BUY – 4.2p
- The Company launched detailed planning for the Tulu Kapi Underground Mine to complement open pit operations, currently in construction.
- Updated Tulu Kapi Underground Mine PEA highlights include:
- Mining inventory ~2.4mt 3.3g/t ~250koz (compared to March 2025 assumptions for 1.5mt 4.2g/t ~200koz)
- A lower cut-off grade and higher gold price assumptions (1.45g/t COG, $2,350/oz) account for the larger tonnage and lower in-situ grade
- The mine plan targets a steady-state stoping run rate of c.500ktpa
- Underground ore to be blended with open pit feed via a 20% increase in plant throughput above the ~2.0mtpa nameplate (associated capital costs are factored in)
- ~94% gold recoveries
- $8.1m development capital with maximum cash drawdown during construction and ramp up of ~$10.5m
- Underground estimated to contribute ~237koz in production on top of ~985koz expected from open pit, for a total of ~1.2moz over a 7-8y LOM.
- Combined open pit and underground AISC estimated at ~$1,100-1,300/oz at assumed $3,000-5,000/oz reflecting higher government royalties in Ethiopia (7%).
- Post-tax NPV5 ~$274m and IRR 220%, 9-month payback, $2,350/oz gold price
- Underground development is expected to be funded by open pit FCF.
- Latest Tulu Kapi underground MRE (2015) stands at 1.2mt 5.7g/t 219koz (1.1mt in M&I).
- Drilling from underground also planned to test extensions to high grade mineralisation that has not yet been delineated.
- Proposed underground development timeline:
- Engineering studies completion 4Q27
- Decline development to start post open pit commissioning mid-2028
- Infill and step out drilling from underground, and updated MRE, 2029
- First stope and ramp-up to steady state 2029
- On open pit construction progress, development works are now in month six, with the focus on community resettlement and mobilisation for construction.
- Activities are expected to accelerate with the start of the dry season.
Conclusion: Updated Tulu Kapi Underground Mine PEA results reiterate the attractive economics of a bolt on underground operation blending higher grade feed with Tulu Kapi open pit, currently in construction. The new PEA includes larger tonnage and higher contained ounces, as cut off grades are adjusted following a strong run in gold prices. Capital light and funded with open pit FCF, Tulu Kapi underground development presents a straightforward value accretive proposition (included both in the Company’s and our target Tulu Kapi NPV for the combined open pit/underground development plan). Future works will focus on underground engineering studies and drilling to de-risk the existing mineral inventory, as well as testing potential extensions.
*SP Angel act as Nomad and Broker to KEFI Gold and Copper
Analysts
Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474
John Meyer –John.Meyer@spangel.co.uk – 0203 470 0490
Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484
Sales
Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472
Abigail Wayne –Abigail.Wayne@spangel.co.uk – 0203 470 0534
Rob Rees –Rob.Rees@spangel.co.uk – 0203 470 0535
Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
Prince Frederick House
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*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)
+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
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