TIDMKEFI
RNS Number : 3665F
KEFI Minerals plc
11 November 2015
11 November 2015
KEFI Minerals plc
("KEFI" or the "Company")
GOVERNMENT OF ETHIOPIA TO INVEST US$15-20M IN TULU KAPI GOLD
PROJECT
KEFI Minerals (AIM: KEFI), the gold exploration and development
company with projects in the Kingdom of Saudi Arabia and the
Federal Democratic Republic of Ethiopia, is pleased to report that
it has received formal confirmation from the Government of Ethiopia
of its intent to invest US$15-20 million in the Tulu Kapi Gold
Project (the "Project"). This investment will provide the
Government of Ethiopia with an equity interest in KEFI Minerals
(Ethiopia) Ltd ("KME"), a wholly-owned subsidiary of KEFI Minerals
plc that owns and operates the Project, of approximately 20-25%
based on the projected enlarged paid-up share capital of KME (c.
25-30% including the Government's pre-existing 5% free
carried-interest).
The intended investment by the Government implies a Project
value of approximately US$75 million at its current stage of
development and reflects the aggregate of equity capital invested
into KME. At a typical consensus gold price of US$1,250/oz, Project
NPV is c. US$168 million, once fully funded and based on the
unleveraged after tax cash flows discounted at 8%.
Monies invested by the Government will be used to fund the
roads, power and certain other associated infrastructure required
by the Project. This formal investment decision follows last
month's appointment of the preferred project contractors and
supports the Company's timetable to assemble the full financing
syndicate in Q4 2015.
Mr Harry Anagnostaras-Adams, Executive Chairman, said: "KEFI
Minerals is honoured to have received from the Government of
Ethiopia the formal confirmation of its intended equity investment
into the Tulu Kapi Gold Project. This demonstrates their commitment
to the project and confidence in our ability to deliver it. We look
forward to exploring other growth opportunities within Ethiopia in
full compliance with the Government's policies and regulations, and
to supporting the expansion of their minerals sector."
The Government's Project equity investment, within the context
of the Full Funding Plan
The next stage of the financing process is to finalise selection
of the remaining members of the preferred syndicate and agreed
terms, and to move into full syndicate documentation for approval
by all participants and the National Bank of Ethiopia. Updated
information has been submitted to the relevant parties for formal
consideration.
The latest financial projections provided by KEFI's preferred
contractors have further improved the Project's economic outlook.
Annual gold production during the first eight years has been
increased from the average estimate contained with the 2015
Definitive Feasibility Study ("2015 DFS") of 95,000 to 115,000 oz.
Combined with the terms being discussed with potential syndicate
members, the latest projections indicate that, at a gold price
range of US$1,100 to US$1,400/oz, All-in Sustaining Costs would be
reduced to US$731-752/oz and all debts could be repaid by the end
of the third or second year of production respectively.
The tenor of proposed loan facilities will be four to eight
years and debt-service obligations designed around appropriately
conservative gold prices below the current spot price. KEFI is
considering a range of alternative finance structures comprising
senior debt facilities of c. US$70 million with the balance sourced
from a combination of streaming of c. US$40 million and Project
equity of c. US$20 million (in addition to historical equity
invested into KME of c. US$50 million). The finalisation of the
equity component will take place in early 2016 after procurement
has been completed to ensure adequate cost-overrun facilities.
The 2015 DFS and independent technical reviews thereof have been
completed, and contractors have commenced the FEED (front end
engineering design) stage of the construction contract and
associated in-country preparatory activities. Pending finalisation
of procurement and drawdown of project finance, development
activities in the meantime are to be funded largely by contractors
under their respective arrangements and potentially by initial gold
stream drawdowns.
ENQUIRIES
KEFI Minerals plc
Harry Anagnostaras-Adams (Executive
Chairman) +357 99457843
SP Angel Corporate Finance
LLP (Nominated Adviser)
Ewan Leggat, Jeff Keating +44 20 3470 0470
Brandon Hill Capital Ltd (Joint
Broker)
Oliver Stansfield, Alex Walker,
Jonathan Evans +44 20 7936 5200
Beaufort Securities Ltd (Joint
Broker)
Elliot Hance +44 20 7382 8300
Luther Pendragon Ltd (Financial
PR)
Harry Chathli, Claire Norbury,
Oliver Hibberd +44 20 7618 9100
Further information can be viewed on KEFI's website at
www.kefi-minerals.com
NOTES TO EDITOR
KEFI Minerals plc
KEFI is the operator of two advanced gold development projects
within the highly prospective Arabian-Nubian Shield, with an
attributable 1.93Moz (100% of Tulu Kapi's 1.72Moz and 40% of Jibal
Qutman's 0.73Moz) gold Mineral Resources (JORC 2012) plus
significant resource growth potential. KEFI targets that production
at these projects generate cash flows for further exploration and
expansion as warranted, recoupment of development costs and, when
appropriate, dividends to shareholders.
Expected milestones for the remainder of 2015 at Tulu Kapi
include:
-- Formalisation of project contracting, senior secured financing and equity funding syndicate.
-- Full development funding and commencement of construction activities.
In addition, during 2015 KEFI anticipates that, through its
joint venture company in Saudi Arabia, Gold & Minerals Ltd
("G&M"), it will commence drilling at new licence Hawiah and
assemble a Mining Licence Application for its discovery at Jibal
Qutman.
KEFI Minerals in Ethiopia
The Tulu Kapi gold project in Western Ethiopia is being rapidly
progressed towards development with the Mining Licence being
granted in April 2015.
KEFI's Definitive Feasibility Study was then completed and the
Company is now refining contractual terms for project construction
and operation. Latest estimates for annual gold production are c.
100,000 oz pa for a 10-year period and for All-in Sustaining Costs
(including operating, sustaining capital and closure) are c.
US$760/oz (excluding initial investment). Tulu Kapi's Ore Reserve
estimate totals 15.4Mt at 2.12g/t gold, containing 1.05Moz.
KEFI Minerals in the Kingdom of Saudi Arabia
In 2009, KEFI formed G&M in Saudi Arabia with local Saudi
partner Abdul Rahman Saad Al-Rashid & Sons Company Limited
("ARTAR"), to explore for gold and associated metals in the
Arabian-Nubian Shield. KEFI has a 40% interest in G&M and is
the operating partner. To date, G&M has conducted preliminary
regional reconnaissance and has had five exploration licences
("ELs") granted, including Jibal Qutman and the more recently
granted Hawiah EL that contains over 6km strike length of
outcropping gossans developed on altered and mineralised rocks with
all the hallmarks of a copper-gold-zinc VHMS deposit.
At Jibal Qutman, G&M's flagship project, Mineral Resources
are estimated to total 28.4Mt at 0.80g/t gold for 733,045 contained
ounces. The shallow oxide portion of this resource is being
evaluated as a low capital expenditure heap-leach mine
development.
ARTAR, on behalf of G&M, holds 24 EL applications that cover
an area of approximately 1,484km(2) . 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 instituted 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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