REG - KEFI Minerals plc - TKGM General Meeting Approves All Resolutions

KEFI Gold and CopperAnnouncement

17/02/2020 07:00

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RNS Number : 1345D  KEFI Minerals plc  17 February 2020

17 February 2020

 

KEFI Minerals plc

 

("KEFI" or the "Company")

 

TKGM General Meeting Approves All Resolutions

 

KEFI Minerals (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 advise that, further to the Company's announcement
on 30 January 2020 in relation to the Company's Tulu Kapi Gold Project (the
"Project"), the scheduled General Meeting of Tulu Kapi Gold Mines Share
Company ("TKGM") has been held with all resolutions passed.

 

Following the passing of the resolutions at the TKGM General meeting,
arrangements will now proceed for the closing of the first subscription funds
from the private sector partner ANS Mining Share Company ("ANS") to TKGM in
accordance with agreed documentation and standard local procedures, beginning
with the notarisation and registration of the approved shareholder resolutions
with the Ethiopian Department of Trade.  Closing with the Ethiopian
Government sector partner had already occurred. As previously announced, the
total ANS commitment is US$38 million with the first US$9.5 million (Ethiopian
Birr equivalent) being unconditional and subsequent amounts in accordance with
the conditions previously outlined.

 

Also notable is that in the past two weeks the consortium of Project partners,
lenders, insurers and contractors have met in the various work-locations of
Perth, Cape Town and Addis Ababa and agreed the overall sequence of events
over the next six months in the lead-up to major on-site works.  The
Ethiopian Government is upgrading its Project preparations with increased
personnel in the Tulu Kapi district for administration and policing.
Off-site works have started.

 

Executive Chairman of KEFI, Mr Harry Anagnostaras-Adams, commented:

 

"The formal TKGM shareholder meeting was an important step for this closely
co-ordinated public-private-partnership for Ethiopia's first modern mine in
decades and has now cleared the way for the closing of the ANS equity
subscription.  The Tulu Kapi Gold Project is planned to be the largest single
export generator in the country and all Project planning is designed within
the multi-party consortium to make our Project a model first-mover in all
social, environmental, human resource and technical aspects."

 

Background to the Ethiopian Environment and the Project

 

Ethiopia is currently undergoing a remarkable and overwhelmingly positive
transformation socially, politically and economically.  It is the base for
the African Union, the continent's highest growth country, and its Prime
Minister was the recent recipient of the Nobel Peace Prize for his leadership
in the rapid improvement of regional relations and internal democratic
initiatives.

 

The proposed Project and financing timetable is for the first six months of
development to be funded by way of equity investment at the TKGM level by
KEFI's Project partners, which began in January 2020, with full finance close
and bank loan drawdown planned for the remainder of the development.  TKGM
has recently selected the preferred Project debt-finance package offered by
two leading African development banks with a commitment to Ethiopia.

 

Using the proposed bank loan infrastructure financing, at 14 February 2020's
gold price of US$1,580/oz, KEFI estimates that the TKGM net cash flow over the
life of the open pit will be US$475 million after all debt and other
obligations.  At this current gold price of US$1,580/oz, the Definitive
Feasibility Study or DFS-based NPV of the open pit (US$299 million) added to
that of the PEA-based NPV of the underground mine (US$94 million), totals to
the aggregate Project NPV of US$393 million.  On this basis and after taking
into account that KEFI has already invested nearly all of its expected
contribution to the Project equity, the NPV of KEFI's 45% beneficial interest
is US$177 million (approximately £138 million), about seven times the current
£21 million market capitalisation of the Company.

 

This NPV-based assessment does not include further potential upside offered by
exploration underground at the Project, where extensions of the 5.6 g/t
Indicated Resource remain untested, in the adjacent Tulu Kapi district, where
several areas of drill-intercepted pre-resource mineralisation require
follow-up and the asset in Saudi Arabia where we recently reported the
discovery of a large polymetallic deposit of mainly copper-gold and drilling
continues to intercept massive sulphides in a large Volcanogenic Massive
Sulphide occurrence.

 

The Company will issue its Quarterly Report next week and conduct its
quarterly shareholder webinar, details of which will be published in due
course.

 

Market Abuse Regulation (MAR) Disclosure

 

Certain information contained in this announcement would have been deemed
inside information for the purposes of Article 7 of Regulation (EU) No
596/2014 until the release of this announcement.

 

 

Enquiries

 KEFI Minerals plc
 Harry Anagnostaras-Adams (Managing Director)                          +357 99457843
 John Leach (Finance Director)                                         +357 99208130

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

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

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

 

 

Notes to Editor

 

KEFI Minerals 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 Minerals in Ethiopia

 

The Company has regularly refined contractual terms for project construction
and operation with principal contractors Lycopodium (processing) and Perenti
(mining), both Australian mining industry leaders with some 30 years of
successful track record in various African countries. Estimates include open
pit gold production of c. 140,000oz pa for a 7-year period. These contractual
arrangements are now entering the closing phase for sign-offs. Based on the
most recent estimates, All-in Sustaining Costs (including operating,
sustaining capital and closure but not including leasing and other financing
charges) remain c. US$800/oz. 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.

 

All plans are made with regard to the World Bank IFC Standards for social,
environmental and other aspects.

 

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 Minerals 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 37.5%% interest in G&M and is the
operating partner.

 

ARTAR, on behalf of G&M, holds over 16 Exploration Licence (EL)
applications pending the introduction of the new Mining Law. ELs are renewable
for up to three years and bestow the exclusive right to explore and to obtain
a 30-year exploitation (mining) lease within the area.

 

The Kingdom of Saudi Arabia has announced policies to encourage minerals
exploration and development, and KEFI Minerals 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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