REG - Kefi Gold and Copper - Placing and Issue of Shares, Directorate Change

KEFI Gold and CopperAnnouncement

21/12/2021 15:00

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RNS Number : 3902W  Kefi Gold and Copper PLC  21 December 2021

21 December 2021

KEFI Gold and Copper plc

("KEFI" or the "Company")

Placing and Issue of Shares

Directorate Change

KEFI Gold and Copper (AIM: KEFI), the gold exploration and development company
with projects in the Federal Democratic Republic of Ethiopia and the Kingdom
of Saudi Arabia, is pleased to announce a firm placing to raise gross cash
proceeds of approximately £715,000 and to settle outstanding debts and
liabilities of approximately £2.6 million (the "Firm Placing"). The Firm
Placing will consist of the issue of 414,375,788 new ordinary shares of 0.1
pence each in the capital of the Company ("Ordinary Shares") at an issue price
of 0.8 pence per Ordinary Share (the "Placing Price") to existing and new
shareholders.

The Company has also received further subscriptions totalling £1.2 million
which will be settled by the settlement of amounts due by the Company to the
subscribers and, in addition, certain directors and managers have elected to
receive shares in lieu of fees and salaries of approximately £1.9 million.
The issue of 371,817,944 Ordinary Shares to the further subscribers, directors
and managers (the "Conditional Placing") is conditional on shareholder
approval at a General Meeting of the Company.

The Firm Placing and the Conditional Placing (together being the "Placing")
will total approximately £6.4 million. In aggregate, a total of 786,193,732
Ordinary Shares are to be issued (the "Placing Shares") to settle, in total,
£5.7 million in debts and add approximately £0.5 million cash net of
expenses for general working capital purposes.

In addition, conditional on shareholder approval at a General Meeting, one
warrant giving the right to subscribe for one Ordinary Share with an exercise
price of 1.6 pence ("Warrant") will be issued for every two Placing Shares
issued. The Warrants will become exercisable if the on-market share closing
price of the Ordinary Shares for five consecutive days reaches or exceeds 2.4
pence (being a 50% premium on the Warrant exercise price). Otherwise, the
Warrants will expire two years after the date of Second Admission (as defined
below). Any proceeds from the exercise of Warrants is, in part, intended to
contribute to the project financing of the Tulu Kapi Gold Project.

Brandon Hill Capital Limited and WH Ireland Limited (together, the "Brokers")
acted as brokers to the Placing.

Harry Anagnostaras Adams, Chairman of KEFI Gold and Copper commented: "KEFI
has arranged equity placings to tidy up its balance sheet going into year-end.
The structure of the placings also provides attached 1 for 2 warrants which in
part, intended to contribute to the project financing of the Tulu Kapi Gold
Project.

"It is also pleasing that there has recently been a significant positive
turning point in the conflict which reinforces KEFI's optimism that peace will
soon be restored in Ethiopia. We work intensely with the Government and the
stakeholders of the Tulu Kapi Gold Project, so as to launch as early as
possible during 2022.

"In Saudi Arabia the Company's projects are advancing on several fronts and
the Company expects to   be able to provide an updated Mineral Resource
Estimate at its Hawiah Copper-Gold Project (a large Volcanogenic Massive
Sulphide Deposit) in Saudi Arabia during January 2022, as well as progress on
the Preliminary Feasibility Study for potential development.

"The Company considers that it now has a development pipeline of three
projects in the Arabian Nubian Shield, all with JORC-compliant MRE's and all
still remaining open in more than one direction. All are expected to generate
progress throughout the coming year. An updated summary of the aggregate MRE's
and estimated Net Present Values will be provided in due course. NPV of Tulu
Kapi and Hawiah based on current JORC-compliant Resources is US£412 million
or £302 million."

Background and reasons for the Placing

The Placing, net of expenses, is expected to yield approximately £0.5 million
in net cash and allow repayment of £5.7 million in debts, which have accrued
since the Company's last capital raise in 2020 as the Company advanced its
assets in Ethiopia and Saudi Arabia. This will permit the Company to continue
preparations for the Tulu Kapi Project and enable the Company to contribute
its share to the Saudi Gold & Minerals joint venture and extinguish
material liabilities.

The Company continues to work intensely with the Government and the
stakeholders of the Tulu Kapi Gold Project, so as to launch as early as
possible during 2022. With the funding consortium and structure already
identified and commitments in place and given the advanced stage of
preparations such as technical and legal due diligence, timing is principally
dependent on the security situation being acceptable for launch. As reported
recently by the Company (see announcement on 6 December 2021), there has
recently been a significant positive turning point in the conflict which
reinforces KEFI's optimism that peace will soon be restored in Ethiopia. The
Project syndicate members have reaffirmed their intended Project participation
as soon as compliance is demonstrated.

