Maiden Hawiah Resource

19 August 2020

KEFI Gold and Copper plc

("KEFI" or the "Company")

Maiden Hawiah Resource

 

KEFI Gold and Copper (AIM: KEFI), the gold exploration and development company with projects in the Federal Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, is pleased to present the maiden Mineral Resource for the Hawiah Project ("Hawiah" or the "Project"), located in Saudi Arabia.

Highlights

·    Maiden Hawiah Inferred Mineral Resource Estimate ("MRE") of 19.3 million tonnes ("Mt") at 0.9% copper, 0.8% zinc, 0.6 g/t gold and 10.3g/t silver

·    Mineralisation remains open at depth

·    High grade zones outside of current Mineral Resource, targeted in next drilling phase

·    Internal Preliminary Economic Assessment ("PEA") targeted for September 2020

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

"This maiden copper-zinc-gold-silver Mineral Resource is consistent with the guidance issued over the past few months and demonstrates the significant scale and quality of the Hawiah deposit.

"Despite a number of challenges brought on by the COVID-19 pandemic, our team has been able to deliver this initial resource less than a year after drilling commenced at Hawiah.

"The Hawiah deposit remains open and further drilling has the potential to result in a larger Mineral Resource in due course. We are particularly keen to test for depth extensions of the identified higher-grade zones.

"We look forward to the outcomes of the internal PEA, expected to be completed in September 2020. Our team is excited to be progressing Hawiah towards potential development and especially when the prices for copper, zinc, gold and silver are all increasing strongly."

KEFI's operations in Saudi Arabia are conducted through its 34% owned joint venture company, Gold and Minerals Co. Limited ("G&M"), where KEFI is the operating partner.

G&M appointed SRK Consulting (UK) Ltd ("SRK") as the independent Consultants and Competent Person for the preparation of the MRE and to undertake an internal PEA study for Hawiah. These studies will facilitate the planning of further exploration drilling and potential development activities at Hawiah.

The maiden MRE for Hawiah totals 19.3Mt at 0.9% copper, 0.8% zinc, 0.6g/t gold and 10.3g/t silver as summarised in the table below, all reported in the Inferred category.

 

Table 1: SRK Mineral Resource Statement for Hawiah, Effective Date 13 July 2020 ^{(1, 2, 3, 4, 5, 6, 7)}

Mineral Resource Category	Material Type	Tonnes (Mt)	Grade				Metal Content
			Cu (%)	Zn (%)	Au (g/t)	Ag (g/t)	Cu (kt)	Zn (kt)	Au (koz)	Ag (koz)
Inferred	Oxide, Open Pit	0.1	0.1	0.03	1.7	3.9	0.1	0.04	7	16
	Transition, Underground	2.0	1.1	0.8	0.7	12.0	21	16	45	763
	Fresh, Underground	17.2	0.9	0.8	0.5	10.1	147	141	297	5,595
	Total	19.3	0.9	0.8	0.6	10.3	168	157	349	6,373

 

Notes:

(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 66% share of the Project, with the remainder (34%) owned by KEFI, where KEFI is the operating partner. The MRE is reported on a 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 underground and open pit mining methods:

a. Open pit Mineral Resources are constrained to the oxide domain, within a Whittle optimised pit and reported based on an Resource Net Smelter Return ("NSR") cut-off which considers processing costs and G&A costs totalling USD12/t for oxide. Pit slope angles within the oxide were defined from geotechnical observations and set to 40°.

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 USD53/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 stability during underground mining.

(6) The Resource NSR cut-off calculation has been determined based on metal price forecasts*, metallurgical recovery assumptions ** based on similar deposit types located within Saudi Arabia and SRK's experience, mining costs, processing costs, general and administrative (G&A) costs, and other NSR factors.  The final Resource NSR calculation is based on average assumptions for the deposit and applied using the following formulae:

a. Resource NSR (USD) for oxide material = (CU_PCT*0)+(ZN_PCT*0)+(AU_PPM*39.5741)+(AG_PPM*0.1157)

b. Resource NSR (USD) for transition and fresh material = (CU_PCT*61.2828)+(ZN_PCT*17.5982)+(AU_PPM*34.9100)+(AG_PPM*0.5058)

* Metal price forecasts (with ~30% uplift for assessing Mineral Resources) considered for the calculation of Resource NSR (USD): Gold (USD1,650/oz), Silver (USD24.8/oz), Copper (USD8,450/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 (87%), Zinc (85%), Gold (69%), Silver (69%)  for transition and fresh (sulphide) material.

(7) No metallurgical testwork has been completed for the Hawiah Project; however, metallurgical parameters have been approximated based on geological observations and petrographic assessment and 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.

 

The MRE is based on 12,027 metres of diamond drilling completed since September 2019 and is reported in accordance with the Australasian Code for the Reporting of Exploration Targets, Mineral Resources and Ore Reserves, The JORC Code (2012).

