REG - Kefi Gold and Copper - Ethiopia Operational Update

KEFI Gold and CopperAnnouncement

05/09/2023 07:00

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RNS Number : 4024L  Kefi Gold and Copper PLC  05 September 2023

5 September 2023

KEFI Gold and Copper plc

("KEFI" or the "Company")

Ethiopia Operational Update

Tulu Kapi Gold Project Nears Construction Startup

KEFI Gold and Copper Plc (AIM: KEFI), the gold and copper exploration and
development company, has focused on the Arabian-Nubian Shield since 2008,
assembling a pipeline of projects in the Federal Democratic Republic of
Ethiopia and in the Kingdom of Saudi Arabia. We are pleased to provide this
operational update covering developments in Ethiopia since the release of the
Company's Quarterly Operational Update on 9 August 2023.

The period between now and the end of 2023 is particularly important for KEFI
and regular updates will be announced. This update encompasses the activities
of KEFI, as well as wholly owned KEFI Minerals (Ethiopia) Ltd ("KME") and
majority-owned Tulu Kapi Gold Mines Share Company ("TKGM") also in Ethiopia.
 A further update on the Company's activities in Saudi Arabia is expected to
be announced shortly.

Ethiopia

Tulu Kapi Gold Project

KEFI is focused primarily on developing the advanced Tulu Kapi Gold Project in
Ethiopia. Tulu Kapi has a Probable Ore Reserve of 1.05 million ounces and
Mineral Resources totalling 1.7 million ounces. Average planned gold
production at Tulu Kapi is forecast to be over 140,000 ounces/year at an
All-in Sustaining Cost of approximately US$950/ounce. Almost all the
pre-requisites to begin construction are now in place. We remain focused on
final credit and board approvals for the project financing, ahead of project
launch in Q4 2023, with first production expected by the end of 2025.

Government Facing Agreements

The necessary Ethiopian laws and regulations continue to be revised in
conjunction with the finalisation of the syndicate's definitive agreements
amongst itself and with Government agencies.  This week's activities include:

·    Syndicate lenders meeting with the Company in Addis Ababa finalising
details with the National Bank of Ethiopia ("NBE", being the Ethiopian central
bank) as regards capital controls. A recent development was the publication of
a new NBE Directive on 14 August 2023 in respect of foreign exchange controls,
which is now being combined with TKGM specific project details. The changes
within the Directive are positive for the country and KEFI is incorporating
for its own situation. This is one of the final action points remaining to
completion of the Tulu Kapi financing package. The meeting will address the
specific details and documentation requirements flowing from these changes
with respect to the Tulu Kapi development;

·    Other project finance syndicate members are meeting with the Company
and the Ethiopian Ministry of Mines ("EMM") in Perth Australia, addressing the
few remaining loose-ends with EMM-facing agreements. These parties have also
been taking part in instructive mine and processing plant inspections while in
Australia. A recent development was the publication by the EMM of a draft new
Mining Proclamation, which is now being compared with TKGM specific project
details; and

·    Field teams meeting local government in zonal government centre
Ghimbi and municipal government centre Genji, planning the launch of community
programmes.

Technical and Organisational Preparations

·    Independent technical expert to the lenders, Behre Dolbear
International ("BDI") has reported and confirmed TKGM's readiness for
development launch;

·    Elevation of security protection in the district around the project
site and our offices with regular independent monitoring by security expert
Constellis, whose recent report concluded that TKGM's approach to securing the
mining licence area, its other sites and the routes in and out are sensible,
pragmatic and in-line with security best management practice; and

·    Grade-control drill-planning for 2024 open-pit operational readiness
programmes and resource-extensional drilling-planning for the 2024-2025
underground mine feasibility study.

Regional Project Financing

·    Historical pre-development expenditure of c.US$90 million was funded
via equity and sourced from stock markets in the UK, Australia and Canada;

·    Over the past month, details of the US$390 million development
funding have been further refined within the finance syndicate, all members of
which are active in the region and plan to inject funds at the subsidiary
level, as follows:

o Mining services contractor provides US$70 million mining fleet against TKGM
mining services agreement;

o Project finance US$320 million:

§ debt-risk capital (senior and subordinated) represents approximately 60%
(US$190 million of US$320 million) to be injected at the TKGM level by our
co-lenders;

§ equity-risk capital of US$130M to be injected as:

·    US$40 million share capital to local partners in subsidiary
companies;

·    US$90 million from major international corporations in the form of
Equity Risk Notes ("ERN"):

o Some of the ERN's are non-convertible and repayable in cash only out of
future revenue; and

o Some of the ERN's are potentially convertible into KEFI shares as from the
end of the third year after funds drawdown (at the higher of the price at
funds drawdown and the then market prices based on VWAP) unless, at KEFI's
election, it is repaid in cash (which is considered feasible given the
estimated healthy surplus cash generation from the Project at or near current
long-term consensus gold price of US$1,850/ounce).

Group Development Sequencing

The critical first step is the Tulu Kapi project finance closing. With the
existing pipeline of advanced projects, the targeted project sequencing is as
follows:

·    Ethiopia:

o 2023: Launch development of Tulu Kapi open-pit in Ethiopia for first
production end-2025;

o 2024: PFS on the Tulu Kapi underground mine for commencement of development
after open pit production has settled down; and

o 2025: DFS on the Tulu Kapi underground mine.

·    Saudi Arabia:

o 2024: complete DFS, permitting, financing and launch of development at Jibal
Qutman Gold in Saudi Arabia; and

o 2025: complete DFS, permitting, financing and launch of development at
Hawiah Copper-Gold in Saudi Arabia.

·    Regional Exploration:

o We have a large pipeline of additional exploration projects, with 15
recently granted Exploration Licences in Saudi Arabia and many applications
pending in Ethiopia.

Investor Webinar

The quarterly open-forum webinar will be held at 12.00 noon, London time, on
Friday 8 September 2023, via the Investor Meet Company platform.

The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via your Investor Meet Company dashboard up until
9am the day before the meeting or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet KEFI
Gold and Copper plc via:

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

Investors who already follow KEFI Gold and Copper plc on the Investor Meet
Company platform will automatically be invited.

 

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

 IFC Advisory Ltd (Financial PR and IR)              +44 (0) 20 3934 6630
 Tim Metcalfe, Florence Chandler

 3PPB LLC International (Institutional IR)
 Patrick Chidley                                     +1 (917) 991 7701
 Paul Durham                                         +1 (203) 940 2538

 

 

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