The start of full gold production at Tulu Kapi remains targeted for 2024, with
commissioning from the end of 2023. Targeted gold production of the combined
open pit and underground operation is 190,000oz pa. The Tulu Kapi Project
financing syndicate is collaborating closely and, subject to whether or not
the planned Tulu Kapi cost-overrun facility is needed for starting up the
open-pit operations, it is also possible that the development of an
underground gold mine at Tulu Kapi can also be triggered without a further
equity capital injection.

The Company currently intends to provide a material update to its Mineral
Resource Estimate at its Hawiah Copper-Gold Project (a large Volcanogenic
Massive Sulphide Deposit) in Saudi Arabia during January 2022, as well as
progress on the Preliminary Feasibility Study for potential development. While
subject yet to review by the Company's independent mining consultants, SRK
Consulting (UK) Ltd, based on drilling results previously announced, the
Company currently targets a potential increase of 30% in tonnage and 5% in
grade on the existing Maiden Resource, an aggregate of 19.3Mt at 1.9% copper
equivalent (this statement does not constitute a JORC-compliant resource,
pending the release of the duly updated and approved JORC-compliant statement
and supporting material). Whilst the tonnage and grade of the Maiden Resource
is expected to be increased, there is no certainty that it will be and,
pending the issuance of a JORC-compliant Resources Statement, these comments
are merely in the context of an Exploration Target. Based on recent
communications with the Saudi regulatory authorities, the Company also targets
clarifying the tenure in respect of its long-standing Mining Licence
Application at the Jibal Qutman Gold Project, also in Saudi Arabia, during
2022, having earlier this month been granted its long-standing applications
for the Godeyer Exploration Licences some 12 kilometres from the Hawiah
Copper-Gold Project.

The Company considers that it now has a development pipeline of three projects
in the Arabian Nubian Shield, all with JORC-compliant MRE's and all still
remaining open in more than one direction. All are expected to generate
progress throughout the coming year. An updated summary of the aggregate MRE's
and estimated Net Present Values ("NPV's") will be provided in due course. The
most recently published NPV of Tulu Kapi and Hawiah based on JORC-compliant
Resources is US£412 million or £302 million. NPV is internally derived using
independently created financial models of net cash flows after tax and debt
service, based on the Definitive Feasibility Study for Tulu Kapi open pit
gold‐silver mine, Preliminary Economic Assessment ("PEA") for Tulu Kapi
gold‐silver underground mine and PEA for Hawiah underground
copper‐gold‐zinc‐silver mine. Metal prices assumed were prevailing spot
market prices at June 2020 and 11 November 2021.

Further information on the Placing

The Placing will be undertaken in two tranches:

1.   The Firm Placing shall consist of 414,375,788 Placing Shares (the
"Firm Placing Shares"); and

2.   The Conditional Placing shall consist of 371,817,944 Placing Shares
(the "Conditional Placing Shares") and 393,096,865 Warrants.

The Firm Placing is conditional, inter alia, on the admission of the Firm
Placing Shares to trading on AIM becoming effective ("First Admission"), which
is expected to take place on or around 24 December 2021.

The Conditional Placing requires shareholder approval at a General Meeting of
the Company, to be held on a date to be confirmed in January 2022 and as
further described below. The Conditional Placing is conditional, inter alia,
on First Admission becoming effective, the passing of the resolutions to be
proposed at the General Meeting and the admission of the Conditional Placing
Shares to trading on AIM becoming effective at 8.00 a.m. on or around 19
January 2022 ("Second Admission").

Shareholders are reminded that because the Conditional Placing is conditional,
among other things, on the passing of the resolutions to be proposed at the
General Meeting, should the resolutions not be passed, the Conditional Placing
will not proceed.

The Placing Shares issued to directors and management in settlement of accrued
fees will be at the Placing Price, except for the issue of 12,950,147
Conditional Placing Shares to be issued to three senior managers at prices
ranging from 1.077p to 2.034p in accordance with a previous contractual
arrangement that settles an amount owing of £225,938. This pricing is based
on the monthly VWAP of KEFI's ordinary shares over the period from 1 January
2021 to 31 October 2021.

The Placing Shares will represent 27% of the then enlarged share capital of
the Company. In the event the issue of the Warrants is approved by
shareholders and subsequently exercised in full, the Placing Shares together
with the new ordinary shares issued on exercise of the Warrants would
represent 35% of the then enlarged share capital (assuming no other issue of
Ordinary Shares in the meantime), having subscribed an additional £6.3
million of share capital.

Working Capital and Use of Funds

On the basis that the Firm Placing and the Conditional Placing are both
completed, the Company expects that it will have discharged its significant
material liabilities currently payable of approximately £5.7 million.

