KEFI Minerals plc (LON:KEFI) Executive Chairman Harry Anagnostaras-Adams caught up with DirectorsTalk for an exclusive interview to discuss their 2018 results, the Central Bank approval for Tulu Kapi project, production targets and their other projects in Saudi Arabia.
Q1: You released your 2018 results yesterday, could you summarise for us the developments at KEFI Minerals last year and in 2019 so far?
A1: In respect of 2018, the number one development really wasn’t our doing but it was profoundly important to us and that is that the states of emergency ended in Ethiopia. Also, the appointment of a new government in the country which I suppose many would’ve seen the headlines every month or so with profoundly, progressive and positive changes in the country, that’s really so important to us, it can’t be understated.
That really unshackled our project, those changes in the local politic environment and positive initiatives have been possible since then, because of that. As a result of which, we have done a number of things through the course of 2018 and up until recently.
Firstly, we fully mandated the infrastructure finance, $160 million, that was in May last year and we then successfully completed the due diligence on the project, contractual relationships, risk assessments and so on would done in accordance with that.
Secondly, we secured project partners, $58 million in Ethiopia from the government and very strong conservative business groups in the country. We set up a working capital facility to make sure that we can keep the ball rolling down in the project company whilst we put together this very large project financing at the project level.
Lastly, we also introduced a very senior management team for development, construction, operations, people with impeccable records for such projects.
In 2019, the most significant thing is receipt, today, of the last government consent required for the project finance package to flow into closing procedures. This last Central Bank consent has been awaiting for 3 months now, it took some months instead of days because whilst we had agreed it a long time ago, the government decided to issue a general policy directive for the world at large, not just for one-off transactions. So, we were under confidentiality so we knew it was coming but we couldn’t really say so, that was the government’s business and we respected their confidentiality.
So, that’s it, unshackling last year and then flowing in actions since then.
Q2: Now, I understand you primary focus is on Tulu Kapi gold project, what’s still required for development to start on the project?
A2: As a result of today’s Central Bank confirmation of approval, we can close our partners agreements and equity subscriptions, protocol and rigmarole that one goes through in Ethiopia but it’s in our procedural. As set out in our RNS, there are no point of contention between the partners, they’ve all cleared the debt for each other and Central Bank have cleared the debt for us as a set. So, we can proceed with those closing procedures for the project equity and likewise move onto the debt.
In terms of the development on the ground, we are now allowed to, with the local authorities out there, to go through the details of the resettling of the first contingent of the people, that is a very small set of 60 households.
We’ve given ourselves several months to do that, it only takes a few weeks physically but we’ve given ourselves a few months to do that to be on the safe side because the country’s going through a lot of change and turmoil and we just want to be very careful and safe and secure for our first movers so that everything’s done nice and timely.
Q3: You’re targeting production in mid-2021, can you briefly outline the development program and what it entails in order for this to be achieved?
A3: Well, we’ve started some of the long lead steps already to 2-year development schedule and somethings are quite critical to have begun already and they have begun already, tender packages for the power installation and road installation in particular. These are critical path issues and that’s in hand with the people doing those jobs.
Between now and the end of the Ethiopian wet season, it’s not like a tropical wet season but nevertheless, we’ve said we’ll adjust some activities around it, for harvest cycle and the community as well as other factors so between now.
So, over the course of the next 4 or so months, we’re really focussing on the resettlement phase I; a small number of households and on the detailed engineering, or front end engineering. At the end of that phase, that equity funded phase, we then move forward with equity closing, bulk earth work and fabrication jobs within the fast flowing factories that provide the plant components.
We’ll then move on to assembly next year, mining will start the middle of next year, there is very little work to do on the mining side before one starts getting to the ore because there’s very little overburden. We then go onto commissioning and along the way a lot of recruitment and training are dedicated to maximum local employment so there’s a lot of recruitment, a lot of training.
That management team we appointed last year in preparation for all of this is setting up plans and so on to take care of that job.
Q4: Outside of going into production at Tulu Kapi, what other focusses are there for KEFI Minerals?
A4: Saudi Arabia, yesterday was Eid, the end of Ramadan, it makes a moment in time where we can remobilise into the field.
We’re quite focussed sharply on very very large copper/gold target we have in Hawiah as part of a very large belt of 24 VHMS systems. They’re all potential company makers, some of them will be good, not all obviously, but the first cab off the rank to drill-test within a few months is Hawiah and our field teams will get back into the field now.
With Tulu Kapi underway on the one hand in Ethiopia and drilling a huge VHMS system on the other hand in Saudi Arabia, you’ve got a parallel stream there. Obviously, Tulu Kapi taking 99% of the time and money in terms of people involvement and financial involvement but the Hawiah project is very very significant even though it takes very few people and very little money. It has an extremely high potential value to the project and if we’re successful in what we’re hoping to achieve in Hawiah, it would dwarf Tulu Kapi .
So, we’ve got both of those streams ahead of us, both of them very exciting and both of them can now start moving forward.
