Kefi Gold and Copper (AIM:KEFI) said it will begin detailed planning for a second mine at its Tulu Kapi project in Ethiopia, following a positive standalone preliminary economic assessment (PEA) for an underground operation.
The AIM-listed gold and copper explorer and developer, focused on the Arabian-Nubian Shield in Ethiopia and Saudi Arabia, has already launched construction of the Tulu Kapi Open Pit Mine, targeting production start-up in mid-2028.
The underground mine would add to that output using existing JORC-compliant mineral resources beneath the open-pit reserves, lifting combined steady-state production to approximately 180,000 ounces of gold annually over 7 to 8 years.
The PEA outlines a preliminary underground mining inventory of 2.38 million tonnes at 3.30 grams per tonne gold, containing around 253,000 ounces, up from the 1.5 million tonnes and 200,000 ounces contemplated in an indicative assessment from March 2025.
The study puts the post-tax net present value at approximately $274.1 million with a 220% internal rate of return and a nine-month payback, on a standalone incremental basis at a $2,350 per ounce gold price.
Pre-production development capital is estimated at $8.09 million, expected to be funded from open-pit operating cash flow with no new equity assumed.
"At Tulu Kapi we are in month six of the development schedule to start production in mid-2028," said Harry Anagnostaras-Adams, Kefi's executive chairman, adding that the ore body "is open and there is potential for large high-grade zones at depth."
Decline development is scheduled to begin as the open pit mine is commissioned, with first stope ore and ramp-up to steady state targeted for 2029.
News Intelligence what this means for the company
Kefi has advanced underground development at Tulu Kapi with a positive PEA showing $274.1 million post-tax NPV and 220% IRR, targeting combined steady-state output of 180,000 oz/year gold across both open-pit and underground operations. The underground resource of 2.38 million tonnes (253,000 oz) is 59% larger than the indicative assessment from March 2025, and pre-production capex of $8.09 million is to be funded from open-pit cash flow with no new equity required—a material de-risking for a company in month six of its development schedule toward mid-2028 production start.
The underground study materially expands Tulu Kapi's reserve base and production profile without requiring additional equity dilution, strengthening the project's cash generation potential and reducing funding risk as construction progresses. However, execution risk remains: the company must deliver the open-pit mine on schedule and generate sufficient operating cash flow to fund the $8.09 million underground development capex while maintaining the 2029 ramp-up timeline.
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