REG - Kefi Gold and Copper - Strategic Review of GMCO JV in Saudi Arabia

KEFI Gold and CopperAnnouncement

13/11/2024 07:00

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RNS Number : 9789L  Kefi Gold and Copper PLC  13 November 2024

13 November 2024

 

KEFI Gold and Copper plc

("KEFI" or the "Company")

Strategic Review of Gold and Minerals Joint Venture in Saudi Arabia

KEFI (AIM: KEFI), the gold and copper exploration and development company
focused on the Arabian-Nubian Shield since 2008, provides an update regarding
the Company's Gold and Minerals SLA ("GMCO") joint venture in Saudi Arabia.

A strategic review is being conducted by the two partners of GMCO, KEFI and
its majority partner, Abdulrahman Saad AlRashid & Sons ("ARTAR").
 Initial conclusions include that KEFI forego its right to contribute US$10
million and maintain its 25% GMCO shareholding and, instead, accept dilution
to 15% of GMCO.  That is now being implemented formally.

In addition, the ongoing business planning scenarios currently being evaluated
include the potential sale of KEFI's residual 15% shareholding, the potential
proceeds of which would be receivable by KEFI.

KEFI's decision is reflective of:

·    GMCO will shortly be looking to trigger its initial development and
increase regional exploration

·    GMCO's commitment to growth would normally see KEFI funding its pro
rata share

·    For the past 12 months ARTAR has sole-funded exploration activities
of GMCO in Saudi Arabia, including KEFI's net share of US$10 million

·    The cost of KEFI raising sufficient funds via the issue of KEFI
equity to maintain KEFI's interest in GMCO is considered dilutive to KEFI
shareholders, given the disconnect between the current market valuation of the
plc and the Board's considered view of the inherent value of KEFI's
shareholding in GMCO, of KEFI's majority-owned flagship Tulu Kapi Project, and
of KEFI's pipeline of projects offering majority ownership

·    The dilution for KEFI's non-contribution in GMCO has been based on
the historical cost of investment by the partners

·    Any sale of KEFI's remaining GMCO shareholding will be based on open
market valuations which, the KEFI Director's believe is expected to be,
following consultations with market analysts, at a significant premium to the
read-through valuation of this transaction with ARTAR which was based on
historical cost only.  However, this is a potential future transaction and
there can be no guarantee of the outcome

·    KEFI is prioritising its majority-owned projects, in particular:

o  its Tulu Kapi Gold Project in Ethiopia, being prepared for finance
closing, construction and production;

o  Tulu Kapi's significant underground resources to develop and with
potential to explore; plus

o  a large wholly owned pipeline of additional opportunities in Ethiopia and
elsewhere in the region

GMCO has ambitious growth plans.  To date approximately US$80 million has
been spent by the joint venture on making its discoveries and on the
development feasibility studies thereon.  GMCO has so far reported
gold-equivalent resources of c.3 million oz on orebodies that remain open.
 GMCO preparations for its next stage of aggressive growth include:

·    Continuing to build GMCO's leadership team for the next stages of
growth

·    Evaluating a two-stage development of both the Hawiah
Copper-Gold-Zinc-Silver ("Hawiah"), and Jibal Qutman Gold ("Jibal Qutman")
discoveries which now have advanced feasibility studies for development of the
initially defined Mineral Resource Estimates. along the following lines:

o  first stage development of both Jibal Qutman and Hawiah, being open-pit
mining combined with carbon-in-leach processing on the shallow oxide ore;

o  second stage development to follow further exploration of ore body
extensions along strike and at depth of both projects noting that the majority
of the known mineralised structure at both projects has yet to be
drill-tested, along with optimisation of metallurgical recovery for their
fresh ore; and

o  expanding the regional exploration programme utilising all knowledge
acquired to date over the 15 year period since launching exploration in Saudi
Arabia.  GMCO's long-standing and highly successful exploration team is one
of the largest in Saudi Arabia and its next challenge is to execute an
efficient and focused exploration strategy for discovering world class
deposits

GMCO's partners will over the next six months assess the various alternative
strategies for optimising GMCO's growth and value, and their respective
involvement.

KEFI Executive Chairman, Harry Anagnostaras-Adams commented:

"Both of KEFI's host countries, Saudi Arabia and Ethiopia, have recently
pivoted towards an improved environment for mining. And the gold price is at
all-time highs.  In that context, KEFI considers it important that the two
operating partnerships play to their strengths and capitalise on the market
dynamics in each country.

"Today's announcement of the strategic review at GMCO reflects that the
partners will, over the next six months, review various scenarios to determine
the best way forward for the joint venture to build on its successful
discoveries and feasibility studies.  In the meantime, the KEFI board
believes it is in the best interests of KEFI shareholders to remove the
outstanding exploration liabilities with a consequential reduction in the
Company's stake in GMCO.  KEFI has made it clear that the priority for its
capital is to now optimise shareholder value via majority-owned projects."

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 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 (Institutional IR)
 Patrick Chidley                                     +1 (917) 991 7701
 Paul Durham                                         +1-203-940-2538

 

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