Trenching, supported by surface diamond drilling have consistently intersected copper-zinc-gold-silver mineralisation contained within massive sulphides over 4 kilometres of strike length. Three distinct zones, or lodes of massive sulphides have been defined to date and are the focus of the MRE.

The Hawiah deposit has only been drill tested to a vertical depth of 350 metres below surface and it remains open at depth. Elevated copper and gold grades have been intersected at depth.   

An internal PEA based on this MRE as guidance for further drilling and project development is planned to be completed in September 2020.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Enquiries

KEFI Gold and Copper plc
Harry Anagnostaras-Adams (Managing Director)	+357 99457843
John Leach (Finance Director)	+357 99208130
SP Angel Corporate Finance LLP (Nominated Adviser and Joint Broker)	+44 (0) 20 3470 0470
Jeff Keating, Soltan Tagiev
Brandon Hill Capital Ltd (Joint Broker)	+44 (0) 20 7936 5200
Oliver Stansfield, Jonathan Evans
IFC Advisory Ltd (Financial PR and IR)
Tim Metcalfe, Florence Chandler	+44 (0) 20 3934 6630

 

Competent Person Statement

The information in this announcement that relates to Mineral Resources is based on information reviewed and compiled 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 and Mr Jeffrey Rayner, respectively Exploration Manager G&M and Exploration Adviser to KEFI, Mr Bryan is a member of the Australasian Institute of Mining and Metallurgy ("AusIMM") and Mr Rayner is a Member of the Australian Institute of Geoscientists ("AIG"). Mr Bryan and Mr Rayner are geologists with sufficient relevant experience for Company reporting to qualify as a Competent Person as defined in the JORC Code 2012. Mr Bryan and Mr Rayner consent 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 34% interest in G&M and is the operating partner.

ARTAR, on behalf of G&M, holds over 16 Exploration Licence (EL) applications pending the introduction of the new Mining Law. ELs are renewable for up to three 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 minerals 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

Hawiah 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 70 diamond drill holes in the first phase drill programme has identified the following three copper-zinc-gold-silver massive sulphide lodes that remain open at depth:

·    The 'Camp Lode': 1.2 kilometres long has an average true width of 7 metres. The lode has been drilled to 300 metres depth, where an intercept of 7.5 metres true width of massive sulphide remains open for resource expansion;

·    The 'Crossroads Lode': 1 kilometre long, with an average true width of 5 metres. This lode has been explored to a maximum vertical depth of only 170 metres where 7 metres of massive sulphide was intersected; and

·    The 'Crossroads Extension Lode': 0.8 kilometres long, with an average true width of 5 metres. This lode has been explored to a maximum vertical depth of 350 metres where 9 metres of massive sulphide was intersected, open at depth.

Drilling spans over 4 kilometres of strike length at a drill spacing on the Camp and Crossroads Lodes at approximately 120 to 140 metres. Only a few short scout holes have been drilled into the Central Area.

Exploration potential remains significant at depth below all areas. The down-dip continuation of Camp Lode is of particular interest with the deepest two holes, HWD_005 returning 1.27% copper over a true width of 9 metres and HWD_059 returning 1.55% copper over a true width of 8.7 metres.

The Crossroads Extension Lode has lower copper grades than the Camp Lode and Crossroads Lode. However, the gold and zinc grades in the Crossroads Extension Lode are higher than the other two lodes. The Crossroads Extension Lode contributes substantial tonnage to the MRE and thus reduces the overall average copper grade in the MRE.

VMS deposits are major sources of copper-lead-zinc-gold-silver ore bodies. Examples of large VMS deposits in the Arabian-Nubian Shield include:

·    Eritrea - Bisha (Nevsun/Zijin) and Asmara (Sichuan Road and Bridge Mining Investment Development) deposits;

·    Sudan - Hassaii (Ariab) deposits; and

·    Saudi Arabia - Jabal Sayid (Barrick and Ma'aden) and Al Masane (Al Kobra Mining) deposits.

The Hawiah EL and surrounding under-explored WBMD are considered to be very prospective for copper-gold VMS deposits.

 

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 the Appendix).

Geology and Geological Interpretation

The Hawiah VMS deposit is located on the eastern limb of a regional-scale antiform in the 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 1-15m. 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 weathering/alteration domains; oxide, transitional and fresh, within which different resulting facies are described. The oxide domain typically shows supergene gold enrichment, while certain parts 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 70 Diamond drillholes (12,027m) and 53 trenches (1,622m) have been used for this Mineral Resource estimate. Drill hole spacing is typically 100 - 140m.

Drill holes 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 2 m 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 5 x 50 x 25 m, (sub-blocked to a minimum of 1 x 5 x 2.5m);

•             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 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 Mineral Resource classification category, as defined by JORC.

Inferred Mineral Resources are reported in the domains that display reasonable to low geological confidence, where estimated blocks are typically within 100-120 m of sample data. These areas require support from targeted infill drilling to improve the estimation quality of the local block grades and geological interpretation before they can be used for long-term mine planning.

