RCS - Kefi Gold and Copper - Investor Webinar and Updated Company Presentation

KEFI Gold and CopperAnnouncement

15/03/2022 07:00

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RNS Number : 7511E  Kefi Gold and Copper PLC  15 March 2022

REACH

15 March 2022

KEFI Gold and Copper plc

("KEFI" or the "Company")

 

KEFI Focused on Three Initial Open Pit Gold Operations

Rescheduled Investor Webinar and Updated Company Presentation

 

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 pleased to announce that its next Investor Webinar will be
held at 3pm London time on Friday 8 April 2022 via the Investor Meet Company
platform, following the anticipated release of the Company's Q1 2022 Quarterly
Operational Update.

The Company also advises that an updated presentation is available today on
the Company's website at https://www.kefi-goldandcopper.com
(https://www.kefi-goldandcopper.com) .

This presentation sets out the Company's position that following recent
positive developments in both Ethiopia and Saudi Arabia, and the improved gold
price outlook, the Company is refining its development strategy by focusing on
sequentially developing three initial open pit gold (and silver) operations -
Tulu Kapi in Ethiopia, Jibal Qutman in Saudi Arabia, followed by Hawiah in
Saudi Arabia. The initial developments at each project would then planned to
be followed by deeper self-funded developments at all three projects which, at
Hawiah, would also yield copper and zinc.

Tulu Kapi, planned to be c. 70%-owned by KEFI, has a granted mining licence
and is construction-ready for a start-up at the initial production rate of
140,000 oz per annum of gold. The current focus is on satisfying the
conditions precedent for completing its project financing in mid-2022. The
Company believes that all capital requirements have been arranged via the
indicative offers and non-binding commitments received.

At Jibal Qutman, planned to be 30%-owned by KEFI, development planning has
been re-activated following indications from the regulatory authorities that
the Mining Licence would be clarified in 2022. The original 2015 Preliminary
Economic Assessment was for an initial production rate of 35,000 oz pa of gold
with capital requirement of US$39 million, targeted to be project-financed as
to 75% by project debt, 70% by partners' equity and the remaining US$3 million
by KEFI.

Hawiah, planned to be 30%-owned by KEFI, reported its maiden Mineral Resource
Estimate ("MRE") in 2020 and an increased MRE in January 2022. It is part-way
through a Preliminary Feasibility Study ("PFS"). It is likely that Hawiah's
development would follow that of Tulu Kapi and Jibal Qutman. Given recent
successful exploration results showing near-surface gold at Hawiah and the
nearby Al Godeyer exploration licences, the PFS is being refocused onto the
possibility of initial open pit gold mining, to be followed by underground
mine development to also recover copper and zinc. Capital requirements for
this 2.2 million oz gold-equivalent project (Hawiah MRE announced on 4 January
2022 of 24.9 Mt at 0.90% copper, 0.85% zinc, 0.62 g/t gold and 9.81 g/t
silver), are anticipated to be covered by project-level funding combined with
projected surplus cash flows in due course from Tulu Kapi.

Harry Anagnostaras-Adams, KEFI Executive Chairman, commented: "It is great to
see the recent turnaround in Ethiopia coinciding with a take-off of our
projects in Saudi Arabia. KEFI has turned onto the front foot in both
jurisdictions, after some particularly frustrating years in both.

"We have focused the development planning teams onto starting with gold open
pits in all three projects, to minimise start-up timetables and capitalise on
what seems a very positive gold price outlook."

Investor Webinar

The Company will provide a Quarterly Update presentation via the Investor Meet
Company platform at 3.00 pm London time on Friday 8 April 2022.

Investors can register to attend using the following link:

https://www.investormeetcompany.com/kefi-gold-and-copper-plc/register-investor
(https://www.investormeetcompany.com/kefi-gold-and-copper-plc/register-investor)

Questions can be submitted pre-event via your Investor Meet Company dashboard
up until 9 am the day before the meeting, or at any time during the live
presentation. Investors who already follow KEFI on the Investor Meet Company
platform will automatically be invited.