Pending full financial closing of the Tulu Kapi Project finance, the Company
expects to have partners' equity subscriptions in both Saudi Arabia and
Ethiopia and the ongoing availability of shareholder advances, in accordance
with the longstanding arrangement with the Company's Lead Broker from time to
time. Expected specific use of the cash net Placing proceeds of approximately
£0.5 million is illustrated below:

                                                                                £000's
 Ethiopian Tulu Kapi project expenditure, preparing community, project finance  305
 closing
 Saudi project expenditure                                                      145
 Corporate costs                                                                50
 Total                                                                          500

 

The sum required in this Firm Placing and Conditional Placing for repayment of
liabilities and replenishment of working capital in part reflects
non-recurring items, which included technical studies in Ethiopia brought
forward from the Project development phase at the request of the financing
syndicate, and the Tulu Kapi security incident management.

KEFI PDMR participation in the Placing

 Name                       Number of existing ordinary shares in KEFI  Percentage of existing issued share capital  Number of Conditional Placing Shares                                            Number of ordinary shares in KEFI on Second Admission  Percentage of total share capital on Second Admission
 H Anagnostaras-Adams       32,231,312                                  1.50%                                        22,500,000                                                                      54,731,312                                             1.86%
 J Leach                    18,525,743                                  0.90%                                        12,500,000                                                                      31,025,743                                             1.06%
 Norman Ling                2,295,486                                   0.10%                                        -                                                                               2,295,486                                              0.08%
 Mark Tyler                 2,000,000                                   0.10%                                        3,125,000                                                                       5,125,000                                              0.17%
 Richard Robinson           1,000,000                                   0.00%                                        6,250,000                                                                       7,250,000                                              0.25%
 Adam Taylor                -                                           0.00%                                        -                                                                               -                                                      -
 Other employees and PDMRs  85,825,313                                  4.00%                                                                          173,530,444                                          259,355,757                                     8.83%

 

Related party transaction

The conditional issue of Warrants to the following directors of the Company,
Harry Anagnostaras-Adams, John Leach, Mark Tyler and Richard Robinson, is a
related party transaction under AIM Rule 13 of the AIM Rules for Companies.
Adam Taylor and Norman Ling, being the directors independent of the
conditional issue of Warrants, consider after having consulted with the
Company's nominated adviser, that the terms of the conditional issue of
Warrants are fair and reasonable insofar as the shareholders of the Company
are concerned.

RAB Capital PLC, a substantial shareholder in the Company, has  subscribed
for 20,000,000 Ordinary Shares for cash in the Firm Placing. This subscription
is being treated as a related party transaction under AIM Rule 13 of the AIM
Rules for Companies.  The directors of the Company consider, having consulted
its nominated adviser, that the terms of the transaction are fair and
reasonable insofar as its shareholders are concerned.

Placing Agreement

The Company has appointed the Brokers as its agents pursuant to the terms of a
placing agreement executed on or about today's date (the "Placing Agreement").
The Company has agreed to pay the Brokers certain commissions and fees.

Under the terms of the Placing Agreement, the Company has given certain
customary warranties, indemnities and undertakings to the Brokers in
connection with the Placing relating to the Company and its affairs.

Warrants

In addition, subject to shareholder approval at the General Meeting, one
Warrant with an exercise price of 1.6 pence will be issued for every two
Placing Shares issued in the Placing. The Warrants will become exercisable if,
during a two-year period following the date of Second Admission, the on market
share closing price of the Ordinary Shares for five consecutive days reaches
or exceeds 2.4 pence (being a 50% premium on the Warrant exercise price) (the
"Warrant Trigger Event").

If the Warrant Trigger Event occurs then: (i) the holders of the Warrants must
exercise the Warrants within 30 days from the occurrence of the Warrant
Trigger Event; and (ii) the Warrants will expire following the end of the
30-day period referenced above if not exercised. If the Warrant Trigger Event
has not occurred within two years following the date of Second Admission, then
the Warrants shall lapse and will no longer be capable of being exercised.

The Warrants will be issued in certificated form and will not be admitted to
trading on AIM. The Warrants will be transferable in accordance with the terms
of the warrant instrument to be entered into by the Company. Any Ordinary
Shares issued pursuant to the Warrants will, when issued, be admitted to
trading on AIM.

General Meeting

A circular convening the General Meeting to be held during January 2022 will
be circulated shortly. The General Meeting will propose resolutions to
shareholders to grant the board authority to allot the Conditional Placing
Shares on a non-pre-emptive basis, and to grant the Warrants. Once published,
the circular will be available to download from the Company's website at
www.kefi-minerals.com (http://www.kefi-minerals.com) . It is important that
shareholders lodge their votes in advance of the General Meeting through
submission of their proxy votes.

