REG - Kefi Gold and Copper - GMCO JV Arrangements in Saudi Arabia

KEFI Gold and CopperAnnouncement

18/01/2024 13:00

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RNS Number : 1900A  Kefi Gold and Copper PLC  18 January 2024

18 January 2022

KEFI Gold and Copper plc

("KEFI" or the "Company")

GMCO JV Arrangements in Saudi Arabia Facilitate Rapid Growth and Provide
Funding Solutions

KEFI Gold and Copper Plc (AIM: KEFI), the gold and copper exploration and
development company, which has focused on the Arabian-Nubian Shield since
2008, is pleased to announce an update regarding the Company's arrangements in
the Kingdom of Saudi Arabia, where KEFI's minority-owned Gold & Minerals
Ltd ("GMCO") joint venture is growing rapidly, whilst in in Ethiopia KEFI
continues its preparations to launch the high-grade Tulu Kapi Gold Project.

 

Background

 

The successful overhaul of the Saudi Arabian minerals sector has triggered an
inrush of investors, miners and explorers.  In the view of the board, the
global interest in, and the growth momentum of the Arabian Nubian Shield, and
Saudi Arabia in particular, surpasses that of any other region globally.
 KEFI and its partner ARTAR's foresight to have formed the GMCO joint venture
in 2008 has provided a first mover advantage that has seen GMCO amass over
1,000 square kilometres of ground selected from GMCO's proprietary database,
focusing on some of the most prospective exploration targets in Saudi Arabia.
 

 

This has already led to the discoveries of the Jibal Qutman Gold Project
("Jibal Qutman") and at Hawiah Copper-Gold Project ("Hawiah") in respect of
which GMCO is rapidly advancing development studies, as well as the
identification of additional satellite deposits currently undergoing further
exploration.  Elsewhere across GMCO's portfolio, which includes more targets
selected from GMCO's proprietary database, earlier stage exploration is also
underway which is expected to maintain a healthy project pipeline targeting a
third discovery.

 

Accordingly, GMCO and its two shareholders are now focused on how to best
position the joint venture for the next stage of its development within what
is now considered by the KEFI directors as the world's highest-growth country
for metals and mining resources, and already the world-leader for hydrocarbon
natural resources. Some important decisions have been made.

 

Refinement of JV Arrangements

 

In order to facilitate maximum growth, KEFI and ARTAR have agreed to refine
their GMCO shareholders agreement and respective working arrangements.  As
previously announced, extensive feasibility study and exploration work has
been undertaken in 2023 in Saudia Arabia and is still ongoing.  The gross
cost of the programme in 2023 was c.£19 million and the Company will provide
updates over the coming weeks and months with respect to the highly
encouraging results that the directors expect to be achieved.

 

ARTAR funded £3.5 million of KEFI's pari passu 2023 contributions and
continues to do so as GMCO pushes forward to define the preferred development
scenario over coming months for its first discovery Jibal Qutman, as well as
the resource upgrade and expansion at its second discovery Hawiah, as well as
further resource expansion and discovery.

 

Additionally, the partners' respective shareholdings of GMCO are now being
adjusted to the expected 75% ARTAR and 25% KEFI.  KEFI formerly held 27% of
GMCO.

 

These GMCO joint venture refinements continue a longstanding pattern of
refinement and reinforcement of the relationship between KEFI and ARTAR in
order to facilitate GMCO's progress.  It also enables KEFI to allocate its
capital principally to the finance-closing and launch in H1 2024 of its
Ethiopian gold project at Tulu Kapi, whilst ARTAR supports GMCO's continued
rapid progress.

 

To provide further flexibility for project financing across the portfolio of
Saudi assets, licences for GMCO's exploration and mining project are being
transferred from ARTAR's name directly into GMCO's.  It is envisaged existing
and future advanced projects will subsequently be transferred into separate
subsidiaries to enable further flexibility on specific mining projects.

 

In addition, attractive development funding scenarios are available within
Saudi Arabia for GMCO to consider, minimising the equity requirements for
mining projects in general.  As an illustration, the Company expects the
project financing of GMCO's mine developments to be available along the
following lines:

·    up to 75% of costs (including both feasibility and development
expenditures) potentially being provided as Shariah-compliant project loans at
internationally low rates from the Saudi Industrial Development Fund; plus

·    the remaining capital requirement of approximately 25% to be
optimised by the GMCO partners who will ordinarily plan to fund it pari passu,
or could potentially consider the range of mezzanine and equity finance now on
offer in Saudi Arabia, if warranted at the time.

 

The mining sector in Saudi Arabia is particularly exciting and the GMCO joint
venture is very well positioned for growth and value creation.  Two Saudi
Government announcements were made last week which were relevant for KEFI
itself: the prioritisation of creating a Saudi metals and mining exchange and
the offer of a 30-year tax holiday to companies moving their regional head
office to Saudi Arabia. Both policy initiatives reinforce KEFI's commitment to
Saudi Arabia for the long term and are being considered seriously.

At this stage, KEFI's beneficial interest in the mineral resources of GMCO's
projects is similar (at 1.1 million gold ounce equivalent) to its planned
c.70% interest in the Ethiopian Tulu Kapi Gold Project of 1.2 million oz), and
KEFI's growth prospects are strong in both countries.

 

KEFI's Executive Chairman, Harry Anagnostaras-Adams commented: "KEFI is very
fortunate to be a partner in GMCO.  We have an excellent partnership with
majority partner ARTAR and we are collectively and efficiently advancing our
portfolio of mining assets in a location that is becoming one of the mining
industry's top priorities.

 

"We have a head start on most parties now entering the Arabian Nubian Shield
in both Saudi Arabia and Ethiopia.  The arrangements announced today will
reinforce both GMCO's and KEFI's position still further.

 

"KEFI expects to benefit from the ongoing GMCO success in exploration and
development preparations, whilst also launching the Tulu Kapi project in
Ethiopia, which the Company envisages will lead to a materially higher
valuation being ascribed to the Company.

 

"Given the sizeable exploration expenditure during 2023, as well as ongoing
drilling and studies, the Company has a substantial pipeline of results to
report, which it will release as appropriate during the current quarter and
beyond."

 

Webinar

Harry Anagnostaras-Adams, Executive Chairman, will provide a live presentation
via the Investor Meet Company platform today, 18 January 2024, at 2pm GMT.

The presentation is open to all existing and potential shareholders. Questions
can be submitted at any time during the live presentation.

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

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

This investor webinar will commence with a presentation which will also be
uploaded to the Company's website and will then move onto addressing questions
as submitted.

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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