TIDMKEFI
RNS Number : 4774D
KEFI Minerals plc
10 October 2018
10 October 2018
KEFI Minerals plc
("KEFI" or the "Company")
Q3 Operational Update
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 provide an
operational update for the period from 1 July 2018 to 30 September
2018.
This quarterly operational update encompasses the activities of
KEFI Minerals (Ethiopia) Ltd ("KME") and Tulu Kapi Gold Mines Share
Company ("TKGM") in Ethiopia and Gold & Minerals Ltd
("G&M") in Saudi Arabia.
Tulu Kapi Gold Project (the "Project")
Project Development Funding
Project development funding has been arranged, subject to normal
conditions precedent:
-- Equity capital has been committed as follows:
o KME has already funded the pre-development costs of
approximately US$60 million;
o The Government of Ethiopia has committed US$20 million
(Ethiopian Birr equivalent) to be subscribed over 2019-2020 to fund
construction of off-site infrastructure; and
o ANS Mining Share Company ("ANS") has committed US$30-38
million (Ethiopian Birr equivalent) to be released to TKGM as
follows:
-- US$9 million (Ethiopian Birr equivalent) in December 2018,
subject to specified Government consents and the receipt of
indicative terms sheet from the providers of secured finance;
and
-- US$21-29 million (Ethiopian Birr equivalent) at the closure
of full development funding in early 2019.
-- Secured bonds/lease capital and a separate working capital
line have been proposed, subject to normal conditions
precedent:
o US$160 million issue of listed senior secured infrastructure
bonds of which US$110 million is to fund construction of on-site
infrastructure and the balance set aside for financing costs during
the construction period and reserves.
o Working capital line via a stockpile financing facility up to
US$20 million.
Project Contractors
All principal contractors are planning Project implementation
with the KEFI/TKGM team and otherwise remain on standby for finance
closing and mobilisation:
-- Lycopodium for process plant and associated infrastructure.
-- Ausdrill (via subsidiary African Mining Services) for mining services.
-- Ethiopian Roads Authority for access roads.
-- Ethiopian Electric Power Corporation for power connection.
Ethiopian Government (Federal, Regional, Zonal, Local as the
case may be)
The following consents or permits have been granted:
-- Development, operational, environmental and social plans.
-- Investment and Shareholders Agreement for jointly-owned project company TKGM.
-- Capital ratios, hedging and bank account arrangements for TKGM.
-- Community resettlement dates and planned actions.
The following consents or permits remain outstanding:
-- Registration of equity subscriptions, most already having
been endorsed by the Ministry of Mines.
-- Endorsement of updated project plans, the 2015 plan already
having been approved by the Ministry of Mines.
-- Approvals of finance documentation and underlying security
arrangements by the central bank (National Bank of Ethiopia).
Timetable and Economics for Project financing and
development
-- Q1 2019: Community resettlement along with detailed
engineering and procurement to start 1 January 2019 and be carried
out over the following three months.
-- Construction is expected to start in early 2019 and
commissioning of production is expected to take place during H2
2020.
-- The financial model Base Case (assuming a gold price of
US$1,300/oz) indicates a payback of approximately 3 years, an
EBITDA of over US$73 million per annum and a post-debt NPV of
US$115 million (GBP82 million) at construction start and US$192
million (GBP137 million) at production start (100% of project at a
discount rate of 8% after tax). The proposed project finance has a
tenure of 9 years.
-- Projected gold Production Costs are c. US$700/oz, All-in
Sustaining Costs are c. US$800/oz and Total Costs, including
depreciation and amortisation are c. US$1,000/oz.
-- The upside leverage is indicated by a 10% increase in gold
price from the Base Case of U$1,300/oz, which are expected to
increase the NPV by 50%.
Corporate Structure, Board and Management
KEFI Minerals plc to remain the operating partner in:
-- G&M project company in Saudi Arabia alongside Saudi
conglomerate Abdul Rahman Saad Al Rashid & Sons Company Limited
("ARTAR"); and
-- TKGM project company in Ethiopia alongside new shareholders,
the Ethiopian Government and Ethiopian financial institution via
ANS.
The Boards and Management of KEFI and TKGM have been expanded
recently.
Exploration
Both TKGM and G&M to trigger exploration programs on a
recently expanded land package targeting both gold and copper on
"Tulu Kapi-style" gold mineralisation as well as large Volcanic
Massive Sulphide systems ("VMS"). These exploration programs are to
be launched when the new regulations pass in Saudi Arabia and when
Tulu Kapi's development has been triggered in Ethiopia.
Investor Webinar
The Company will host a live webinar at 11am BST on Thursday 11
October 2018 which can be accessed via:
http://webcasting.brrmedia.co.uk/broadcast/5bace697269b0c1ded189126
and also through www.brrmedia.co.uk
Listeners are encouraged to submit questions by emailing:
questions@brrmedia.co.uk
The webinar will subsequently be available on the Company's
website at http://www.kefi-minerals.com/news/webcasts.
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 20 3470 0470
Ewan Leggat, Jeff Keating, Soltan Tagiev
Brandon Hill Capital Ltd (Joint Broker) +44 20 7936 5200
Oliver Stansfield, Jonathan Evans
IFC Advisory Ltd (Financial PR and IR) +44 20 3934 6630
Tim Metcalfe, Heather Armstrong
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
Ethiopia is currently undergoing a remarkable transformation
both politically and economically.
The Tulu Kapi gold 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 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 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 40% interest in G&M and is
the operating partner.
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
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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