REG - Kefi Gold and Copper - Ethiopia Development Update

KEFI Gold and CopperAnnouncement

15/06/2022 07:00

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RNS Number : 8912O  Kefi Gold and Copper PLC  15 June 2022

15 June 2022

KEFI Gold and Copper plc

("KEFI" or the "Company")

Ethiopia Development Update

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 provide an update for the Company's Tulu Kapi Gold
Mines Share Company ("TKGM") joint venture project in Ethiopia.

Progress in Ethiopia over the past month has remained on track, with further
advancement on the multi-party project financing activities and the early
development works. We have kept the Ethiopian Ministry of Mines (the
"Ministry") informed to ensure that the procedure is satisfactory to
demonstrate good faith and progress that is as fast as reasonably possible.
KEFI has maintained the full funding syndicate for the Tulu Kapi Gold Project
("Tulu Kapi" or the "Project") and the plan is to:

·    Sign the funding 'Umbrella Agreement' during June 2022 to demonstrate
the full funding commitment, in particular to the Ministry

·    Evidence the full funding capacity of each syndicate member to the
Ministry

·    Clearly set out any outstanding conditions for execution of the
underlying definitive agreements between the respective individual
counterparties to the Umbrella Agreement

·    Trigger full Project construction in the Ethiopian dry season
starting in October 2022

·    Execute the underlying detailed funding agreements with each of the
individual counterparties to the Umbrella Agreement upon demonstration of
requisite progress as regards the satisfaction of the few remaining conditions
precedent, which themselves are internationally standard for a transaction of
this nature and include:

o  security protection on transport routes as well as at the Project sites;

o  insurance policies;

o  registration of mortgages and direct agreements between the banks and
Government; and

o  the remaining few Government tasks, including confirming security
arrangements and confirmations of various other Project matters and
protections for the banks, such as registration of historical costs,
exploration rights in the areas worked by KEFI and from within which the Tulu
Kapi mine development was successfully planned, details of international bank
accounts for clearing development and operational fund flows as approved by
the central bank and confirmation the two lending banks have the same terms of
engagement.

Project activities undertaken in the last month included:

·    Receiving a final pricing proposal from the mining contractor, which
is being reviewed;

·    Commissioning further refinements of the process plant construction
contract and pricing. Current supply chain strains internationally warrant
intensified due diligence on this matter;

·    Collaborating with the local Government authorities to implement the
first stage of resettlement and compensation under the agreed protocols as per
World Bank IFC Performance Standards;

·    A multitude of community and local-authority engagement meetings;

·    Presentation at the Mine Africa forum in Toronto to promote Ethiopia
for mining development (the presentation will be available on the KEFI
website: https://www.kefi-minerals.com)

 

Harry Anagnostaras-Adams, Executive Chairman of KEFI, commented:

"We continue to accelerate activities in preparation for signing the financing
syndicate Umbrella Agreement this month, then signing individual definitive
agreements over the following few months, enabling full Tulu Kapi construction
to commence from the end of the wet season in October 2022.

"KEFI has significant momentum as we progress our three advanced projects in
two countries that are now overtly pro-development.  These three projects
provide the opportunity for the Company to establish itself as a production
leader in the Arabian Nubian Shield, having already established itself as an
exploration leader with a now-established Mineral Resources of c.4.7 million
ounces gold-equivalent in Ethiopia and Saudi Arabia."

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.

 

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

Mission

 

The mission of KEFI is to discover and acquire economic gold and copper
mineralisation and follow through with cost-effective responsible exploration,
mine development and production in compliance with local laws and
international best practice.

 

Our geological region of focus is the Arabian-Nubian Shield, due to its
outstanding prospectivity for gold and copper.

 

Our activities provide a strong project pipeline covering the spectrum from
our Tulu Kapi Gold Project at the funding stage in Ethiopia, to our Hawiah
Copper-Gold and Jibal Qutman Gold Projects at the feasibility study stage in
Saudi Arabia, and to walk-up drill targets in both countries.

 

Since incorporation 16 years ago, KEFI has invested some £72 million in these
activities and today the Company sits with advanced projects that have project
NPV's that are already multiples of the amount invested. KEFI has a leading
position in the two countries that contain the majority of the Arabian-Nubian
Shield. We now have three advanced projects in these now strongly
pro-development countries and are focused on a sequential mine development
path to build a mid-tier mining company over the next few years.

 

Approach

 

KEFI was launched in 2006 as a £2.5 million initial public offering ("IPO")
on the AIM Market of the London Stock Exchange and was then led by exploration
specialists. The 2014 acquisition of the Tulu Kapi Gold Project triggered the
appointment of management with track records in developing and operating mines
in Africa. KEFI partners with appropriate local organisations, such as Abdul
Rahman Saad Al Rashid and Sons Limited ("ARTAR") in the Kingdom of Saudi
Arabia in our Gold and Minerals Limited ("G&M") joint venture and with the
Federal Government and the Oromia Regional Government in Ethiopia for our TKGM
joint venture.

 

Our community plans are in accordance with the International Finance
Corporation (World Bank) Performance Standards and Equator Principles.
Operationally, we align with industry specialists such as Lycopodium Limited
("Lycopodium") - our principal process plant contractors in both Ethiopia and
Saudi Arabia.

 

Some elements of Tulu Kapi's development commenced in Q4-2019 and were stalled
repeatedly by civil disturbance. These have now re-started and full
construction is planned to begin in October 2022 once the local dry season
begins. Annual gold production remains projected at 140,000 ounces from the
Tulu Kapi open pit to increase to c.190,000 ounces when the underground mine
starts up a few years later.

 

In Saudi Arabia, we now have two development projects in progress after being
held up for many years awaiting a regulatory overhaul. We look to develop our
Jibal Qutman Gold Project ("Jibal Qutman") and then to follow with the startup
of the Hawiah Copper-Gold Project ("Hawiah"). Both projects are now in the
feasibility study stage and are projected, between them, to add similar scale
of gold-equivalent production to that projected for Tulu Kapi in Ethiopia.
Copper will provide the majority of Hawiah's revenue.

 

We have also registered applications in Saudi Arabia for exploration of
prospects selected from our proprietary database, covering four major new
project areas and aggregating more than 1,000 square kilometres.

 

Timing

 

KEFI's objective is to have three projects in production by 2026 at a net
production rate of c.4,000 gold-equivalent ounces (KEFI beneficial interest
200,000 oz gold-equivalent).

 

The potential net operating cash flow from these projects is currently
estimated to exceed £137 million (US$185 million) per annum. The next few
years will be focused on multi-pronged development and exploration during
which our cash flow production should commence and escalate.

 

The operating environment for KEFI has improved considerably in recent times.
Since H1-2020, the estimated net present value ("NPV") of our assets has
tripled to £348 million (c.9 pence per share, based on today's issued
capital) due to exploration and permitting success in Saudi Arabia and an
expected greater equity interest in Tulu Kapi. KEFI's current market
capitalisation is c.£30 million (at 0.7 pence per share).

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