Desert beckons KEFI

MD Jeff Rayner says geology is similar to AIM-quoted Centamin’s acclaimed Sukari project in Egypt

02/07/2009 Robert Tyerman

Gold and copper explorer KEFI Minerals is optimistic about its new gold licence applications in Saudi Arabia.

The AIM-quoted company, a 2006 spin-off from EMED Mining, has a 60-40 joint venture with the fifth largest Saudi construction group ARTAR, which has ten five-year licences covering 100 sq km. Australian managing director Jeff Rayner says five more applications are to be lodged this weekend in the ‘Arabian Shield’ area of Saudi, whose geology he suggests compares favourably with gold prospects in Indonesia.

Once worked vigorously in ancient days, Saudi gold deposits are attracting interest as the government is now promoting their development. Rayner says the geology is similar to AIM-quoted Centamin’s acclaimed Sukari project in Egypt and points to Saudi’s state-owned Maaden institution, which has so far established a resource of more than eight million oz of gold and raised more than £1 billion on the stock market.

Rayner says he believes KEFI’s areas will resemble Maaden’s narrow-veined structure. He points to Maaden’s cash extraction costs of below $200 an ounce, helped by cheap Bangladeshi labour, against a $930-plus market price.

Originally set up to probe promising Turkish gold prospects, KEFI is talking about potential joint ventures there with several Canadian companies, says Rayner. Floated at 3p, its shares now languish at 1.88p, valuing the company at £4.2 million.