KEFI Minerals (LON:KEFI), the gold exploration and development company with projects in the Federal Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia,has announced today that it has conditionally raised £3 million (US$4 million), before expenses, through a placing of 120 million new ordinary shares of 1.7p each in the capital of the Company at an issue price of 2.5 pence per Ordinary Share to existing and new shareholders through Brandon Hill Capital Limited, Cantor Fitzgerald Europe and RFC Ambrian Limited .
The Company is also intending to issue up to 100 million new ordinary shares of 1.7p each in the Capital of the Company (the “Subscription Shares”) at the Placing Price (the “Subscription”) comprising of the following:
· 48,485,643 Subscription Shares which the Company has agreed to issue to project contractors and other third parties in settlement of outstanding invoices and debt of £1,212,142; and
· 51,514,357 Subscription Shares for an aggregate value of £1,287,858 before expenses which are intended to be subscribed for by certain directors and management of the Company following the publication of the Company’s annual results to satisfy accrued fees and salaries.
The Placing proceeds net of expenses are expected to be £2.8 million and will primarily be used to provide the Company with the funds to enable the procedural and documentary closing of the US$260 million project financing of the Company’s Tulu Kapi Gold Project , which it is envisaged will be entirely funded at the Project level. Such costs include those associated with implementing the full project closing for construction, mining and finance, as well as legal and community resettlement costs associated with the Project. As announced on 11 June 2018, KEFI has now assembled the proposed full project funding consortium including contractors (approximately $50 million mining contractors’ equipment fleet), equity ($50 million) and non-equity capital ($160 million). 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.
A detailed use of proceeds table is illustrated below:
|
Item |
£m |
|
Discharge of existing liabilities |
3.5 |
|
KEFI costs of implementing Full Project Closing for Construction, Mining and Finance |
2.4 |
|
Luxembourg Legal and other Bond Formation Costs |
0.6 |
|
Addis and Tulu Kapi Costs |
0.9 |
|
Total |
7.4 |
The items outlined in the table above will be funded by the proceeds of the Placing, existing cash at bank, project equity and, before triggering project development, the drawdown of project debt. Whilst not expected to be required, KEFI also has the option to access working capital from certain existing stakeholders for up to £1.5 million.
Harry Adams, Chairman of KEFI Minerals commented:
“We are pleased to secure this funding and the support of our contractors and management. It is planned that the financing of the Tulu Kapi Gold Project will be entirely at the Project level, with KEFI retaining a beneficial ownership interest in the order of 54% and the balance being held by the Ethiopian Government and other Ethiopian investors.
“The Placing and Subscription we have announced today is expected to provide KEFI with the funds to enable it to close the Tulu Kapi Project financing, subject to approvals by all stakeholders and formal documentation. I look forward to providing updates on progress over the coming months.”
The Placing and the Subscription
The Placing and the Subscription will be undertaken in two tranches:
1. The first tranche shall consist of 60 million Placing Shares (the “First Placing Shares”) and 6.5 million Subscription Shares (the “First Placing Shares”); and
2. The second tranche (the “Second Placing”) shall consist of 60 million Placing Shares and 93.5 million Subscription Shares (the “Second Placing Shares”).
The First Placing is conditional, inter alia, on the admission of the First Placing Shares to trading on AIM becoming effective (“First Admission”), which is expected to take place on or around 20 June 2018.
The Second Placing requires the obtaining of shareholder approval at a General Meeting of the Company to be held on 2 July 2018. The Second Placing is conditional, inter alia, on First Admission becoming effective, the passing of the resolutions to be proposed at the General Meeting and the admission of the Second Placing Shares to trading on AIM becoming effective on or before 8.00 a.m. on or around 3 July 2018 (or such later date as the Brokers may agree being not later than 17 July 2018 (the “Second Admission”).
Shareholders are reminded that because the Second Placing is conditional, among other things, on the passing of the resolutions to be proposed at the General Meeting, should the resolutions not be passed, the Second Placing will not proceed and all placing and subscription monies will be returned to subscribers.
The Placing Price was set by reference to the prevailing market price of the Ordinary Shares prior to Friday 8 June 2018, being the period in which the Company was in the process of implementing the Placing and Subscription and prior to the announcement made on 11 June 2018 when the Company was able to announce the in-principle terms of a planned equity issue by its subsidiary KEFI Minerals Ethiopia Limited.
It is expected that immediately following the settlement of the First Placing, KEFI’s net cash balance will be approximately £100,000 compared to approximately £600,000 as of May 2018. If the Second Placing is to proceed, KEFI’s cash balance is expected to be approximately £1.6 million. Assuming that the First Placing and Second Placing are settled, the Company expects that it will be fully funded until the end of 2018, by which the point the Company expects to have closed and received additional funds under its previously announced bond issuance and asset level investment by the Ethiopian consortium.
