Kefi Minerals plc EXPLORATION UPDATE AT JIBAL QUTMAN, SAUDI ARABIA (3021M)

TIDMKEFI

RNS Number : 3021M

Kefi Minerals plc

06 May 2015

6 May 2015

KEFI Minerals plc

("KEFI" or the "Company")

EXPLORATION UPDATE AT JIBAL QUTMAN, Saudi Arabia

Positive Preliminary Economic Assessment based on increase in JORC Mineral Resource and favourable metallurgical heap leach test results

KEFI Minerals (AIM: KEFI), the gold exploration and development company with projects in the Kingdom of Saudi Arabia and the Federal Democratic Republic of Ethiopia, is pleased to announce an expansion of JORC (2012) Compliant Mineral Resources and the early results of metallurgical heap leach testing for its Jibal Qutman project in Saudi Arabia. As with all KEFI's activities in Saudi Arabia, the Jibal Qutman project is part of the Gold and Minerals Joint Venture company ("G&M").

The December 2014 Mineral Resource has been updated and upgraded via introduction of exploration data from activities carried out until end March 2015. The Company is focusing on the possibility of an open cut heap leach operation at Jibal Qutman in order to lower capital requirements and expedite the potential development timetable.

Highlights of Preliminary Economic Assessment

   --     The additional resource is a JORC compliant Indicated and Inferred Resource category 

-- The total Mineral Resource, including the additional November 2014 resource, is 28.4 Mt at 0.80 g/t Au for 733,045 contained gold ounces (previously 22.0 Mt at 0.90 g/t Au for 633,461 contained gold ounces), both at a cut-off grade of 0.2 g/t Au

-- The expansion of Mineral Resource notably includes an oxide resource of 11.1Mt at 0.80 g/t Au for 287,329 contained gold ounces

-- Positive metallurgical heap leach test work results have been received from coarse crush cyanide leach on four of the main oxide deposits, averaging 69% gold recovery over a 5-day leach time. Column leach test work is ongoing and is expected to support the coarse crush results

-- Preliminary pit shells at a price of $1,250/oz Au have been designed on the oxide resource indicating a potential open cut mineable resource of 6.6Mt at 0.95 g/t Au for 201,600 oz Au

-- An internal preliminary assessment using 69% Au recovery and local costs suggests an operating cash cost of $597/oz on a 1.5Mt per annum heap leach mine

Conclusion and Next Steps

   --     These results indicate the economic merit of development 

-- The Company intends to commence a Preliminary Feasibility Study ("PFS") in Q3 2015, which it expects to complete in mid-2016

-- The development of the project would require an investment of approximately $30m in 2017, to be comprised of a local development loan of $22.5m and equity of $7.5m (with KEFI being accountable for 40% of the equity portion)

Jeff Rayner, Exploration Director of KEFI Minerals, commented:

"We are very encouraged by these latest results at our Jibal Qutman project. The metallurgical test work and enlarged oxide resource indicate the economic viability of the development of a low cost heap leach operation that could generate early cash flow to fund our Saudi exploration program. With our Tulu Kapi project in Ethiopia on schedule to commence gold production in 2017 and Jibal Qutman in Saudi Arabia expected to transition to the development phase shortly thereafter, we are well-positioned to benefit from being one of the first companies exploring the enriched Arabian Nubian Shield."

Enquiries

 
 KEFI Minerals plc 
 Harry Anagnostaras-Adams (Executive 
  Chairman)                             [phone] 
 Jeff Rayner (Exploration Director)     [phone] 
 
 SP Angel Corporate Finance 
  LLP (Nominated Adviser) 
                                        [phone] 
 Ewan Leggat, Katy Birkin                0470 
 
 Brandon Hill Capital Ltd (Broker) 
 Oliver Stansfield, Jonathan            [phone] 
  Evans                                  5000 
 
 Luther Pendragon Ltd (Financial 
  PR) 
 Harry Chathli, Claire Norbury, 
  Oli Hibberd                           [phone] 
 

Background:

Metallurgical Test Work

Samples of oxide mineralisation from diamond drill core at 4 of the main Jibal Qutman deposits; Main Zone, West Zone, South Zone and 3K Hill were sent to ALS Metallurgy in Perth, Australia. The samples were crushed, assayed, composited and separated into 4 crush sizes (<50mm, 25mm, 12.5mm and 6.5mm) for each deposit area and subjected to standard cyanide leach bottle roll test work over a 5 day period. Gold recoveries in the <12.5mm and <6.5mm crush sizes ranged from 66.3% to 71.5% with an average of 69.0%.

