9 January 2023

KEFI Gold and Copper plc

("KEFI" or the "Company")

Hawiah Mineral Resource increased by 16% to 29 million tonnes

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 upgrade 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 Company Limited ("GMCO").

Highlights

·    Hawiah Mineral Resource Estimate has increased by 4.1 million tonnes ("Mt") to 29.0 Mt at 0.89% copper, 0.94% zinc, 0.67 g/t gold and 10.1 g/t silver, representing a tonnage increase of 16%. Total contained metal is now:

o  258,000 tonnes of copper (up 16% from 223,000 tonnes);

o  272,000 tonnes of zinc (up 30% from 210,000 tonnes);

o  620,000 ounces of gold (up 25% from 497,000 ounces); and

o  9.4 million ounces of silver (up 20% from 7.8 million ounces).

·    Indicated Resource increased to 12.4Mt (up 14% from 10.9Mt), which now includes 1.2Mt of oxide material (previously all Inferred) containing 80,000 ounces of gold.

·    Total Indicated and Inferred Resources reporting to the Open-Pit Scenario have increased to 11.1Mt (up 32% from 8.4Mt), reaffirming the potential for an initial open-pit mining operation and a lower start-up capital requirement.

·    Drilling commencing in Q2 2023 is aimed at extending planned mine life by further increasing the Hawiah Mineral Resource and converting more Inferred Resources to the Indicated category.

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

"The updated Mineral Resource Estimate for the Hawiah Copper-Gold Project achieved our key objectives: a tonnage increase of approximately 16%, plus a higher overall increase in metal content due to overall improved grades, plus the increase in the Indicated Resource category, plus the increased open pittable component.

"The Hawiah Preliminary Feasibility Study is progressing well and additional drilling during 2023 is being designed to further increase and upgrade the resource.

"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 advancing to full project launch in light of the improvements in the Ethiopian working environment during the past twelve months and for which a formal update will be announced shortly, the now larger Hawiah Copper-Gold project in Saudi Arabia, and the Jibal Qutman Gold project, also in Saudi Arabia."

Background

Since the commencement of major exploration works at Hawiah in early 2019, KEFI announced a maiden MRE in August 2020 followed by the December 2021 updated MRE of 24.9Mt at a 0.90% copper, 0.85% zinc, 0.62 g/t gold and 9.81 g/t silver.

Diamond and reverse circulation ("RC") drilling have since continued with an additional 7,675m of diamond drilling and 4,845m of RC drilling completed over the past year, bringing the Project total to 58,194m of drilling. Recent drilling had three main objectives:

-      Improve the level of geological control in the upper portion of sparsely explored Central Zone and northern portion of the Camp Lode;

-      Explore the Crossroads Extension Lode and further define the deeper portion of the orebody; and

-      Better define the upper oxide and transition zones and increase the known gold resource.

These objectives have been achieved and with the deposit remaining open at depth, the Hawiah orebody has additional potential for further enhancement and expansion.

GMCO appointed The MSA Group (Pty) Ltd ("MSA") as the Independent Consultants and Competent Person to prepare an updated MRE for Hawiah in accordance with the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves ("JORC Code 2012"). 

Looking forward to 2023, work programmes including reverse-circulation and diamond drilling are being planned to upgrade the classification of current Inferred Resources to the Indicated category for use in the Hawiah Definitive Feasibility Study ("DFS"). These programmes are designed to run in parallel with the maiden MRE for the nearby Al Godeyer deposit which is being scheduled for Q1 2023.

Updated Hawiah MRE

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

-      29.0 Mt at 0.89% copper, 0.94% zinc, 0.67 g/t gold and 10.1 g/t silver.

Resources are classified as:

-      Indicated - Open Pit - 9.2 Mt at 0.88% copper, 0.70% zinc, 0.84 g/t gold and 9.9 g/t silver

-      Indicated - Underground - 3.2 Mt at 0.82% copper, 1.07% zinc, 0.59 g/t gold and 9.5 g/t silver

-      Inferred - Open Pit - 1.8 Mt at 0.99% copper, 1.02% zinc, 0.67 g/t gold and 12.4 g/t silver

-      Inferred - Underground - 14.7 Mt at 0.90% copper, 1.05% zinc, 0.58 g/t gold and 10.1 g/t silver

Based on this MRE, the Hawiah deposit is estimated to contain a total of 258,000 tonnes or 569 million lbs of copper, 272,000 tonnes or 600 million lbs of zinc, 620,000 gold ounces and 9.4 million silver ounces.

