REG - Kefi Gold and Copper - Tulu Kapi Gold Project Launch Update

KEFI Gold and CopperAnnouncement

25/03/2024 07:00

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RNS Number : 0547I  Kefi Gold and Copper PLC  25 March 2024

25 March 2024

KEFI Gold and Copper plc

("KEFI" or the "Company")

Tulu Kapi Gold Project Launch Update

KEFI Gold and Copper (AIM: KEFI), is pleased to report further positive
developments at the Company's high-grade Tulu Kapi Gold Project in Ethiopia
("Tulu Kapi" or the "Project"), as it prepares for full launch in H1 2024.

As previously reported, all of the required development budget of US$320
million (exclusive of the historical equity investment of c. US$100 million)
has been sourced at the subsidiary level. We are pleased that, following the
final approvals from the lead-bank, all other parties triggered their formal
approval processes which are now all advancing, notably including progress
with both the co-lending bank and the local equity-capital investors.

A positive development is that recent regulatory changes have facilitated the
improvement to the equity funding structure which has lowered overall finance
costs. The regulatory changes of note were the foreign exchange exemptions,
the increase in the maximum permissible ratio of debt to equity from 70:30 to
80:20 and the deeming as foreign direct investment the re-investment of the
local currency (Ethiopian BIRR) retained earnings of multi-national
corporations ("MNC") into new business sectors.

Within the development capital budget of US$320 million, US$100 million was to
be provided through the issuance of two types of Equity Risk Notes ("ERN"),
one type for MNC's with no operations in Ethiopia and another lower-cost ERN
for those with accumulated retained earnings in Ethiopian operations. The
Company is pleased to report that it can now focus on the lower-cost ERN -
fixed at 12% per annum. These notes remain repayable in cash from operations
or, as a fall-back, in KEFI equity (at KEFI's election), convertible in year 4
(being year 2 of full production) at the then prevailing KEFI share price.

The Company can confirm a longstanding and large MNC investor in the ERN has
now received initial board approvals. All syndicate members have agreed a
schedule for all remaining pre-launch tasks including their respective formal
approvals ahead of full financial close mid-2024.

Comment by Harry Anagnostaras-Adams, KEFI Executive Chairman:

"I am delighted to report the initial board approval of a major local
equity-capital provider. And it is especially pleasing that the instrument
designed for this transaction, the Equity Risk Note, has been streamlined
under the lower-cost approach. Our modelling and production profile for this
high-grade open pit gold mine, based on a gold price of US$1,864/oz (versus
current spot of US$2,170/oz), shows sufficient cash will have been generated
at the proposed time of repayment to repay these ERN in cash at the time they
fall due.

"When combined with the credit committee approved US$95 million debt from lead
bank Eastern and Southern Trade and Development Bank ("TDB") and the Ethiopian
Federal and Regional Governments' US$20 million commitment, with the potential
to increase to US$40 million, this accounts for US$215 million to US$235
million.

"I can also advise the Company has received confirmation from the co-lender
Africa Finance Corporation ("AFC") that its approval processes are underway
and progressing well for its-intended US$95 million investment, which would
provide the balance of the required funding for Project launch.

"All syndicate members are supportive and are working to ensure final
documentation is entered into by mid-2024 to enable full Project launch and
drawdown of funds. I look forward to providing further updates as
appropriate."

Additional Project Updates

Preparing for resettling the local community:

·    The planned extra security protection is being implemented as the
field activities increase; and

·    The lenders' independent security adviser will monitor safety of
implementation over the next few months as we prepare to trigger Project
launch mid-2024.

Preparing to trigger procurement and construction:

·    We have completed the detailed work packages for tendering local
sub-contractor work;

·    These are based on the FEED (Front-End Engineering and Design) also
completed by principal contractor Lycopodium; and

·    The mining contractor PW Mining is now seeking its Ethiopian
regulatory clearances for its arrangements with its own financiers and OEM's
(Original Equipment Suppliers).

Establishment and deepening of operational banking support and working capital
sources:

·    Ethiopia's largest bank, the Government-owned Commercial Bank of
Ethiopia, has established onshore Ethiopian BIRR and US Dollar Project
operating accounts and is engaging on providing various working capital
facilities as we advance;

·    Ethiopia's largest non-Government bank, Awash Bank, has done likewise
and has also approved a working capital facility for TKGM. It will initially
be drawn to Ethiopian BIRR 35 million (approximately £480,000) and can expand
as the launch proceeds; and

·    A major international bank, Citibank, is in discussions about opening
the offshore operating accounts in London, in accordance with the foreign
exchange exemptions granted by the central bank, the National Bank of
Ethiopia.

Conditions Precedent to Signing Definitive Detailed Formal Agreements
("Detailed Documentation"):

·    The aforementioned processes are designed to be progressed by the end
of May 2024 to the stage that warrants signing of Detailed Documentation
between all syndicate members; and

·    All conditions precedent to signing are typical for a transaction of
this nature.

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. The person responsible for the release of this announcement is Harry
Anagnostaras-Adams (Executive Chairman).

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)   +44 (0) 20 3470 0470
 Jeff Keating, Adam Cowl

 Tavira Financial 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

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

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