KEFI Minerals Plc (LON: KEFI), the gold exploration and development company with projects in the Kingdom of Saudi Arabia and Democratic Republic of Ethiopia, today announced its unaudited interim results for the half-year ended 30 June 2018.
The statement below encompasses the activities of the Company’s subsidiary, KEFI Minerals (Ethiopia) Limited, in Ethiopia and its joint venture, Gold & Minerals Limited, in the Kingdom of Saudi Arabia.
Tulu Kapi Gold Project, Ethiopia
· In the first six months of the year, the Tulu Kapi Gold Project in Ethiopia remained the primary focus of KEFI’s activities.
· Ten year historic average gold prices and analyst consensus for 2021 to 2022 support the view of using a base case gold price of $1,300/oz for modelling purposes. Economic estimates for 100% of Tulu Kapi at US$1,300/oz are for average net cash flow (after lease or debt repayments and all other planned commitments) of US$32 million per annum. All-in Sustaining Costs remain at c. US$800/oz and All-in Costs c. US$1,000/oz. Tulu Kapi’s Ore Reserves of 1.0 million ounces of gold and Mineral Resources of 1.7 million ounces of gold have significant upside potential.
· On 24 August 2018 the Company followed up its original announcement of 11 June 2018 advising that it had progressed to executing a detailed Heads of Agreement with Ethiopian investors who intend to make their Birr equivalent investment of US$30-35 million in the Project through recently established Ethiopian based Arabian Nubian Shield Resources Limited (since registered as ANS Mining Share Company or “ANS”). ANS’ injection of the first instalment of US$9 million (Birr-equivalent) is subject to completion of the remaining due diligence and execution of a binding share subscription agreement. Injection of the balance is subject to full project finance closing proceeding, fully approved by the Ethiopian Government. The final investment sum of ANS must not exceed that which preserves KEFI as majority shareholder of KEFI’s Project company, Tulu Kapi Gold Mines Share Company Limited (“TKGM”). The Company is progressing this initiative and expects to move to final agreements soon, in accordance with the previously reported schedule for final binding agreements by the end of September 2018.
· Recent political developments within Ethiopia also complement the country’s positive progress as one of the world’s highest growth countries.
Gold & Minerals Ltd Joint Venture, Saudi Arabia
· Saudi Arabia has just promulgated new regulations to encourage minerals exploration and development, targeting a resurgence of its minerals sector.
· KEFI has been active in Saudi Arabia since 2008 and is partnered with ARTAR, a leading locally owned industrial group.
· KEFI, as 40% shareholder and technical partner in G&M, is well placed to advance and develop projects in line with the new regulations.
· G&M’s primary goal is the discovery and development of a one million ounce plus gold equivalent deposits. Currently the Company is focused on two projects:
o Hawiah and the Wadi Bidah Belt – Exploration Licence granted in December 2014, when KEFI commenced exploration of an unusually large gossan for gold at the surface and a VMS copper-gold-zinc sulphide ore body at depth. The geological setting is analogous with the large VMS deposits in the Arabian-Nubian Shield that are known for well-preserved, mature oxidised zones enriched with near surface gold. KEFI has applied for most of the adjacent structural belt which contains many VMS targets.
o Jibal Qutman – Exploration Licence granted in July 2012, since then KEFI rapidly identified mineral resources totalling more than 700,000 oz of gold and is now evaluating gold production via an open-pit, heap leach operation. This project will await tenure clarity and increased resources before further exploration and development-assessment is triggered.
Corporate
· As announced on 15 June 2018, the Company raised additional funds and settled a number of debts through the issue of 220,000,000 new ordinary shares of 1.7p each in KEFI (“Shares”) at a price of 2.5 pence as follows :
o 120,000,000 new Shares to existing and institutional shareholders to raise £3 million cash (before expenses);
o 47,801,642 new Shares to certain project contractors and other third parties in settlement of outstanding invoices of approximately £1.2 million; and
o 52,198,358 new shares to certain directors and management of the Company following the publication of the Company’s annual results to satisfy accrued fees and salaries of approximately £1.3 million.
· KEFI has now assembled the proposed full project funding consortium including contractors, equity and non-equity capital. For the Project to proceed, all stakeholders now rely on closing out the remaining Ethiopian Government processes and approvals, along with completion of due diligence and formal documentation.
· In order to prepare for the mine build and operational phases of its development, the Company has implemented a number of management and Board changes:
o On 1 February 2018, the Company expanded its senior executive team, from comprising only the two executive directors, by adding the heads of operations, systems and planning and since then the head of project construction.
o On 20 July 2018, to further strengthen its corporate governance framework, the Company separated the roles of Chairman and Managing Director. Mark Wellesley-Wood, assumed the role of the Non-Executive Chairman and Harry Anagnostaras-Adams, the role of the Managing Director.
o On 5 September 2018 the Company appointed Mr. Mark Tyler to the KEFI Board as an additional independent Non-Executive Director and, therefore, independent Non-Executive Directors now comprise the majority of the Board.
· Management remuneration at KEFI emphasizes the maximum possible alignment of management and shareholder interest and, to that end, it is notable that most senior executive remuneration during the current year has been re-invested in the Company’s shares and, indeed, 70% of the Managing Director’s remuneration since assuming an executive role four years ago has been re-invested in the Company’s shares.
Commenting, Mr Harry Anagnostaras-Adams, Managing Director of KEFI said, “The first half of 2018 was one of considerable progress for KEFI, momentum that has continued in the second half. Our primary focus has remained on our Tulu Kapi Gold Project in Ethiopia and we look forward to providing further updates shortly with regard to the Project and its funding as matters progress.”
