In its quarterly update, released today, KEFI Minerals PLC (LON:KEFI) announced that its funding partner, Oryx, is actively implementing finance closing (scheduled this quarter) and has also agreed to expand its proposed finance facility for Tulu Kapi from US$135m to US$140m to allow an increase in ore processing capacity from 1.5-1.7Mtpa to 1.9-2.1Mtpa (depending on ore hardness). This will take plant capacity back to that proposed in Nyota’s 2012 definitive feasibility study – albeit at a reduced capital cost.
Creates flexibility while capex cost mitigated
Increasing capacity will bring production and cash-flows forward by mitigating the build-up of ore stockpiles that would otherwise exceed two years of production. It will also allow faster mining of the pit (even to the point of bulk mining when appropriate) and create flexibility for the development of either satellite deposits and/or the proposed underground mine at Tulu Kapi. As such, the expansion provides more upside leverage as well as more protection on the downside. In addition to being financed by Oryx, the increase in capital required to fund the capacity expansion will be partially offset by savings in other aspects of the construction budget, such as converting KEFI’s commercial agreement with Lycopodium from an engineering, procurement and construction (EPC) contract to an engineering, procurement, construction and management (EPCM) one.
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