TIDMKEFI
RNS Number : 8693Q
KEFI Minerals plc
11 June 2018
11 June 2018
KEFI Minerals plc
("KEFI" or the "Company")
Tulu Kapi Gold Project ("Project")
US$30 million Project Equity Investment
KEFI Minerals (AIM: KEFI), the emerging gold producer, is
pleased to report that it has reached agreement with an Ethiopian
investment syndicate for the proposed acquisition of a 30%
ownership interest in KEFI's wholly-owned subsidiary KEFI Minerals
(Ethiopia) Limited ("KME") and holder of the Company's interest in
the Tulu Kapi Gold Mines Share Company Limited ("TKGM"). Under the
proposed terms, which remain subject to final documentation and
government approval, the syndicate will invest US$30 million in
local currency (Birr) equivalent of which US$9 million will be
invested in August 2018 and the balance upon closing of project
finance.
This will mean that upon closing of project finance, the
ownership of the Tulu Kapi Gold Project via TKGM would be circa 23%
by the Ethiopian Government and 77% by KME. KME would be owned 70%
by KEFI (equivalent of 54% of TKGM) and 30% by the Ethiopian
investment syndicate (equivalent of 23% of TKGM).
At approximately US$1 million per percentage point of ownership,
the proposed equity pricing terms for the Ethiopian investment
syndicate are broadly consistent with those entered into with the
Ethiopian Government for its committed investment of local currency
(Birr) equivalent of US$20 million into TKGM, except that the
Ethiopian Government is also entitled to a 5% free-carried interest
in TKGM.
These terms are also broadly consistent with actual historical
equity investment costs and with Project NPV's (open pit only) at
start of construction of US$115 million and at start of production
of US$192 million respectively, ignoring the underground deposit
and exploration prospects.
KEFI has now assembled the proposed full project funding
consortium including contractors, equity and non-equity capital.
For the Project to proceed, all stakeholders now rely on closing
out the remaining Ethiopian Government processes and approvals,
along with completion of due diligence and formal
documentation.
The Ethiopian investment syndicate leaders have a record of
successful investment in other local enterprises such as hotels and
banks, two of the sectors which have grown significantly in the
past decade, during which Ethiopia has been amongst the world's top
ten growth countries every year. Subject to the recent progress
being maintained by all parties, it is proposed that financial
settlement from the Ethiopian investment syndicate will take place
in two stages, with the first 30% of their investment closing at
the end of August 2018 and the remaining 70% immediately after full
project funding is in place. The use of proceeds would be to fund
project finance closing, community and development costs.
This project equity proposal reflects KEFI's commitment to
maximum feasible "Ethiopianisation" at every level of its
activities in the country. The Federal Ethiopian and Regional
Oromia Governments have publicly declared that mining is a top
priority and Tulu Kapi is the most advanced modern mining project
in the Oromia region and in Ethiopia generally. The Project, which
is designed to comply with national and international environmental
and social standards (in particular Equator Principles and World
Bank IFC Standards), will be directly employing and training over
1,000 people by the end of 2019 if all goes according to plan, and
would generate significant indirect benefits to local and regional
stakeholders for the long term, in addition to export revenues of
approximately US$200 million per annum.
In related developments last week, the Tulu Kapi local
government community compensation committee commenced the process
of allocating the proposed compensation payments to the individual
households to be resettled. TKGM also re-affirmed its commitment to
the livelihood restoration program for resettled households, its
commitment to the community development program set out as part of
its mining licence approvals and appointed its senior site services
manager to oversee the Company's social performance team for
community programs as part of the role.
Harry Adams, Chairman of KEFI Minerals commented:
"We are delighted to have agreed terms with the Ethiopian
investment syndicate, which further strengthens our alignment with
local stakeholders for our Tulu Kapi project. Their investment on
roughly the same terms as the Ethiopian Government means that c.46%
of the Project equity will now be held by the Ethiopian Government
and local investors to complement the other benefits.
"KEFI's remaining c.54% beneficial interest in the Project,
along the lines previously foreshadowed, gives the Company an
implied valuation of US$66 million based on these transaction
metrics, whilst not including any value for the Tulu Kapi
underground deposit or the exploration prospects in Ethiopia and
Saudi Arabia, the largest countries within the highly prospective
Arabian Nubian Shield where KEFI is focused.
"KEFI has now assembled the proposed full project funding
consortium, including contractors, equity and non-equity capital
and is expected to move towards full financial close later this
year by closing out the remaining Ethiopian Government processes
and approvals, along with completion of due diligence and formal
documentation. The Company looks forward to updating shareholders
on its progress over the coming months."
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 (Executive
Chairman) +357 99457843
John Leach (Finance Director) +357 99208130
SP Angel Corporate Finance LLP (Nominated
Adviser) +44 20 3470 0470
Ewan Leggat, Jeff Keating, Soltan
Tagiev
Brandon Hill Capital Ltd (Joint Broker) +44 20 7936 5200
Oliver Stansfield, Jonathan Evans
RFC Ambrian Ltd (Joint Broker) +44 20 3440 6817
Charlie Cryer
IFC Advisory Ltd (Financial PR and
IR) +44 20 3934 6630
Tim Metcalfe, Heather Armstrong
Further information can be viewed 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 generates cash flows for further exploration and
expansion as warranted, recoupment of development costs and, when
appropriate, dividends to shareholders.
KEFI Minerals in Ethiopia
Ethiopian Political Developments
Ethiopia is currently undergoing a fast, smooth and remarkable
transformation both politically and economically. Last week, the
two month old government announced three major decisions. First, it
lifted the three month old state of emergency. Secondly, it
accepted the Algiers Agreement peace deal in a bid to end a 20 year
stalemate with its neighbour Eritrea. F inally, the Government
announced the liberalisation of the economy with the decision to
privatise major state owned businesses including Ethiopian
Airlines, Ethiopian Telecoms and the Ethiopian Electricity and
Power companies.
The Tulu Kapi Gold Project
The Project in western Ethiopia is being progressed towards
development, following a grant of a Mining Licence in April
2015.
The Company has now refined contractual terms for project
construction and operation. Estimates include open pit gold
production of c. 140,000oz pa for a 7-year period. 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.
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 1,100 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 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 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, 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 over 20 EL applications. 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.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
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END
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