26 March 2024
KEFI Gold and Copper
plc
("KEFI"
or the "Company")
GM
Statement
KEFI (AIM: KEFI), the gold and copper
exploration and development company with projects in the Federal
Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, is
hosting a General Meeting ("GM") today at 9.00 a.m. GMT in Cyprus.
At the GM, Harry Anagnostaras-Adams, Executive Chairman of the
Company, will make the following statement:
"Today we bring shareholders up to date and
strive to convey a picture of where your company is
heading.
Ethiopia
We will start by focusing on Ethiopia where the
identified US$320 million funding package for the Tulu Kapi Gold
Project is now progressing through the approval process of each of
the syndicate members.
In October 2023, the National Bank of Ethiopia
(the central bank) approved essential exemptions from exchange and
capital controls. This satisfied the third of the three
critical conditions precedent for the syndicate to proceed, as had
been foreshadowed. Then, in December 2023, the lead lending
bank, Eastern and Southern Trade and Development Bank, a key member
of the financing syndicate, gave final credit committee approval
for its US$95 million project loan. This was also ratified by
its country-members' board in February. The other members of the
syndicate, being the co-lender (US$95 million) and the equity risk
note investors (US$100 million) (all major regional corporations)
duly activated their approval processes. A longstanding and a
large MNC investor in the Equity Risk Note ("ERN") has now received
its initial board approvals.
The steps now underway to progress Tulu Kapi
funding package are:
·
Finalisation of approvals by the rest of the
financing syndicate following the recent approval by the lead
bank;
·
Preparation of the community for
resettlement;
·
Satisfaction of conditions precedent such as
readiness of security, insurances, title confirmations, perfection
of banks' security and similar formal documentary requirements;
and
·
Completion of detailed definitive documentation
which will require all syndicate parties to approve counterparty
rights and obligations, among other things.
After approval by all syndicate members, we can
then proceed by mid-2024 to:
·
Sign the Definitive Documentation between the
respective syndicate counterparties;
·
Place insurances and complete other administrative
tasks;
·
Draw down first capital, starting with project
equity and then debt months later;
·
Commence staged resettlement of approximately 350
households near Tulu Kapi; and
·
Begin procurement and tendering local
sub-contractors.
We are following this clear roadmap, and we
will report material milestones along the way.
The end result will be the launch of Ethiopia's
first industrial-scale mining project and its largest single export
generator and, in so far as environmental, social and governance
aspects are concerned, the project is designed to be in compliance
with World Bank IFC Performance Standards, creating direct and
indirect employment for 5,000 to 10,000 people.
Its NPV is £304 million for KEFI's projected
net beneficial interest, assuming a gold price of US$2,166/oz,
being the spot as at 22 March 2024 and discounting at 5% of net
estimated after tax cash flows for equity, the industry standard
approach, so as to allow market comparisons of listed developers.
At the long-term consensus gold price of US$1,864/oz, the NPV
is £204 million.
Saudi
Arabia
Tulu Kapi is one of KEFI's three advanced
projects, the other two being Jibal Qutman Gold and Hawiah
Copper-Gold in Saudi Arabia, conducted via our 25%-owned GMCO
operating company. Both projects are GMCO's own discoveries
and are enjoying very positive regulatory support as the preferred
development plans are considered.
Both projects are enjoying growth, illustrated
by recent announcements of further discoveries and the associated
drilling results.
At Jibal Qutman, initial drilling at the
Asfingia prospect has intercepted near-surface gold such as 13m at
8g/t gold.
At Abu Salal, approximately 50km south of
Hawiah, drilling has intercepted massive and semi-massive sulphide
mineralisation containing copper, gold, zinc and silver in multiple
horizons across a 2,600m strike length, with true widths of up to
11m.
Work remains ongoing with respect to the
development feasibility studies. Given the continued and expected
expansion in resources, the Company is focused on establishing the
optimal scale, recoveries and start-up strategies. We look
forward to reporting further positive results as the extent of
mineralisation at both projects is better understood.
