Detailed quarterly update from Kefi Minerals on all activities

The new Prime Minister Dr. Abiy Ahmed was appointed on 2 April 2018 and is also Chairman of the ruling federal coalition party and of the party representing Oromia, in which Tulu Kapi is located. Dr Abiy Ahmed was formerly Vice President Oromia Regional Government.

KEFI expects that the Government will maintain its determination for Ethiopia to remain within the world’s top 10 growth countries, where it has been ranked for a remarkable 15 years in a row. The Company also expects that the strong support for our project will now be further reinforced.

Throughout the recent Government transition, KEFI and joint Government-KEFI company TKGM have been maintaining communications with the Ministries and Government agencies at federal, regional, zonal and local levels and we can now re-intensify the collaboration.

Good progress continues with a full consortium having been assembled which is focused on raising all development funding at the project-level. We now plan a $150 million bond issue for the debt side (compared to $140 million previously) to include some extra cash reserves. This is in addition to c. $40 million of project-level equity, which includes the Government’s $20 million commitment. These figures exclude the already-invested project equity of $60 million.

The planned project consortium now includes the project contractors Lycopodium and Ausdrill, KEFI partner the Government of Ethiopia and, under Non-Disclosure Agreements, the Bond Arranger and one or more of the several potential project equity investors discussing terms.

The proposed project financing structure has the following main elements:

o  KEFI Minerals plc to remain operating partner in:

§ G&M in Saudi Arabia alongside ARTAR, and

§ KEFI Ethiopia alongside a new shareholder in KEFI Ethiopia.

o  KEFI Ethiopia to remain majority shareholder of TKGM in which the Government is co-shareholder

o  Both KEFI Ethiopia and G&M to trigger exploration programs later this year 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.

Various project “pre-works” are underway:

o  the Ethiopian Roads Authority (“ERA”) has widened and sealed the arterial road to within 12 km of Tulu Kapi as a prelude to upgrading the side roads to the project site as part of the Government’s project-equity earn-in. ERA has committed to complete the upgrade by late 2019 to support the project’s operational requirements. Construction does not need any new roads;

o  the Ethiopian Electric Power Company (“EEPCO”) has confirmed it is planning to install the power connection from the main transmission line by late 2019, to meet operational requirements; and

o  the Oromia Regional Government and TKGM have agreed the joint preparation of the new host lands for the community and await clearance to proceed under new Government teams.

Various other pre-works have been completed and are planned to serve schedule-efficiency as from the end of the wet season in Ethiopia in June-September, when major works can commence.

Subject to continuing satisfactory progress, project finance drawdown is targeted to match the commencement of major works. In the meantime, due diligence, documentation and formalities continue and appropriate updates will be provided.

Project commissioning is expected to commence by the end of 2019.

An aggressive exploration program is scheduled to begin in H2-18 to tackle a recently expanded exploration land-package now approximating 3,000 sq km. This is the aggregate of our existing and applied-for position in Ethiopia (100%-owned) and Saudi Arabia (40%-owned). The commencement of the program relies on the Governments in both country’s formalising certain licences as scheduled.

The targets comprise satellite gold deposits under or within trucking distance of Tulu Kapi along with a set of VMS copper and gold targets in Ethiopia (near Tulu Kapi) and in the Wadi Bida Mineral Belt (“WBMB”) along strike of Hawiah.

One area applied for contains significant historic drill intercepts such as 19m at 9.21 g/t Au and 21.8m at 6.1 g/t Au, trench results of 28.3m at 8.7 g/t Au. Based on KEFI’s database, Saudi Arabia’s WBMB contains many large gossans with recorded mineralisation along with evidence of base metals at depth and has a surface expression twice the size of the Bisha Belt in Eritrea.

It is notable that, notwithstanding that few international explorer-developers have yet to enter the Arabian Nubian Shield (“ANS”), the ANS region has more than doubled its gold production in the last 5 years from c. 50 tonnes of gold in 2013 to more than 100 tonnes in 2017.

The goals for KEFI’s exploration program are:

o  to support and expand Tulu Kapi production from the initial 140,000 oz pa;

o  to justify and support the start-up of Jibal Qutman in Saudi Arabia, to generate cash flow for self-funding a large exploration program; and

o  to capitalise on the Company’s pole position in the fast-expanding minerals sector of the ANS in both gold and copper