KEFI Gold and Copper (LSE:KEFI) has approved detailed planning for an underground mine at its Tulu Kapi gold project in Ethiopia following positive results from a standalone Preliminary Economic Assessment, adding another potential source of production alongside the open pit development already under way.
The proposed underground operation is designed to utilise existing mineral resources and largely share the processing infrastructure being developed for the open pit, with only minor plant modifications required. Once both operations reach steady state, KEFI is targeting combined production of approximately 180,000 ounces of gold per year from the integrated Tulu Kapi complex.
The updated PEA identifies an underground mining inventory of 2.38 million tonnes grading 3.30 grams per tonne of gold. This is projected to deliver approximately 237,000 ounces of recovered gold, complementing around 985,000 ounces expected from the open pit over an eight-year period.
On a standalone basis, the underground development has an estimated post-tax net present value at a 5% discount rate of approximately US$274 million and an internal rate of return of 220%, based on an assumed gold price of US$2,350 per ounce.
Pre-production capital for the underground mine is estimated at just over US$8 million. KEFI expects this expenditure to be funded from cash flow generated by the open pit operation, potentially allowing the company to expand Tulu Kapi without requiring substantial additional external development capital.
Under the current schedule, construction of the underground decline would begin as the open pit moves through commissioning in mid-2028. Trial underground production is planned during the first year, followed by a ramp-up towards steady-state stoping around 2029.
The underground infrastructure would also provide platforms for additional drilling aimed at testing the deposit’s potential at depth. Successful exploration could support future resource updates and potentially extend the operating life of the wider Tulu Kapi project.
KEFI estimates that the combined open pit and underground operation could achieve all-in sustaining costs of approximately US$1,100 to US$1,300 per ounce at higher gold prices, providing the potential for attractive operating margins.
The company has emphasised that the PEA remains preliminary and that the underground mining inventory has not yet been classified as an Ore Reserve. As a result, the production forecasts and economic assumptions remain subject to further technical work and development milestones.
Advancing the underground plan nevertheless represents an important step in KEFI’s strategy to increase production, extend Tulu Kapi’s economic life and maximise the value of infrastructure already being developed at the project. Further resource growth at depth could provide additional expansion potential as the company progresses towards becoming a larger regional gold producer.
More about KEFI Gold and Copper plc
KEFI Gold and Copper plc is a mineral exploration and development company focused on gold and copper opportunities within the Arabian-Nubian Shield, with principal projects in Ethiopia and Saudi Arabia.
Its flagship Tulu Kapi project in Ethiopia comprises an open pit gold mine and processing facility, with the proposed underground operation offering the potential to increase long-term production while leveraging shared infrastructure.
KEFI’s development strategy focuses on advancing high-value mineral deposits while managing capital requirements through phased investment and, where possible, funding expansion from operating cash flow.
By combining open pit and underground production at Tulu Kapi, the company aims to improve project economics, extend mine life and strengthen its position within the regional gold industry.
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