KEFI Minerals plc has finalised plans to expand the projected production rate at the Tulu Kapi gold project in Ethiopia.
The average annual gold production in the first three years is now estimated to be 145,000 ounces per year.
READ: KEFI gets provisional exploration go-ahead at Tulu Kapi
Payback will be in three years, assuming a gold price of US$1,250.
The latest estimates build in the impact of the planned finance structure, reflecting the specifics of the Heads of Terms signed with infrastructure specialist Oryx in July.
At that point, Oryx committed to finding US$135mln via bonds to be put into a special purpose vehicle on the assumption that the project could be loaded more to the front-end.
READ: KEFI Minerals PLC updates on quarterly progress
Accordingly, the size of the plant now being planned has an expanded capacity of between 1.9mln and 2.1mln tonnes per annum, depending on the hardness of the ore. The additional cost will be offset by other savings and by an offer from Oryx to expand the facility on offer.
In a note to clients, analysts at Beaufort Securities said: “Tulu Kapi has been optimised to maximise KEFI shareholder returns (both existing and new), for quick payback, but also to exploit satellite gold deposits.
“Obviously it is no coincidence that KEFI announced a large scale exploration programme last week. These are very attractive financial returns, especially given KEFI's current market value and modest equity capital requirements. We reiterate our Speculative Buy recommendation.”
In afternoon trading, KEFI shares were 0.6%, or 0.02p higher at 4.50p.
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