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KEFI Minerals

Small refinements and robust numbers

Update | Mining | 31 May 2017

On 24 May, KEFI announced an update to its 2015 definitive feasibility study (DFS) in order to account for all of the initiatives undertaken by the company in the intervening two years. Without exception, the operational parameters of the mining operation (throughput, grade, recovery, etc) were identical to our prior expectations. Cash operating costs are now expected to be just 3.5% higher (equivalent to an annualised inflation rate of 1.7%), while capex costs, although towards the top of the range of our prior expectations, are materially lower than those presented in the original 2015 DFS (albeit the latter were calculated on an owner-manager, rather than a contract miner, basis). Note that all forecasts and valuations are here presented on a post-17:1 share consolidation basis (which became effective on 2 March), unless otherwise specified.

KEFI Minerals

Honing in on production

Update | Mining | 06 Dec 2018

On 6 December, KEFI announced that it had arranged for project equity funding of the Tulu Kapi gold mine project in Ethiopia for both Q119 and Q219, and that activities are progressing to this end, including government indications that the handful of outstanding permits are still expected to be granted in December to allow for community resettlement and development. The announcement also reports completion of the project due diligence for the US$160m bond/lease proposal (see previous notes) and follows KEFI’s announcement, on 28 Nov, that it had entered into an up to GBP 4.0m secured convertible loan facility to underpin parent company working capital as it triggers the development of the project in Q119.

KEFI Minerals

Counting down to production

Update | Mining | 30 Oct 2018

Since our last note, KEFI has: 1) raised GBP 5.5m (US$7.4m) in equity; 2) signed a binding agreement with a consortium of Ethiopian investors for US$30m of new equity into Tulu Kapi at the project level; 3) received key approvals from the government; 4) announced that the local, zonal and regional authorities have confirmed their intention to trigger resettlement of the Tulu Kapi community as soon as possible; and 5) that field preparations have commenced – all of which are very much in line with our prior expectations. Today, KEFI also announced the arrangement of a loan facility as an expansion of its working capital arrangements. This is all part of the company continuing to target project construction starting in early 2019 and commissioning and first gold in H220.

KEFI Minerals

Blue sky and beyond

Outlook | Mining | 08 May 2018

KEFI has formally mandated the placing of US$160m of Luxembourg-listed infrastructure bonds, which are expected to fund ownership by the Luxembourg-regulated SPV of the gold processing plant and ancillary infrastructure at the Tulu Kapi Gold Mines Share Company (TKGM), jointly owned by KEFI Minerals (Ethiopia) and the Ethiopian government. This initiative follows a positive draft independent technical expert’s report on the project. Subject to completion of all due diligence, documentation and government approvals, drawdown and development is planned for the end of the Ethiopian wet season, in September. While originally designed as a 1.2Mtpa operation, plant throughput at Tulu Kapi has since been increased to 1.9–2.1Mtpa for around the same overall capital cost.

KEFI Minerals

Greater exposure to gold price beckons

Update | Mining | 01 Feb 2018

On 1 February, KEFI announced the appointment of David Munro, former MD of Billiton, and his two partners at International Mining Performance, to the senior management team as a prelude to triggering development and operations. This followed the announcement on 18 January that KEFI had terminated, by mutual agreement, its relationship with Oryx relating to its funding plans. Simultaneously, in its quarterly operational update, it reported that the funding approach remains unchanged, albeit with a simplified structure. KEFI also released the results of the final Tulu Kapi project models agreed by the consortium (and uploaded into the formal financing data rooms), which demonstrated some value improvements for shareholders compared with recent guidance.

KEFI Minerals

Executive interview - KEFI Minerals

Edison TV: | Mining | 29 Nov 2017

After announcing the acquisition of Tulu Kapi from Nyota in 2013, KEFI is now putting together the final touches of its financing plans to put the mine into production. In its most recent update, KEFI announced that its financing facility with partner, Oryx, has been increased by 3.7% to US$140m in order to accommodate an increase in processing capacity to 2.0Mtpa. Here, the company’s executive chairman, Harry Anagnostaras-Adams, and its finance director, John Leach discuss how they achieved this.

KEFI Minerals

Up to 90% of the way there

Update | Mining | 28 Nov 2017

KEFI has announced that it has made “considerable progress” in finalising the US$140m infrastructure lease facility for the development of Tulu Kapi in Ethiopia. The announcement follows the release of KEFI’s updated financial projections for Tulu Kapi in late October, based (for the first time) on a c 25% increase in ore processing capacity to 1.9-2.1Mtpa. It has also reconfirmed the project’s timeline, with construction anticipated in FY18-19 and commissioning at the end of 2019, and a residual equity/mezzanine requirement of US$20m (in line with our expectations).

KEFI Minerals

Tulu Kapi financial projections update

Update | Mining | 02 Nov 2017

The release of KEFI’s updated financial projections for Tulu Kapi earlier this week follows the operational update in October in which it first posited a c 25% increase in ore processing capacity from 1.5-1.7Mtpa to 1.9-2.1Mtpa (depending on ore hardness), funded by an expansion of the proposed Oryx financing facility, from US$135m to US$140m. The detail provided in the updated projections has allowed us to firm up our forecasts and expectations relative to the indicative estimates presented in our update note of 9 October.

KEFI Minerals

Plant capacity expansion beckons

Update | Mining | 09 Oct 2017

In its quarterly update, released today, KEFI announced that its funding partner, Oryx, is actively implementing finance closing (scheduled this quarter) and has also agreed to expand its proposed finance facility for Tulu Kapi from US$135m to US$140m to allow an increase in ore processing capacity from 1.5-1.7Mtpa to 1.9-2.1Mtpa (depending on ore hardness). This will take plant capacity back to that proposed in Nyota’s 2012 definitive feasibility study – albeit at a reduced capital cost.

KEFI Minerals

83% of the way there

Update | Mining | 20 Jul 2017

This week, KEFI Minerals announced that it had signed an agreement with Oryx for US$135m of lease funding for Tulu Kapi. As a result, Oryx will assume c 70% of the project’s on-site capex requirements in a form of build, own, operate and transfer (BOOT) arrangement. Following full repayment of the lease, ownership will revert to KEFI.

KEFI Minerals

Securing Lanstead: Tulu Kapi financing underway

Update | Mining | 13 Feb 2017

This morning, KEFI announced it is to raise £5.62m (gross) via the issue of 1.7bn shares at a price of 0.33p, including £4.62m from Lanstead. The majority of the funds raised will be expended on the development of Tulu Kapi over the next 12 months, with the next largest segment being directed towards exploration and the balance to corporate costs. Directors and contractors have supported the fund-raising by subscribing for c £0.4m. Afterwards, a 17:1 consolidation of the shares has been proposed (to be voted on, among other things, at a General Meeting of the company's shareholders on 1 March).

KEFI Minerals

Maintaining flexibility

Update | Mining | 21 Dec 2016

KEFI has today issued a quarterly operational update in which it has confirmed the partial lifting of the current conditions of the State of Emergency in Ethiopia plus its expectation that it will be completely lifted around the end of Q117. At this point, KEFI anticipates being able to announce a co-lender to the Development Bank of Ethiopia followed by the start of actual development at Tulu Kapi.