The development

KEFI Gold and Copper (LSE:KEFI) announced on 27 October 2026 that Stage 1 of the Jibal Qutman gold project in Saudi Arabia had received conditional approval for development, with commencement targeted for the fourth quarter of 2026 subject to the grant of a Mining licence. For a company whose valuation has largely rested on the Tulu Kapi gold project in Ethiopia, the question is how much a second development adds, and at what cost to KEFI.

About the company

KEFI Gold and Copper is a developer with interests in Ethiopia and Saudi Arabia. Its Tulu Kapi project in western Ethiopia is being built using project-level Debt and share capital, while in Saudi Arabia it works with local partners on exploration and development. For a developer that has no production, progress is measured by funding, construction milestones and permits.

The company in brief

LSE:KEFI is an AIM-quoted gold and copper developer with interests in western Ethiopia and in Saudi Arabia, where it participates in exploration and development alongside local partners. Its flagship, Tulu Kapi, is being built with project-level debt and share capital. An August operational update, said all phase one resettlement compensation agreements were complete, more than half of major equipment had been ordered or was ready to order, and commissioning was targeted for late 2027. The company described itself as well funded after share issues in the first half of 2026, with project debt drawdown expected in the fourth quarter.

What Jibal Qutman Stage 1 involves

Stage 1 is projected to recover about 258,000 ounces of gold over seven years from an estimated capital programme of around US$87m. Post-tax net present value is put at US$141m to US$275m and the internal rate of return at 23% to 60%, across gold price assumptions of US$3,000 to US$5,000 per ounce.

On those figures, Stage 1 implies average recovery of roughly 37,000 ounces a year and initial capital of about US$340 per recovered ounce, excluding later operating costs.

LSE:KEFI's own share of the funding is estimated at 13%, or US$10m to US$12m over 24 months, with roughly half expected at commencement. The company's Saudi portfolio holds aggregate mineral resources of around 4.0 million gold-equivalent ounces.

Why it matters

Jibal Qutman would give KEFI a second route to production in a different jurisdiction, reducing dependence on a single country and project. Because KEFI is a minority funder, the commitment is modest relative to Tulu Kapi, where the company has said more than US$150m has been invested to date. The wide valuation range also shows how sensitive the Economics are to the gold price: the upper end of the range assumes US$5,000 per ounce, so headline returns should be read as scenarios, not forecasts.

Tulu Kapi remains the priority and the main risk

The Saudi news arrived shortly after a setback in Ethiopia. Development at Tulu Kapi was suspended following an incident on 4 September 2026, and on 12 October KEFI announced a phased restart covering power infrastructure and access roads, community resettlement, security infrastructure, bulk earthworks for the processing plant and workforce accommodation. The company said it had consulted community representatives and government officials and that lenders continued to support the project.

Other dependencies include timely debt drawdown at Tulu Kapi, the award of the Jibal Qutman mining licence, and KEFI's ability to meet its Saudi contribution without stretching funds earmarked for Ethiopia. Further share issuance would dilute existing shareholders.

Interpreting the Stage 1 economics

Stage 1 would recover about 258,000 ounces over seven years for capital of around US$87m, so capital per ounce is about US$337, in line with the roughly US$340 reported. The net present value range of US$141m to US$275m for gold prices of US$3,000 to US$5,000 per ounce shows that a price increase of 67% raises the value by about 95%, so value rises faster than the price because costs are largely fixed. The return range of 23% to 60% likewise shows high sensitivity.

Even at the lower gold price of US$3,000, the project is described as having a positive value of US$141m and a return of 23%, which suggests it can withstand prices below the upper scenarios.

KEFI's share of the funding

A 13% share of the funding equals US$10m to US$12m over 24 months, with about half expected at commencement. That implies a total programme of roughly US$77m to US$92m on those percentages, in line with the US$87m capital figure. Because the company's share is small, the project may offer exposure to Saudi gold without a large commitment of cash. The partners, who provide the remaining 87%, bear most of the costs.

Conditional approval and the licence

The approval is conditional on a mining licence being granted, so the targeted fourth-quarter 2026 start depends on that step. Until the licence is issued, construction cannot lawfully begin. The Saudi portfolio's resources of around 4.0 million gold-equivalent ounces are larger than the 258,000 ounces expected from Stage 1, so Stage 1 uses only a small share of the resource base, and later stages could add more.

Tulu Kapi's position

In August, all phase one resettlement compensation agreements were complete, more than half the major equipment had been ordered or was ready to order, and commissioning was targeted for late 2027. More than US$150m has been invested to date. A suspension following the incident of 4 September affects the timetable, and the company expects project debt drawdown in the fourth quarter, which is a key funding step.

Jurisdiction and funding

Having projects in two countries spreads political and regulatory risk, though each has its own challenges. A minority share in the Saudi development limits the cash the company must provide, while Tulu Kapi requires a much larger funding package, including the project debt expected to be drawn in the fourth quarter. The timing of that drawdown is therefore a key event for the company's finances.

What to watch

Near-term milestones disclosed by the company are the Jibal Qutman mining licence and Stage 1 commencement in the fourth quarter of 2026, and the drawdown of Tulu Kapi project debt in the same quarter. Any update confirming the Tulu Kapi construction schedule after the restart will be closely followed.