Table 1 : MSA Minerals Resource Statement for Hawiah,
Effective Date 12 December 2022 (see notes 1,2,3,4,5,6,7)

Notes on MSA Resource statement:

(1) koz = one thousand ounces, kt = one thousand metric tonnes, Mt = one million metric tonnes.

(2) All tabulated data have been rounded and as a result minor computational errors may occur.

(3) Mineral Resources, which are not Mineral Reserves, have no demonstrated economic viability.

(4) The Gross Mineral Resource for the Project is reported.

(5) The Mineral Resource is reported in accordance with the guidelines of the 2012 Edition of The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves ('the JORC Code').

(6) A Whittle optimised pit shell was used to report open-pit Mineral Resources and a mineable shape optimisation (MSO) was completed for underground Mineral Resources outside the open-pit shell. The Whittle, MSO and cut-off grades were derived using the following assumed technical parameters:

-      No Oxide and Transition mined underground.

-      Pit slope angle: Fresh 53%, Transition and Oxide: 42%.

-      Dilution included in regularised block model (5 mX by 5 mY by 2.5 mZ) for open-pit

-      A minimum stope width of 2 m, and 10% dilution applied for underground.

-      Concentrator Recovery: Cu 92%, Zn 76%, Au 74%, 83% Ag in fresh domain and Au 84%, 15% Ag in oxide. No recovery of zinc and copper in oxide.  Metallurgical factors based on initial metallurgical test-work.

-      Cost and revenue assumptions:

o  Metal Price: Cu 9350 USD/t, Zn 3300 USD/t, Au 1820 USD/oz, Ag 26 USD/oz.

o  Smelter recovery/payability: Cu concentrate - Cu 95.5%, Au 90%, Ag 90%. Zn concentrate - Zn 84.9%. Au Dore - Au 99.5%, Ag 99.6%.

o  Total mining cost: open pit oxide 2.2 USD/t, open pit transition and fresh 2.4 USD/t, underground 30.0 USD/t. Cost adjustment for open-pit depth USD0.004/ vertical m.

o  Total Processing cost: oxide 15.4 USD/t, transition and fresh 19.5 USD/t.

o  G&A: 5.6 USD/t ore.

(7) A net smelter return (NSR) calculation was carried out by G&M that was reviewed and accepted as reasonable by MSA. The cut-off grade was applied on a NSR basis: underground fresh ore 49.5 USD/t, open-pit transition and fresh ore 21.9 USD/t, open-pit oxide ore 17.6 USD/t. NSR was calculated for each block model cell using the following formulae:

Oxide = (Cu %*0)+(Zn%*0)+(Au g/t 48.8912 )+(Ag g/t*0.1217)

Transition and Fresh = (Cu %*72.6915)+(Zn%*16.4965)+(Au g/t *41.767)+(Ag g/t*0.6579)

Mineral Resource Estimation comparison and future expansion

The updated MRE represents a significant increase in tonnage from 24.9Mt to 29.0Mt, a small decrease in copper grades from 0.90% to 0.89%, with an increase in zinc grades from 0.85% to 0.94% along with an increase in gold and silver grades from 0.62 g/t gold to 0.67 g/t gold and from 9.81 g/t silver to 10.1 g/t silver (Table 2) .

Table 2 - 2021 MRE and Updated MRE comparison - Grade and Tonnage.

The additional resource tonnage is largely driven by:

-      increased density of the Oxide Zone from 1.7g/cc to 2.32g/cc;

-      expansion of Crossroads Extension Lode at depth; and

-      inclusion of a greater portion of the model across all domains due to increased drill density and confidence.

The increase in the Oxide Zone resources from 0.7Mt to 1.2Mt (Inferred to Indicated classification) and contained gold from 35koz to 80koz. This has been due to the increased drilling density within this domain and improved recoveries obtained by switching the sampling method from diamond to reverse circulation drilling. This drilling, running in combination with a deep trenching programme allowed for improved understanding of density characteristics of the oxide domain. The average oxide gold grade has also increased from 1.49g/t to 2.1g/t, representing a 41% increase.

As highlighted in the 2022 MRE, while the limits of the Crossroads Extension contained lower than average copper grade, the zinc, gold and silver grades result in all additional mineralisation defined in this area of the Hawiah deposit reporting to the underground resource estimate. As predicted by the geological model, drilling this year has shown the Crossroads Extension portion of the orebody has a higher average zinc and gold grades with the final and deepest drillhole into this area (HWD 201) intersected 8.8m (estimated true width of 6.2m) at 2.9% zinc and 0.79g/t gold, demonstrating that this high-grade area of the Hawiah deposit remains open at depth.

The early phases of exploration in 2023 will focus on resource classification upgrade drilling throughout the deposit and exploration drilling in deeper areas of the Crossroads Extension. The classification upgrade will then feed into the DFS.

