841) and 53 trenches (1,622m) have been used for this Mineral Resource Estimate. Drillhole spacing is typically 40-60m (Indicated classification) and 120-140m (Inferred classification).

Drillholes were logged for a combination of geological and geotechnical attributes.  The core has been photographed and measured for RQD and core recovery. 

Sampling and Sub-Sampling Techniques

Diamond drilling and surface trenching was used to obtain sample intervals that typically range from 0.3-3m for drilling and 1-3m for trenching.

Whole core was split using a core saw by G&M personnel and then submitted for preparation at ALS Jeddah, during which material was crushed to 2mm, pulverised to ~75µm, with 250g split sent for analysis. The sample preparation procedures used for trench samples is consistent with the drillcore samples.

Sampling Analysis Method

Samples have undergone analysis at the ALS Laboratory, located in Jeddah., Saudi Arabia.

-      Gold - Fire assay digest with AAS instrumentation

-      Copper, Zinc, Silver: Four acid digest ICP-AES

Estimation Methodology

In summary, for this Mineral Resource Estimate, the following approach has been utilised:

•             modelling of the mineralised lode and weathering domains in 3D, in conjunction with the G&M geological team;

•             composited the sample data to 2m intervals;

•             applied high grade caps per estimation domain from log histograms;

•             undertaken geostatistical analyses to determine appropriate interpolation parameters;

•             created a block model with parent block dimensions of  2 x 25 x 25 m, (sub-blocked to a minimum of 0.5 x 1.5 x 3.0 m);

•             interpolated Cu, Zn, Au and Ag grade into the block model using ordinary kriging (or IDW where adequate variogram models where not possible);

•             assigned average or lithology-weighted average density values by weathering domain; and

•             visually and statistically validated the estimated block grades relative to the original sample results.

Classification Criteria

The Hawiah resource has been classified in the Inferred and Indicated Mineral Resource classification category, as defined by JORC 2012.

Mineral Resource Statement Parameters and Cut-off Grade

SRK has applied basic economic considerations based on initial metallurgical testwork results and assumptions provided by the Company, similar deposit types located within Saudi Arabia and SRK's experience to determine which portion of the block model has reasonable prospects for eventual economic extraction by underground and open-pit mining methods.

To achieve this, the Mineral Resource has been subject to an underground floating stope optimisation and open-pit optimisation studies, based on long-term metal price forecasts (with appropriate uplift to reflect potential for assessing Mineral Resources) for copper, zinc, gold and silver, to assist in determining the material with potential for underground and open pit mining and reporting above a suitable Resource Net Smelter Return ("NSR") USD/t cut-off value ("Resource NSR").

The Resource NSR cut-off calculation has been determined based on metal price forecasts, initial metallurgical recovery results and assumptions, mining costs, processing costs, general and administrative (G&A) costs, and other NSR factors. The final Resource NSR value calculation is based on average assumptions for the deposit and applied to the block model using the following formulae:

Resource NSR (USD) value for oxide material = (CU_PCT*0) + (ZN_PCT*0) + (AU_PPM*43.6528) + (AG_PPM*0.1217) 

Resource NSR (USD) value for transition and fresh material = (CU_PCT*71.9407) + (ZN_PCT*14.4408) + (AU_PPM*41.7501) + (AG_PPM*0.6582) 

The cut-off values determined for reporting the Mineral Resource on a Resource NSR USD/t basis, are given below and were based on the technical and economic inputs presented in Table 3 below:

-      USD12/t for open pit material reported from within the oxide mineralisation domain;

-      USD20/t for open pit material reported from within the transition and fresh mineralisation domains; and

-      USD54/t for underground material reported from within the transition and fresh mineralisation domains.

Table 3 - Summary of key assumptions for conceptual underground stope optimisation, open pit optimisation and cut-off grade calculation

Mining and Metallurgical Methods and Parameters

Initial metallurgical testwork has been completed for the transitional and fresh (sulphide) mineralisation at Hawiah, comprising flotation and cyanide leach methods. No metallurgical testwork results are available for the oxide mineralisation; however, metallurgical parameters have been approximated based on similar deposit types/styles located within Saudi Arabia and SRK's experience. Once testwork is completed, if the metallurgical recovery results change significantly from the current approximated values, this would impact the parameters used to report the Mineral Resource, which, in turn, could also impact the tonnages and grades considered to have 'reasonable prospects for eventual economic extraction' for reporting in the Mineral Resource Statement.

Appendix A - Glossary of Technical Terms

Appendix B - Diagrams

The Appendix B diagrams may be accessed via the following link

http://www.rns-pdf.londonstockexchange.com/rns/5683X_1-2022-1-5.pdf