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KEFI Minerals (LON:KEFI) remains confident of producing gold in 2016 due to rapid progress being made on mining permit applications for both of its projects.
Jeff Rayner, KEFI’s managing director, said Tulu Kapi in Ethiopia is ahead of expectations, while substantial strides have also been made at Jibal Qutman in Saudi Arabia.
Both projects lie on the Arabian Nubian Shield, a stretch of the Earth’s crust that runs from Saudi Arabia on the east of the Red Sea, extends into Egypt and head south into Eritrea, Ethiopia, Somalia and Sudan.
The rocks are similar to those that hold the major gold deposit in Australia and Canada, said Rayner, who added he did not know of any area as potentially prospective that has had so little exploration.
KEFI acquired a 75% interest in Tulu Kapi at the end of 2013 since when it has redrawn the strategy with a target now of processing 1.2mln tonnes per annum (Mtpa) of ore.
Ramp-up is scheduled for 2016 with a target of 80,000-85,000 oz per year and all–in costs of US$700 per ounce.
There is also potential for expanding the open-pit under higher gold price scenarios and for discovering satellite deposits, it added.
For the remainder of 2014, the plan for Tulu Kapi is to update the resource and reserve estimates; complete the definitive feasibility study (DFS); move forward with financing and re-activate the mining licence.
At Jibul Qutman, a pre-feasibility study was completed in March and financial modelling has indicated a profitable carbon-in-leach operation with All-in Costsless than $1,000 per ounce.
Work at the deposit this year focus on further drilling, the submission of a mining licence and the start of work on the DFS.
Rayner added: "Looking ahead, we have entered 2014 in a better position than any previous occasion.
“We are on track this year to complete the Definitive Feasibility Study for Tulu Kapi and re-activation of its mining licence, and the submission of a lining licence application for Jibal Qutman.
There is more certainty over the licence situation in Ethiopia as the DFS by previous owner Nyota had already been reviewed by the mining authorities, he said.
Once the licence is granted, the timetable will be to start construction in 2015 and to commission the mine in late 2016.
In Saudi, the construction timescale would be similar, but there is greater uncertainty over when the licence will be granted said Rayner.
At both prospects there was still plenty of potential to expand, he added, though step-out drilling at Jibul Qutman while at Tulu Kapi there are "lots of exploration targets" around the main licence where previous drilling intersected high grade gold but which has not been followed up.
KEFI posted a loss for 2013 of £2.59mln (£1.73mln) with cash and equivalents of £3.3mln at the year end.