 

Enquiries

 KEFI Gold and Copper plc
 Harry Anagnostaras-Adams (Managing Director)        +357 99457843
 John Leach (Finance Director)                       +357 99208130
 SP Angel Corporate Finance LLP (Nominated Adviser)  +44 (0) 20 3470 0470
 Jeff Keating, Adam Cowl
 Tavira Securities Limited (Lead Broker)             +44 (0) 20 7100 5100
 Oliver Stansfield, Jonathan Evans
 WH Ireland Limited (Joint Broker)                   +44 (0) 20 7220 1666
 Katy Mitchell, Andrew de Andrade
 IFC Advisory Ltd (Financial PR and IR)              +44 (0) 20 3934 6630
 Tim Metcalfe, Florence Chandler

 

Notes to Editor

KEFI Gold and Copper plc

KEFI started as a grassroots explorer equity-funded via AIM and is now the
operator of large exploration and development joint ventures with strong local
partners in the Arabian-Nubian Shield, with most funding being sourced at the
project level.

KEFI is focused primarily on the development of its advanced development
projects in both Ethiopia and Saudi Arabia, plus the expansion of its resource
base at these projects and through exploration of its other prospects  in the
Arabian-Nubian Shield. KEFI targets that production at its three development
projects, starting with Tulu Kapi Gold in Ethiopia and adding production from
Jibal Qutman Gold and Hawiah Copper-Gold in Saudi Arabia will generate cash
flows for capital repayments, further exploration and dividends to
shareholders.

The following tabular summary presents KEFI's updated estimated share of the
projects' aggregate NPV's, as at mid-2022:

                                                              Tulu Kapi                      Hawiah       Jibal Qutman  Total        Issued       Pence Per
                                                              NPV                            NPV          NPV           NPV          Shares       Share
 Net Present Value for KEFI as 31 December 2021 metal prices
     30/06/2020                                               £114m                          0            0             £114m        1,867m       6
     31/12/2020                                               £164m                          £80m         0             £244m        2,137m       11
     30/06/2021                                               £205m                          £74m         0             £279m        2,153m       13
     31/12/2021                                               £191m                          £128m        £29m          £348m        2,939m       12
 Footnotes:

 Assumed exchange rate was US$1.35:£1.00
 JV ownership levels: Ethiopia 45% in 2020 and 70% in 2021; Saudi 34% in 2020
 and 30% in 2021
 31 December 2021 Metal Prices:                                                 31 January 2021 Analyst Consensus Long Term Prices
 Gold Price is US$1,830/oz                                                      Gold Price is US$1,607/oz
 Copper Price is: US$9,750/t                                                    Copper Price is: US$7,590/t
 Zinc Price is US$3,590/t                                                       Zinc Price is US$2,442/t
 Silver Price is US$23/oz                                                       Silver Price is US$21/oz
 Explanatory Notes:
 * NPV is derived by KEFI using independently created financial models of net
 cash flows after tax
 and debt service, using a discount rate of 8%;
 * Tulu Kapi open pit model is based on the Definitive Feasibility Study
 ("DFS") as updated for any
 refinements during project contracting and in-country experience;
 * Tulu Kapi underground mine model is based on the internal Preliminary
 Economic Assessment ("PEA");
 * Hawiah assumes preliminary mine modelling for open pit and underground
 because the MRE has only recently been updated. Also includes preliminary debt
 leverage;
 * Jibal Qutman model is based on the internal PEA, preliminary debt-leverage
 applied.