Mineral Resource Statement Parameters and Cut-off Grade

SRK has applied basic technical and economic considerations based on 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 (as required by JORC) by both underground and open-pit mining methods.

To achieve this, the Mineral Resource has been subject to a underground stope optimisation and open-pit optimisation study, based on metal price forecasts (with ~30% uplift for assessing Mineral Resources) for Zn, Cu, Au and Ag, to assist with determining the material with potential for underground and open pit mining and reporting above a suitable Resource NSR USD/t cut-off value.

The Resource NSR cut-off calculation has been determined based on metal price forecasts, metallurgical recovery assumptions based on similar deposit types located within Saudi Arabia and SRK's experience, mining costs, processing costs, general and administrative (G&A) costs, and other NSR factors. The final Resource NSR calculation is based on average assumptions for the deposit and applied using the following formulae:

Resource NSR (USD) for oxide material =
(CU_PCT*0) + (ZN_PCT*0) + (AU_PPM*39.5741) + (AG_PPM*0.1157)  

Resource NSR (USD) for transition and fresh material =
(CU_PCT*61.2828) + (ZN_PCT*17.5982) + (AU_PPM*34.9100) + (AG_PPM*0.5058)

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 the table below:

·    USD12/t for open pit material reported from within the oxide mineralisation domain; and,

·    USD53/t for underground material reported from within the transition and fresh mineralisation domains.

 

Parameters	Units	Value
Production Rate
Production Rate - Ore	(mtpa)	1.5 - 2
Geotechnical
Overall Slope Angle (Oxide)	(Deg)	40
Open Pit Mining Factors
Dilution	(%)	Included in regularised Block Model 10x10x5 m
Recovery	(%)	Included in regularised Block Model 10x10x5 m
Underground Mining Factors
Minimum stope dimension	(m)	2m width x 25 m height x 20 m length
Dilution (total)	(%)	15%
Processing (Oxide: Heap Leach)
Recovery - Cu	(%)	0%
Recovery - Zn	(%)	0%
Recovery - Au	(%)	75%
Recovery - Ag	(%)	15%
Processing (Transition and Fresh: Floatation and Cyanide Leach)
Recovery - Cu	(%)	87%
Recovery - Zn	(%)	85%
Recovery - Au	(%)	69%
Recovery - Ag	(%)	69%
Commodity Prices
Cu	(USD/t)	8,450
Zn	(USD/t)	3,000
Au	(USD/oz)	1,650
Ag	(USD/oz)	25
Operating Costs
Open Pit Mining (Oxide)	(USD/t rock)	1.9
Underground Mining (Transition and Fresh)	(USD/t ore)	27
Processing (Oxide: Heap Leach)	(USD/t ore)	6
Processing (Transition and Fresh: Flotation and Cyanide Leach)	(USD/t ore)	13
G&A (incl. corporate, sales/ marketing)	(USD/t ore)	5.6

 

Mining and Metallurgical Methods and Parameters

At present, no metallurgical testwork has been completed for the Hawiah Project; however metallurgical parameters have been approximated based on similar deposit types/ styles located within Saudi Arabia through discussion with SRK. 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

Ag	Silver
AAS	Atomic Absorption Spectroscopy
AIC	All-in Costs
Arabian-Nubian Shield or ANS	The Arabian-Nubian Shield is a large area of Precambrian rocks in various countries surrounding the Red Sea
ARTAR	Abdul Rahman Saad Al Rashid & Sons Company Limited
Au	Gold
Cu	Copper
DFS	Definitive Feasibility Study
g/t	Grams per tonne
Gossan	An iron-bearing weathered product overlying a sulphide deposit
ICP-AES	Inductively Coupled Plasma-Atomic Emission Spectroscopy
IDW	Inverse Distance Weighted
IP	Induced polarisation - a ground-based geophysical survey technique measuring the intensity of an induced electric current, used to identify disseminated sulphide deposits
JORC	Joint Ore Reserves Committee
JORC Code 2012	Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves
Massive sulphide	Rock comprised of more than 40% sulphide minerals
Mt	Million tonnes
Mtpa	Million tonnes per annum
MRE	Mineral Resource Estimate
NSR	Net Smelter Return
oz	Troy ounce of gold
PCT	Percent
PEA	Preliminary Economic Assessment
PFS	Pre-Feasibility Study
PPM	Parts per million
Precambrian	Era of geological time before the Cambrian, from approximately 4,600 to 542 million years ago
VMS deposits	Volcanogenic massive sulphides; refers to massive sulphide deposits formed in a volcanic environment with varying base metals (copper, lead and zinc) often with significant additional gold and silver
Zn	Zinc

 

Appendix B - Diagrams

A number of illustrative diagrams are contained within the appended PDF, accessible via http://www.rns-pdf.londonstockexchange.com/rns/5090W_1-2020-8-18.pdf

 

Appendix C  - JORC Table 1

The Hawiah MRE JORC Table 1 can be accessed as a PDF via http://www.rns-pdf.londonstockexchange.com/rns/5090W_2-2020-8-18.pdf