KEFI Minerals (LSE:KEFI) dipped 3.9pc to 1.44p after announcing a one-month delay at its flagship Tulu Kapi gold mine in Ethiopia.

The business had expected to receive government regulatory consents for the project by the end of December. This is a condition for local partner ANS Mining Share Company to release its first $9m tranche of investment into TKGM, the business in control of Tulu Kapi. As confirmed last October, this will be followed by another payment of between $21-29m later in 2019.

In today’s update, KEFI said the government has now provided numerous formal consents. However, it said there remain several that are still subject to ‘processing formalities’. As a result, the project partners have extended the deadline for receiving all permissions to the end of January.

KEFI said it believes this extension will have a ‘minimal impact’ on Tulu Kapi’s progression. Meanwhile, the company said its partners have reiterated their support for the project's development and financial plan. As well as KEFI and ANS, these associates include the Ethiopian Federal Government.

The business added that the partners have backed a focus on maintaining progress at Tulu Kapi while scheduling regular reviews. They believe this will ensure the project advances safely and securely.

KEFI has been progressing Tulu Kapi towards development since being granted a mining licence in April 2015. Estimates for output at the project include open-pit gold production of c.140,000oz per annum for seven years with an all-in sustaining cost of $800/oz. The project’s ore reserve estimate totals 15.4Mt at 2.1g/t gold, containing 1.1Moz.

In today’s update, the business said it has made further progress at the site over recent weeks. This has included drilling for infrastructure design and land clearing. Meanwhile, the first steps towards a community resettlement program are due to start later this month. An independent reviewer will assess these plans to ensure they meet Equator Principles and the needs of residents.

Finally, KEFI’s managing director Harry Anagnostaras-Adams said the business starts 2019 ‘heartened’ by the current gold price outlook. He is also enthusiastic about the continuing positive transformation of the Ethiopian political situation and level of support from major industry players.

‘We are confident that with this cautious and disciplined strategy, our well-qualified consortium provides an excellent platform to launch our Tulu Kapi Gold Project,’ he added.

When ValueTheMarkets.com spoke to Anagnostaras Adams in October last year, he said Tulu Kapi would enjoy a first-mover advantage in Ethiopia.

He said: ‘The gold sector in Ethiopia is conspicuous by its absence, given that its geology suggests it should be a prolific producer. With that in mind, once we reach production at Tulu Kapi, we will have a first-mover advantage. When we first got the project, it was nearly ready, and we have been working ever since to get it to the starting line. The first step was re-designing the mining and processing plans, which reduced the AISC to $800 from $1000. Then, we secured financing to get the equity requirement down to $50-60m. Last week’s funding gets us to the point where we have these funds and puts us on very steady footing moving forward.’

Author: Daniel Flynn

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