Summary
After many demanding years in highly
prospective, but extremely challenging jurisdictions, we believe we
are now well placed to charge ahead.
I am pleased to report that your company has
not only maintained its excellent record of safety and of tenure
protection, but has also drawn together first-tier partnerships,
banking relationships and contractors into project-finance
alliances in each of Ethiopia and Saudi Arabia.
Our operating alliances are with the following
strong organisations:
·
Partners:
o in
Ethiopia:
§ Federal Government of
the Democratic Republic of Ethiopia
§ Oromia Regional
Government
o in Saudi
Arabia: Abdul Rahman Saad Al Rashid and Sons Ltd
("ARTAR")
· Principal
contractors:
o for process
plants in both Ethiopia and Saudi Arabia: Lycopodium Ltd
o for mining in
Ethiopia: PW Mining
· Senior project
finance lenders:
o For Tulu
Kapi:
§ Eastern and Southern
African Trade and Development Bank Ltd
§ African Finance
Corporation Limited
o For Saudi
Arabia:
§ Saudi Industrial
Development Fund
KEFI has deliberately assembled its development
funding at the in-country subsidiary level in a manner which has
minimised dilution (to KEFI) of the intrinsic value of the
underlying assets. Of course, we need to convert this into
value per KEFI share by closing the project financings, de-risking
the projects and getting them into production. KEFI is also
examining dual-listings in those countries' fledgling stock
exchanges because of the strong demand for investments in the
mining sector.
Conclusion
Our host countries have turned markedly better
for the minerals sector and for KEFI. We are preparing to
construct Tulu Kapi, advancing development studies on Jibal Qutman
and Hawiah and conducting reconnaissance over exploration targets
in Ethiopia and Saudi Arabia.
As stated last year, along with my
fellow Directors, I am very sensitive to the need to generate
returns on investment. It was frustrating that the political
reforms and ensuing conflicts in Ethiopia and the suspension of
licencing for some years pending Saudi Arabia's sweeping
deregulation in effect suspended our progress. However, as
foreshadowed last year, our operating environment has indeed turned
for the better in both countries and we now progress on all
fronts.
The fundamental value to KEFI of the
three advanced projects is estimated at £372 million (calculated as
set out above for Tulu Kapi and ascribing market average metrics to
preliminary production projections in respect of the advanced Saudi
projects which are still at the pre-Definitive Feasibility Study
stage). This valuation indicator is c.12 times KEFI's current
share market capitalisation. This is no more than just one
indicator for the estimate of intrinsic valuation and requires that
the projects are implemented as assumed. However, it is a
notable indicator that there is plenty of scope for share price
rerating as the projects progress and de-risk. The dedication
our teams and syndicates have already demonstrated augers well
given the expected ongoing improvements to the investment climate
in our host countries.
The KEFI directors are deeply
appreciative of all personnel's tenacity, as well as the support
the Company receives from our shareholders, our in-country
partners, lenders and contractors, our host communities, and other
stakeholders."
Enquiries
KEFI Gold and Copper plc
|
|
Harry Anagnostaras-Adams (Executive
Chairman)
|
+357 99457843
|
John Leach (Finance
Director)
|
+357 99208130
|
|
|
SP
Angel Corporate Finance LLP (Nominated Adviser)
|
+44 (0) 20 3470 0470
|
Jeff Keating, Adam Cowl
|
|
|
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Tavira Securities Limited (Lead Broker)
|
+44 (0) 20 7100 5100
|
Oliver Stansfield, Jonathan
Evans
|
|
|
|
IFC
Advisory Ltd (Financial PR and IR)
|
+44 (0) 20 3934 6630
|
Tim Metcalfe, Florence
Chandler
|
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|
|
3PPB LLC (Institutional IR)
|
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Patrick Chidley
|
+1 (917) 991 7701
|
Paul Durham
|
+1-203-940-2538
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