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KEFI Minerals Plc

KEFI Gold and Copper’s Tulu Kapi project economics have become more attractive

KEFI Gold and Copper plc (LON:KEFI), the gold exploration and development company with projects in the Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, has announced its unaudited interim results for the six months ended 30 June 2020.

The statement below encompasses the activities of the Company’s subsidiary, KEFI Minerals (Ethiopia) Limited, in Ethiopia, and KEFI’s joint venture, Gold & Minerals Limited, in the Kingdom of Saudi Arabia.

Overview

The current climate of increased gold and copper prices means that the project economics for the Company’s Tulu Kapi gold project in Ethiopia have become even more attractive, as have the potential values of our discoveries in Saudi Arabia, with maiden resources now reported mainly for copper/gold at Hawiah, as well as for zinc/silver and also for gold at Jibal Qutman.

The Company has continued to advance its projects in the highly prospective Arabian Nubian Shield notwithstanding the logistical restrictions imposed to protect personnel and the wider community due to COVID-19.

As reported post period end in July 2020 Tulu Kapi project company Tulu Kapi Gold Mines Share Company (“TKGM”) is in detailed discussions with specialist mining financiers to complete the Project finance consortium alongside the mandated senior bank lenders to the Project. TKGM is working closely with all these parties to refine the detailed terms and to complete their reviews of the recently completed independent technical expert reports. The focus remains on continuing offsite development activities, the closing of the full Project funding package in October 2020, resettlement  commencing in Q4 2020, site construction in early 2021 and for gold production to commence in 2022, in line with recent guidance.

It is notable that both Ethiopia and Saudi Arabia have prioritised development of the mining sector and both countries are implementing reforms to further develop and open up their economies.

The company continues to receive the support of its shareholders and welcomes to its investor base RAB Capital who now hold 12% of the issued capital of the Company and have Board representation.

Tulu Kapi Gold Project, Ethiopia

As previously reported, despite COVID-19, the implementation of the Project development activities during the first half has continued as planned:

·      Infrastructure for connection of roads & power and security upgrade: This long-lead activity is on schedule, so that it does not hold up on-site construction over the next two years when new roads and electricity will be required;

·      A road now has been built into new host lands for Tulu Kapi residents to be resettled;

·      Security has been significantly expanded in the Mine License Area and surrounding district; and

·      Infrastructure for ore processing: Process plant Front-End-Engineering-and-Design was completed by principal contractors Lycopodium Limited, after updating pricing from the plant fabricators and integrating the results of recent geotechnical drilling into final designs of foundations for plant and dams.

Gold & Minerals Limited Joint Venture (G&M), Saudi Arabia

As announced post period end on 19 August 2020, a maiden resource at Hawiah has been delineated:

·      Maiden Hawiah Inferred Mineral Resource Estimate (“MRE”) of 19.3 million tonnes (“Mt”) at 0.9% copper, 0.8% zinc, 0.6 g/t gold and 10.3g/t silver;

·      Mineralisation remains open at depth; and

·      High grade zones outside of current Mineral Resource, expected to be targeted in next drilling phase.

The Hawiah Internal Preliminary Economic Assessment (“PEA”) has also been announced today.

KEFI welcomed the approval by the Saudi Arabian Cabinet in June 2020 of a new Mining Investment Law which is aimed at boosting the country’s mining industry and is part of Saudi Arabia’s plan to diversify its economy away from hydrocarbons. The Company also welcomes the expanded role of the Saudi Investment Development Fund specifically to support mining project finance, which may be pertinent to the Hawiah Project once prepared for development. 

This new regulatory impetus is expected to also help clarify the path forward to unlock value from KEFI’s Saudi gold discovery at Jibal Qutman, which has been on hold awaiting Mining Licence tenure confirmation. An Internal Preliminary Economic Assessment in 2015 suggesting estimated operating costs of c. US$600/oz and estimated capital expenditure of US$30 million demonstrates that Jibal Qutman’s Mineral Resources, totalling 733,000 ounces of near-surface gold, should be highly profitable in the current gold price environment.

Financial

During the period the Company raised gross proceeds of £5.6 million through two placings. The placing completed on 6 January 2020 raised gross proceeds of £1.9 million to reduce creditors and the placing completed on 28 May 2020 provided additional funding to the Company of £3.7 million (gross) to continue the Tulu Kapi preparations, notwithstanding the challenges created by COVID-19.

In order to reduce short term expenditure whilst project preparations continued, KEFI initiated a number of changes during the period:

·      adjusting parts of the TKGM budget, whilst preserving key business targets;

·      ongoing salary reductions by senior management of 25% pending progress reviews; and

·      one-time dilution of Saudi joint-venture interest from 40% to 34% by not contributing pro rata share of expenses to G&M in the two years to 30 June 2020. It should be noted that KEFI expects to fund its pro rata share going forward.

The Company continues to consider a range of financing options to provide and maintain appropriate levels of working capital and funding for the long term development of the Tulu Kapi Gold project and the advancement of the Saudi initiatives.(see also “Note 2” to the financial statements)

Corporate – post period end

·    Mr Adam Taylor was appointed as a Non-executive Director on 20 July 2020 following the investment by international investment company RAB Capital, a specialist in the mining sector. RAB Capital’s welcome involvement is viewed as a long-term participation and they now hold approximately 12% of KEFI’s issued share capital.

·      On 18 August 2020 the company changed its name to KEFI Gold and Copper plc to better characterise and communicate its objectives and activities, reflecting its now established significant position in gold and copper.

Commenting, Mr Harry Anagnostaras-Adams, Executive Chairman of KEFI said, “During the first half and subsequently, the Company has continued to advance and is now extremely well positioned. The value-enhancing milestones ahead bode well for the Company’s prospects and we seem fortunate that this coincides with a rising gold and copper prices in particular and aggressively pro-development Government initiatives in our host countries, Ethiopia and Saudi Arabia. The remainder of 2020 is expected to be a very exciting period for the Company and we look forward to providing regular updates as matters progress.”

Investor Webinar ·  The Company will host its live quarterly webinar at 2pm London time on Monday 26 October 2020 which will be accessed via: 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

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.