If the resolutions are not approved at the General Meeting, the Company will
need to seek an increased amount of additional funding from alternative
sources in order to support its operations. There is no guarantee, however,
that such increased amount of additional funding could be obtained in the
requisite time frame or at all. If the resolutions are not approved at the
General Meeting, and no alternative funding can be raised, the Company's
ability to operate as a going concern may be put at risk.

Directorate Change

Mr. Adam Taylor, a non-executive director of KEFI, has advised that he has
accepted a full time chief executive position with another organisation and as
a result, it is necessary to leave the KEFI board at the end of this year. Mr.
Taylor has contributed significantly to the Company providing insight and
support on a diversity of matters up to and including this latest round of
financing.

Mr. Taylor commented: "KEFI is well placed to take advantage of a number of
opportunities in Ethiopia and Saudi Arabia and the company has shown great
resilience on a number of occasions in the face very challenging
circumstances. It is my expectation that this resilience and determination
will ultimately lead to positive results for shareholders".

Total Voting Rights

Application has been made to the London Stock Exchange for Admission of the
Firm Placing Shares to trade on AIM and it is expected that First Admission
will become effective and that dealings in the Firm Placing Shares will
commence at 8.00 a.m. on or around 24 December 2021. Following First Admission
of the Firm Placing Shares, the total issued share capital of the Company will
consist of 2,567,301,106 Ordinary Shares each with voting rights. The Company
does not hold any Ordinary Shares in treasury. Therefore, the total number of
voting rights in the Company will be 2,567,301,106 and this figure may be used
by shareholders as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a change in
their interest in, the share capital of the Company under the FCA's Disclosure
Guidance and Transparency Rules.

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 (Executive Chairman)                         +357 994 57843
 John Leach (Finance Director)                                         +357 992 08130

 SP Angel Corporate Finance LLP (Nominated Adviser and Joint Broker)   +44 (0) 20 3470 0470
 Jeff Keating, Adam Cowl

 Brandon Hill Capital Ltd (Joint Broker)                               +44 (0) 20 7936 5200
 Oliver Stansfield, Jonathan Evans

 WH Ireland Limited  (Joint broker)

   +44 (0) 20 7220 1666

 Adrian Hadden, Andrew de Andrade

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

Further information can be viewed at www.kefi-minerals.com
(http://www.kefi-minerals.com)

Competent Person Statement

The information in this announcement that relates to exploration results and
Mineral Resources is based on information compiled by Mr Tomos Bryan,
Exploration Manager for Gold & Minerals Limited. Mr Bryan is a member of
the Australasian Institute of Mining and Metallurgy ("AusIMM"). Mr Bryan is a
geologist with sufficient relevant experience for Company reporting to qualify
as a Competent Person as defined in the JORC Code 2012. Mr Bryan consents to
the inclusion in this announcement of the matters based on this information in
the form and context in which it appears.

The Hawiah Mineral Resource was announced on 19 August 2020 and G&M is in
the process of updating the resource statement for 2021. KEFI confirms that it
is not aware of any new information or data that materially affects the
information in the above releases and that all material assumptions and
technical parameters, underpinning the estimates continue to apply and have
not materially changed. KEFI confirms that the form and context in which the
Competent Person's findings are presented have not been materially modified
from the original market announcements.

Notes to Editor

KEFI Gold and Copper plc

KEFI is focused primarily on the advanced Tulu Kapi Gold Project development
project in Ethiopia, along with its pipeline of other projects within the
highly prospective Arabian-Nubian Shield. KEFI targets that production at Tulu
Kapi generates cash flows for capital repayments, further exploration and
expansion as warranted and, when appropriate, dividends to shareholders.

KEFI in Ethiopia

Ethiopia has for some years been undergoing a remarkable transformation both
politically and economically. However, 2021 has been a turbulent year for the
country due to internal conflict due to military challenges to the Federal
Government from rebel minorities.

The Tulu Kapi gold project in western Ethiopia has however continued
progressing towards development, following a grant of a Mining Licence in
April 2015.

The Company has refined contractual terms for project construction and
operation, together with having assembled the full funding consortium and set
the conditional terms for the development funding package of c.US$356 million,
which is expected to be triggered as soon as normal conditions are satisfied
including security.

Estimates include gold production of c.190,000oz pa. All-in Sustaining Costs
(including operating, sustaining capital and closure but not including leasing
and other financing charges) remain US$800-900/oz, depending on the gold price
impact on the royalty payable. 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
upon commencement of development, with a view to adding satellite deposits to
development and production plans.

KEFI 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 c.31.5% interest in G&M and is the
operating partner.

The Kingdom of Saudi Arabia has announced policies to encourage mineral
exploration and development, and KEFI supports this priority by serving as the
technical partner within G&M. ARTAR also serves this government policy as
the major partner in G&M, which is one of the early movers in the modern
resurgence of the Kingdom's minerals sector.

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