 

Note that aggregate NPV's in mid-2025 using the same underlying assumptions as
above, are estimated to be approximately 80% higher than those at 2022,
reflecting that production will have commenced at Tulu Kapi, assumed to be
imminent at Jibal Qutman and soon-to-follow at Hawiah. This project sequencing
will be refined as the Saudi development studies progress. The scale of the
projects in value terms to KEFI is highlighted by the table above as at
mid-2022, but of equal importance from a financing viewpoint is the emphasis
of project-level capital funding as well as the sequencing of their
development. These aspects are illustrated in the tabulation below:

 

                                                                              TULU KAPI  HAWIAH  JIBAL QUTMAN  TOTAL
                                                                              Current                          ALL 3
                                                                              Estimate                         PROJECTS
                                                                              US$m       US$m    US$m          US$m

 Assumed Year of Commencing Construction                                      2022       2025    2024

 Total Applications, including Mine Fleet                                     356        160     39            555

 Less Mine Fleet Provided by Corica                                           56         0       0             56

 Senior Debt                                                                  140        120     29            289

 Equity-Risk Capital Requirement                                              160        40      10            210

 Project Partners' Share Subscriptions into TKGM/G&M                          38         28      7             73

 Offtake-Linked Mezzanine Finance                                             45         0       0             45
 Cost Overrun Facility, Part of Mezzanine Facility                            15         0       0             15

 TKGM/G&M Share Capital to be subscribed by KEFI                              62         12      3             77

 Funded by Subordinated Convertible into KEFI Shares at Year 3 market price   15         0       0             15

 Funded by KEFI Shares Issued at end Year 2 at the then market price          7          0       0             7

 Budgeted internal spare cash generated                                       12         12      0             24

 KEFI Convertible Note Issued after signing, at premium to market in H2-2022  20         0       0             20

 KEFI Share Issue after closing each project financing in 2022, 2024, 2025    8          0       3             11
 Note that the Dec 2021 warrants at 1.6p bring in approximately US$8m
 Residual Requirement                                                         0          0       0             0

 

KEFI Gold and Copper in Ethiopia

Ethiopia is currently undergoing a remarkable transformation both politically
and economically.

The Tulu Kapi gold project in western Ethiopia is being progressed towards
development, following a grant of a Mining Licence in April 2015.

The Company has now refined contractual terms for project construction and
operation. Estimates include open pit gold production of c. 140,000oz pa for a
7-year period. All-in Sustaining Costs (including operating, sustaining
capital and closure but not including leasing and other financing charges)
remain c. US$800/oz. Tulu Kapi's Ore Reserve estimate totals 15.4Mt at 2.1g/t
gold, containing 1.1Moz.

All aspects of the Tulu Kapi (open pit) gold project have been reported in
compliance with the JORC Code (2012) and subjected to reviews by appropriate
independent experts.

A Preliminary Economic Assessment has been published that indicates the
economic attractiveness of mining the underground deposit adjacent to the Tulu
Kapi open pit, after the start-up of the open pit and after positive cash
flows have begun to repay project debts. An area of over 1,000 square
kilometres adjacent to Tulu Kapi has been reserved for exploration by KEFI's
wholly-owned Ethiopian subsidiaries upon commencement of development by TKGM,
with a view to adding satellite deposits to development and production plans.

KEFI Gold and Copper in the Kingdom of Saudi Arabia

In 2009, KEFI formed Gold & Minerals Limited ("G&M") in Saudi Arabia
with local Saudi partner, ARTAR, to explore for gold and associated metals in
the Arabian-Nubian Shield. KEFI has a 30% interest in G&M and is the
operating partner.

ARTAR, on behalf of G&M, and G&M directly hold over 16 Exploration
Licence (EL) applications pending the introduction of the new Mining Law.
These new regulations have recently been proclaimed and G&M now holds 3
EL's.  ELs are renewable for up to three years and bestow the exclusive right
to explore and to obtain a 30-year exploitation (mining) licence within the
area.

In addition, G&M has a Mining Licence Application over the Jibal Qutman
Gold Project which recent informal indications by the authorities provide some
confidence that the licence will be granted in 2022.

 

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