Column leach test work has been initiated and confirmatory results are expected within two months.

Internal Economic Assessment

Pit optimization studies have been applied to the oxide resources at Jibal Qutman. Initial results show a potential mineable resource in a series of shallow open pits of 6.6Mt at 0.95 g/t Au for an in-situ 201,600 oz.

The following parameters were applied to the preliminary, internal economic assessment, some of which were derived from G&M's 2014 technical study of the potential CIL operation at Jibal Qutman and also from case examples of similar currently operating heap leach mines: mining cost $1.60/t; heap leach processing cost $5.50/t; general and administration $2.00/t; average gold recovery 69%; mining dilution 10% and Au price $1,250/oz.

Based on the Company's preliminary economic assessment of these results, the project now warrants a PFS to confirm the basis for a mine licence application. Results to date indicate gold production 139,000 oz over an initial 4.5 years life of mine, at an average grade of 0.95 g/t Au, Au recovery of 69% and a strip ratio of 2.18. Opex would be in the order of $597/oz. Such a development, if validated by independent studies, approved by the authorities and committed by G&M, would involve an investment of $30m, potentially funded as 75% by local finance institutions with KEFI's 40% share of equity funding being $3m. This potential development would be a source of funding of G&M's regional exploration programs and its timing could be along the lines of completing the technical studies and permitting in 2016/17 and development thereafter.

The Company expects to continue to define additional oxide resources in the licence area and on adjoining licence application areas. Cash flow from the heap leach could fund the addition of a carbon in leach (CIL) circuit for mining and processing of the sulphide mineralisation.

Resource Update

In March 2014, the Company reported a JORC Compliant Resource of 495,194 oz and the resource model was independently verified. A non JORC-Compliant resource upgrade of 633,461 oz was estimated internally and reported by the Company in December 2014.

A new JORC-Compliant resource estimated has been completed by the Company in April 2015. The additional resources are classified as Indicated and Inferred and have been primarily derived from expanding previous deposits along strike and from the new discoveries at Red Hill.

The total JORC (2012) Mineral Resource is now 28.4 Mt at 0.80 g/t Au for 733,045 ounces contained gold.

Geological interpretation and construction of orebody solids, which constrain mineralised intercepts at a 0.2 g/t grade boundary, was performed in Surpac. Block model construction, variography, geostatistics studies and grade estimation were carried out in CAE Studio 3 (Datamine) and Advanced Geostatistics Modules mining software using dynamic anisotropy to align the estimation with the local dip and strike of mineralisation trends.

Top cuts were applied to prevent over estimation and smearing of comparatively high values relative to the dataset. Top cutting was based upon continuity in log probability plots and carried out by individual domain.

The estimate was carried out in a three pass Ordinary Kriging plan, where successive search volumes were 2 and 4 factors larger than the initial search ellipse. Final tonnes and grade reported on the kriged estimate from CAE Studio 3.

 
                      OXIDE RESOURCE                SULPHIDE RESOURCE             OXIDE + SULPHIDE RESOURCE 
    ZONE         TONNES     GRADE     OZ         TONNES     GRADE     OZ          TONNES      GRADE     OZ 
 
     3K        1,607,964    0.99    51,027      2,320,780   0.99    74,139       3,928,745    0.99    125,166 
     SC        2,887,929    0.69    63,775      4,915,937   0.79    125,392      7,803,866    0.75    189,167 
     4K        1,646,603    0.62    32,765      2,156,146   0.50    34,690       3,802,749    0.55    67,454 
    Main       1,452,188    0.89    41,406      1,302,766   0.77    32,323       2,754,954    0.83    73,729 
    West       2,581,090    0.87    72,361      5,282,494   0.86    145,712      7,863,584    0.86    218,073 
  Red Hill      832,564     0.89    23,880      1,300,354   0.79    32,989       2,132,918    0.83    56,869 
 Pyrite Hill    134,308     0.49     2,114       33,980     0.43      471         168,288     0.48     2,585 
 
   TOTALS      11,142,647   0.80    287,329     17312457    0.80    445716      28,455,104    0.80    733,045 
 

Numbers may not add up due to rounding

Visual comparison of composite sample grade and block grade were conducted in cross section and in plan. Visually the model was considered to spatially reflect the composite grades. Statistical analysis of the block model was carried out for comparison against the composited drill hole data. The validation and checking of the block model confirms that it performs as expected globally and locally in plan and section within the 2015 drill database and structural comparison with surface and trench mapping confirm mineralised zones to outcrop where expected and be the approximate thickness as indicated by the block model.