Kefi Gold Regulatory News (KEFI)

6 May 2015

KEFI Minerals plc

("KEFI" or the "Company")

EXPLORATION UPDATE AT JIBAL QUTMAN, Saudi Arabia

Positive Preliminary Economic Assessment based on increase in JORC Mineral Resource and favourable metallurgical heap leach test results

KEFI Minerals (AIM: KEFI), the gold exploration and development company with projects in the Kingdom of Saudi Arabia and the Federal Democratic Republic of Ethiopia, is pleased to announce an expansion of JORC (2012) Compliant Mineral Resources and the early results of metallurgical heap leach testing for its Jibal Qutman project in Saudi Arabia. As with all KEFI's activities in Saudi Arabia, the Jibal Qutman project is part of the Gold and Minerals Joint Venture company ("G&M").

The December 2014 Mineral Resource has been updated and upgraded via introduction of exploration data from activities carried out until end March 2015. The Company is focusing on the possibility of an open cut heap leach operation at Jibal Qutman in order to lower capital requirements and expedite the potential development timetable.

Highlights of Preliminary Economic Assessment

· The additional resource is a JORC compliant Indicated and Inferred Resource category

· The total Mineral Resource, including the additional November 2014 resource, is 28.4 Mt at 0.80 g/t Au for 733,045 contained gold ounces (previously 22.0 Mt at 0.90 g/t Au for 633,461 contained gold ounces), both at a cut-off grade of 0.2 g/t Au

· The expansion of Mineral Resource notably includes an oxide resource of 11.1Mt at 0.80 g/t Au for 287,329 contained gold ounces

· Positive metallurgical heap leach test work results have been received from coarse crush cyanide leach on four of the main oxide deposits, averaging 69% gold recovery over a 5-day leach time. Column leach test work is ongoing and is expected to support the coarse crush results

· Preliminary pit shells at a price of $1,250/oz Au have been designed on the oxide resource indicating a potential open cut mineable resource of 6.6Mt at 0.95 g/t Au for 201,600 oz Au

· An internal preliminary assessment using 69% Au recovery and local costs suggests an operating cash cost of $597/oz on a 1.5Mt per annum heap leach mine

Conclusion and Next Steps

· These results indicate the economic merit of development

· The Company intends to commence a Preliminary Feasibility Study ("PFS") in Q3 2015, which it expects to complete in mid-2016

· The development of the project would require an investment of approximately $30m in 2017, to be comprised of a local development loan of $22.5m and equity of $7.5m (with KEFI being accountable for 40% of the equity portion)

Jeff Rayner, Exploration Director of KEFI Minerals, commented:

"We are very encouraged by these latest results at our Jibal Qutman project. The metallurgical test work and enlarged oxide resource indicate the economic viability of the development of a low cost heap leach operation that could generate early cash flow to fund our Saudi exploration program. With our Tulu Kapi project in Ethiopia on schedule to commence gold production in 2017 and Jibal Qutman in Saudi Arabia expected to transition to the development phase shortly thereafter, we are well-positioned to benefit from being one of the first companies exploring the enriched Arabian Nubian Shield."

Enquiries

Background:

Metallurgical Test Work

Samples of oxide mineralisation from diamond drill core at 4 of the main Jibal Qutman deposits; Main Zone, West Zone, South Zone and 3K Hill were sent to ALS Metallurgy in Perth, Australia. The samples were crushed, assayed, composited and separated into 4 crush sizes (

Column leach test work has been initiated and confirmatory results are expected within two months.

Internal Economic Assessment

Pit optimization studies have been applied to the oxide resources at Jibal Qutman. Initial results show a potential mineable resource in a series of shallow open pits of 6.6Mt at 0.95 g/t Au for an in-situ 201,600 oz.

The following parameters were applied to the preliminary, internal economic assessment, some of which were derived from G&M's 2014 technical study of the potential CIL operation at Jibal Qutman and also from case examples of similar currently operating heap leach mines: mining cost $1.60/t; heap leach processing cost $5.50/t; general and administration $2.00/t; average gold recovery 69%; mining dilution 10% and Au price $1,250/oz.

Based on the Company's preliminary economic assessment of these results, the project now warrants a PFS to confirm the basis for a mine licence application. Results to date indicate gold production 139,000 oz over an initial 4.5 years life of mine, at an average grade of 0.95 g/t Au, Au recovery of 69% and a strip ratio of 2.18. Opex would be in the order of $597/oz. Such a development, if validated by independent studies, approved by the authorities and committed by G&M, would involve an investment of $30m, potentially funded as 75% by local finance institutions with KEFI's 40% share of equity funding being $3m. This potential development would be a source of funding of G&M's regional exploration programs and its timing could be along the lines of completing the technical studies and permitting in 2016/17 and development thereafter. 

The Company expects to continue to define additional oxide resources in the licence area and on adjoining licence application areas. Cash flow from the heap leach could fund the addition of a carbon in leach (CIL) circuit for mining and processing of the sulphide mineralisation.

Resource Update

In March 2014, the Company reported a JORC Compliant Resource of 495,194 oz and the resource model was independently verified. A non JORC-Compliant resource upgrade of 633,461 oz was estimated internally and reported by the Company in December 2014.

A new JORC-Compliant resource estimated has been completed by the Company in April 2015. The additional resources are classified as Indicated and Inferred and have been primarily derived from expanding previous deposits along strike and from the new discoveries at Red Hill.

The total JORC (2012) Mineral Resource is now 28.4 Mt at 0.80 g/t Au for 733,045 ounces contained gold.

