Kefi Gold & Copper (KEFI) published a Preliminary Economic Assessment (PEA, an early-stage study of a project’s financial viability) for the Tulu Kapi underground mine on 26 August 2026, and the numbers make for striking reading. The shares nudged up to 1.225p on the day. What followed less than two weeks later is what investors need to understand equally well.
What the Tulu Kapi Underground Mine PEA Actually Shows
The assessment, released via the London Stock Exchange Regulatory News Service, values the underground mine on a standalone incremental basis at a post-tax net present value (NPV) of US$274.1 million at a 5% discount rate, assuming a gold price of US$2,350 per ounce. The internal rate of return (IRR, the annualised return implied by the project’s cash flows) comes in at 220%, with a payback period of just nine months.
Those figures reflect a resource that has grown since an indicative assessment in March 2025. The underground mining inventory used in the Investegate RNS filing totals 2.38 million tonnes at 3.30 grammes per tonne gold, containing approximately 253,000 ounces. The March 2025 study had contemplated recovery of around 200,000 ounces from roughly 1.5 million tonnes; the increase follows a revision of the cut-off grade to 1.45 g/t.
Capital requirements are modest by mining standards. Pre-production development capital is estimated at US$8.09 million, with maximum cash drawdown (the peak funding needed before the mine generates its own cash) of approximately US$10.5 million. No new equity is assumed: KEFI plans to fund this from open-pit operating cash flow, according to DirectorsTalk’s coverage of the PEA.
Adding the underground operation to the existing open-pit plan is expected to lift combined steady-state gold production at Tulu Kapi to approximately 180,000 ounces per annum, with the underground component sharing the existing processing plant with only minor modifications, as reported by TipRanks. Combined all-in sustaining costs (AISC, the full cost of production including sustaining capital) are estimated at approximately US$1,100 to US$1,300 per ounce at gold prices of US$3,000 to US$5,000 per ounce, with government royalties pushing the figure higher at elevated gold prices.
The Broader Project Picture Before the Suspension
The PEA arrived against a backdrop of genuine progress. More than 50% of major equipment for Tulu Kapi had already been ordered or was ready for ordering as of early August 2026, with Mining Weekly reporting development as advancing on schedule. KEFI and its funding partners had raised or committed US$355 million towards the project against an initial capital requirement of around US$355.6 million, after replacing a US$15 million short-term working capital facility with US$10 million of additional royalty financing and US$5 million of additional Ethiopian preference shares.
KEFI also holds a signed US$400 million mining services contract with BCM Group covering the initial nine-year mine life at Tulu Kapi, according to a separate DirectorsTalk report on project delivery.
On the valuation gap that long-term holders will be aware of: KEFI’s carrying value of its investment in KEFI Minerals (Ethiopia) Limited was only £31.4 million as at 31 December 2024, against the company’s assessed c.80% beneficial interest in a project NPV of c.£804 million (approximately US$1,069 million) at a gold price of US$3,000 per ounce including the underground mine, per DirectorsTalk’s coverage of the 2024 results. The gap between book value and project NPV is why KEFI has attracted speculative interest at its penny-share price, but it is an in-ground number that depends entirely on the project being built and run.
Why the PEA Now Sits in the Background
Engineering for the underground mine was targeted to begin immediately after the PEA, with completion by Q4 2027. Underground decline development was scheduled to start as the open-pit mine is commissioned in mid-2028, with trial production in the first development year and ramp-up to steady-state stoping around 2029, according to Vox Markets.
Those timelines are now uncertain. On 4 September 2026, a security incident at Tulu Kapi resulted in multiple fatalities, including one company employee. KEFI suspended all development activities and stated that work will not resume until adequate security measures are in place, as reported by Yahoo Finance.
The PEA economics are genuinely strong on paper. Whether they translate into shareholder value depends on resolution of the security situation in Ethiopia. That is the binary the market is now pricing.