Open-Pit Scenario

GMCO is also pleased to report that the resources reporting to the Open-Pit Scenario have been expanded from the previous 8.4Mt reported in 2021 to a total of 11.1Mt at 0.90% copper 0.75% zinc, 0.81 g/t gold and 10.30 g/t silver (see Figure 2 in Appendix C).

This Hawiah deposit continues to demonstrate a robust case for a lower cost open-pit development during the early years of the Project, further strengthening the economic case. This Open-Pit Scenario will be fully evaluated during the DFS which will include the upgraded oxide resource and the results of the 2023 drilling programmes. 

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 Hawiah Mineral Resource estimate was completed by Mr. Jeremy Charles Witley (BSc Hons, MSc (Eng.)) who is a geologist with 34 years' experience in base and precious metals exploration and mining as well as Mineral Resource evaluation and reporting. He is a Principal Mineral Resource Consultant for The MSA Group (an independent consulting company). He is registered with the South African Council for Natural Scientific Professions ("SACNASP"), is a Fellow of the Geological Society of South Africa ("GSSA") and a Fellow of the Professional Society of Independent Experts of the Subsurface Resources ("PONEN"), Kazakhstan. Mr. Witley has the appropriate relevant qualifications and experience to be considered a "Competent Person" as defined by JORC (2012) for the style and type of mineralisation and activity being undertaken.

The information in this announcement that relates to exploration results is based on information compiled by Mr Tomos Bryan, Exploration Manager for 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.

APPENDIX A

Additional Background information on the 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.

GMCO 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 213 diamond drillholes, 114 reverse circulation drillholes and 57 trenches have led to the definition of the following three copper-zinc-gold-silver massive sulphide lodes that remain open at depth (see Figure 3 in Appendix C):

·    Camp Lode: 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;

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

·    Crossroads Extension Lode: 0.7km long at surface, with a total plunging strike length of mineralisation to 1.3km to surface. The average width of 4.2m with the widest intersection being 13m true width. This lode has been explored to a maximum vertical depth of 500m where 6.2m of massive sulphide was intersected at 2.9% zinc and 0.79g/t gold.

Drilling spans over 5km 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 has primarily been focused on near surface Oxide and Transition domains and is limited at depth.

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 D).

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 varies from 1-20m. The ridge has been interpreted by GMCO 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 four weathering/alteration domains; oxide, oxide/transitional, 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 213 diamond drillholes (49,593), 114 reverse circulation drillholes (4,845) and 54 trenches (1,649m) have been used for this Mineral Resource Estimate. Drillhole spacing in the Oxide and Transition is typically 50m (Indicated classification) and 100m (Inferred classification). Spacing within the Fresh domain is typically 40-60 (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, 1-3m for reverse circulation drilling and trenching.

Whole diamond core was split using a core saw by GMCO 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 reverse circulation and trench samples is consistent with the drillcore samples.

The mineralised interval for all sample types was continuously sampled from hangingwall to footwall, which included samples a short distance into the hangingwall and footwall.

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

QAQC

QAQC procedures include:

-      Insertion of CRM standards, certified blanks, and field duplicates at rate of 15%

-      Monthly internal QAQC reporting

-      Regular communication with the laboratory, including periodical lab inspections. 

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 2 m intervals using length and density (assigned by rock type) weighting;

•            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  25 m (strike) x 2 m (across strike) x 10m (dip), sub-blocked to a minimum of 1 m (strike) x 0.5 m (across strike) x 1 m (dip);

•             interpolated Cu, Zn, Au and Ag grade into the block model using ordinary kriging;

•             assigned 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

MSA 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 MSA'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 Mineable shape optimisation (MSO) 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*48.8912) + (AG_PPM*0.1217) 

Resource NSR (USD) value for transition and fresh material = (CU_PCT*72.6915) + (ZN_PCT*16.4965) + (AU_PPM*41.767) + (AG_PPM*0.6579)

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:

-      USD17.6/t for open pit material reported from within the oxide mineralisation domain;

-      USD21.9/t for open pit material reported from within the transition and fresh mineralisation domains; and

-      USD49.5/t for underground material reported from within the 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 test work has been completed for the transitional and fresh (sulphide) and oxide mineralisation at Hawiah. This test work comprised flotation and cyanide leach methods. Further test work is ongoing including Albion amenability and resin in leach testing. 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 B - Glossary of Technical Terms

Appendix C - Diagrams

The Appendix C diagrams may be accessed via the following link http://www.rns-pdf.londonstockexchange.com/rns/0129M_1-2023-1-8.pdf