Geological interpretation and construction of orebody solids, which constrain mineralised intercepts at a 0.2 g/t grade boundary, was performed in Surpac. Block model construction, variography, geostatistics studies and grade estimation were carried out in CAE Studio 3 (Datamine) and Advanced Geostatistics Modules mining software using dynamic anisotropy to align the estimation with the local dip and strike of mineralisation trends.

Top cuts were applied to prevent over estimation and smearing of comparatively high values relative to the dataset. Top cutting was based upon continuity in log probability plots and carried out by individual domain.

The estimate was carried out in a three pass Ordinary Kriging plan, where successive search volumes were 2 and 4 factors larger than the initial search ellipse. Final tonnes and grade reported on the kriged estimate from CAE Studio 3.

Numbers may not add up due to rounding

Visual comparison of composite sample grade and block grade were conducted in cross section and in plan. Visually the model was considered to spatially reflect the composite grades. Statistical analysis of the block model was carried out for comparison against the composited drill hole data. The validation and checking of the block model confirms that it performs as expected globally and locally in plan and section within the 2015 drill database and structural comparison with surface and trench mapping confirm mineralised zones to outcrop where expected and be the approximate thickness as indicated by the block model.

Resource categories were based on geological mapping, interpretation, model validation, the drilling grid density, surface trenching and observation of the grade and mineralisation continuity.

The central areas of each of the mineralised zones of the deposits show the greatest continuity of mineralisation and structure and the drill hole and trenching spacing in these areas is generally on a 50m by 25m to 50m by 50m grid. KEFI consider this to be relatively well sampled in comparison to other moderate to high nugget gold deposits and provides sufficient coverage to give confidence to the geological interpretation for the reporting of Indicated Mineral Resources; 68% of the total Resource is in the Indicated Resource category.

In peripheral areas, generally along strike of the central zones or down dip of deeper intersections, where the current drill hole and trenching spacing may range from 50m by 50m and rarely up to 50m by 100m KEFI considers the sample spacing to be suitable only of Inferred mineral resources; 32% of the total Resource is in the Inferred Resource category.

Extrapolation beyond 50m, and to a maximum of 100m has been carried out where supported by adjacent drill intercepts along strike or on section, approximately 50% of the total Inferred Resource is in this extrapolation beyond the normal sampling spacing.

Numbers may not add up due to rounding

COMPETENT PERSONS' STATEMENTS

References in this announcement to exploration results, resources, interpretations and prospects have been approved for release by Mr. Jeffrey Rayner. Mr Rayner is a geologist and has more than 25 years' relevant experience in the field of activity concerned. He is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and has reviewed and consented to the inclusion of the material in the form and context in which it appears.

NOTES TO EDITOR

KEFI Minerals plc

KEFI is the operator of two advanced gold development projects within the highly prospective Arabian-Nubian Shield, with an attributable 1.93Moz (95% of Tulu Kapi's 1.72Moz and 40% of Jibal Qutman's 0.73Moz) Au Mineral Resources (JORC 2012) plus significant resource growth potential. KEFI is targeting production at these projects to generate cash flows for further exploration and expansion as warranted, recoupment of development costs and, when appropriate, dividends to shareholders.

Expected milestones for the remainder of 2015 at Tulu Kapi include:

· Independently updated Definitive Feasibility Study for banking purposes

· Formalisation of bank syndicate, agreement of final terms for project finance

· Full development funding and commencement of construction

In addition, during 2015 KEFI anticipates initiating a preliminary feasibility study on the planned heap leach mine at Jibal Qutman and submitting a Mining Licence Application for Jibal Qutman in Saudi Arabia through its joint venture company, Gold & Minerals Ltd ("G&M").

KEFI in Ethiopia

KEFI has 95% ownership of the Tulu Kapi Mining Licence in western Ethiopia and is at an advanced stage in refining the development plan for the project, aimed at reducing the previously planned capital and operating expenditure. Detailed research has yielded encouraging results and has been summarised in recent Company announcements.

At the end of 2013, the Ethiopian Government improved the fiscal regime applying to the gold sector, and Tulu Kapi in particular. This included lowering the income tax rate for mining (to 25% from 35%); settling of repayment schedule for inherited VAT liability (over three years rather than up-front); the removal of VAT on future exploration drilling expenditure; lowering royalty on gold mining (to 7% from 8%); accelerating the depreciation of historical and future capital expenditure (over four years); and clarifying the workings of the Government's 5% free-carried interest so that it does not impede conventional project financing terms.

KEFI in the Kingdom of Saudi Arabia

In 2009, KEFI formed G&M in Saudi Arabia with local Saudi partner Abdul Rahman Saad Al-Rashid & Sons Company Limited ("ARTAR"), to explore for gold and associated metals in the Arabian Shield. KEFI has a 40% interest in G&M and is the operating partner. To date, G&M has conducted preliminary regional reconnaissance and has had five exploration licences ("EL") granted, including Jibal Qutman and the recently granted Hawiah exploration licence that contains over 5km2 of outcropping gossans developed on VMS altered and mineralised rocks.

ARTAR, on behalf of G&M, holds 24 exploration licence applications that cover an area of approximately 1,484km2. ELs are renewable for up to three years and bestow the exclusive right to explore and to obtain a 30-year exploitation (mining) lease within the area.

The Kingdom of Saudi Arabia has instituted policies to encourage minerals exploration and development, and KEFI Minerals supports this priority by serving as the technical partner within G&M. ARTAR also serves this government policy as the major partner in G&M, which is one of the early movers in the modern resurgence of the Kingdom's minerals sector.

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