7 May 2024
KEFI Gold and Copper
plc
("KEFI" or the
"Company")
Tulu Kapi Gold Project Launch
Update
·
Remaining finance
syndicate approvals expected to be granted during May
2024
·
Project launch
preparations progressing
·
Ethiopian gold
sector taking off
KEFI Gold and Copper (AIM: KEFI), is pleased to
report good progress to schedule at the Company's high-grade Tulu
Kapi Gold Project in Ethiopia ("Tulu Kapi" or the "Project"). The
remaining finance syndicate board processes are on track for final
(conditional) approvals during May 2024, whilst Project launch
preparations have commenced at Tulu Kapi.
Notably, these developments coincide with
construction works commencing at another Ethiopian industrial scale
gold-mine development, west of Tulu Kapi, and the commencement of a
modernisation programme at the only pre-existing large Ethiopian
gold mine, south of Tulu Kapi. Taken as a whole, these
developments reflect the positive turnaround in Ethiopia over the
past two years. On the back of wide-sweeping reforms, some of which
were absolutely critical for the mining sector, as negotiated and
previously reported by KEFI, the country is now striving hard to
reclaim its previous long-standing ranking amongst the world's top
ten growth countries. Particularly important for KEFI is that
Ethiopia's top five gold development projects look likely to raise
Ethiopia's aggregate annual gold production from c.400,000 oz per
annum at present to an estimated 1.5 million oz per annum within
the next five years, which today would rank Ethiopia amongst
Africa's top ten gold producers.
KEFI recently reported (see announcement of 25
March 2024) the following:
· all
of the required development budget of US$320 million (exclusive of
the historical equity investment of c.US$100 million) has been
assembled at the subsidiary level in the form of US$190 million
secured debt, US$100 million Equity Risk Note ("ERN") and US20-40
million share subscriptions to KEFI subsidiaries;
· the
receipt of final approvals from the Federal Government of Ethiopia
(co-shareholder in TKGM), Eastern and Southern Trade and
Development Bank ("TDB") (the lead lender of secured debt) and the
lead-investor in the ERN (a multinational organisation which has
operated in Ethiopia for decades); and
·
approval processes having been triggered for the remaining
parties, in particular the long-planned co-lender of secured
project finance debt, Africa Finance Corporation ("AFC") and
investors in the ERN.
We are pleased to now report the following
further progress:
Financing Progress:
· all
syndicate parties have now either confirmed final (conditional)
approval or that they target theirs this month;
·
KEFI now targets an elevated beneficial interest in TKGM of
80%; and
·
corporate activity is increasing in the Arabian Nubian Shield
and KEFI has received expressions of interest from other parties to
potentially participate should the opportunity arise in Ethiopia,
either at Tulu Kapi or in other growth opportunities being
considered.
Operational Progress:
·
Jacques Kruger has been appointed as the new Project
Development Manager and is working closely with Project Director
Norman Green, the founder of Green Team International;
and
·
Simon Cleghorn, KEFI's original Resource Geologist and a core
team member during our overhaul of the Project in 2014-2015, has
rejoined the Company at the Executive Committee level after serving
as Chief Geologist and Chief Operating Officer respectively at
leading Kazakh mining groups, Eurasian Resources Group and JSC AK
Altynamas.
Preparing for a safe construction programme at
Tulu Kapi:
·
dedicated policing has been formed for permanent presence
around Tulu Kapi and the other strategic mining projects, reporting
to the Prime Ministry to ensure safe working conditions for the
community and any parties brought to site by the
Company;
·
whilst no-one is threatening the Project or Company, these
precautionary measures are requirements for compliance with
international standards and our arrangement is being formalised and
signed off to satisfy all stakeholders of the commitment to safety
and international standards by Government and the Project
syndicate;
·
independent international experts have already confirmed that
Tulu Kapi Gold Mines Share Company's ("TKGM") Project launch plans,
and the arrangements with Government, adhere to the leading
international standards for environment, community and
safety. This follows the equivalent reports late last year in
respect of the technical aspects;
·
these experts, including SLR for environment and social,
Constellis for safety and security systems, and Behre Dolbear for
technical matters and operational systems, oversee all critical
aspects of Project implementation ensuring compliance and
excellence;
·
additional independent security experts are now being
instructed to also monitor and report to their individual clients
within the syndicate, as an added layer of due diligence;
and
·
these commitments and independent checks have allowed the
syndicate parties to advance their processes and remain on track
for completing final approvals this month, May 2024.
These activities are focused on the Tulu Kapi
Project launching in mid-2024 for production in
mid-2026.
Harry
Anagnostaras-Adams, KEFI Executive Chairman,
commented:
"I am
delighted with the continuing progress on subsidiary-level project
financing for launch in mid-2024 of the high-grade Tulu Kapi Gold
Project, the current Mineral Resources of which are 1.72 million
ounces at 2.65 g/t. Following previously reported final
approvals by syndicate leaders for project debt, equity risk notes
and share subscriptions to subsidiaries, we can now report further
progress with those outstanding syndicate partners, such that all
final approvals are on track to be received this month.
"All very
exciting. In the meantime, we will escalate community consultations
and preparations. All stakeholders in the community will be invited
to engage for briefings to understand our requirements on all
matters, ranging from safety procedures and precautions, to
environmental policies and programmes, to development projects for
the community - all at the same time as constructing the gold
mining and processing infrastructure.
"Closing this
US$320 million international project finance package will be a
notable accomplishment in today's tough capital market conditions
for the junior mining sector and will be testament to KEFI's
persistence and hard-won position within Ethiopia, which itself has
withstood the many widely publicised challenges in recent years.
The timing of our launch is fortuitously coinciding with the
improved conditions in Ethiopia and the increased gold price. The
Standard and Poor's consensus long term forecast for the gold price
is now US$1,965/oz and spot is higher.
"Combined
open pit and underground production is targeted at +/- 200,000 oz
p.a. of gold production which now represents an estimated gold
export revenue of circa US$400 million per annum (assuming a gold
price of $1,965/oz), which would today be Ethiopia's largest single
export generator and a significant economic engine for local and
regional benefits.
"With
projected all-In-sustaining costs of approximately US$860/oz and
break-even costs (after all debt-service) of approximately
$1,200/oz, this presents a solid position for generation of net
cash flow to KEFI. With a now-targeted KEFI beneficial ownership
80%, this represents net cash flow entitlement to KEFI of
approximately £63 million (US$74 million) per annum over the first
9 years, commencing from H2 2026."
Market Abuse Regulation (MAR) Disclosure
This announcement contains inside
information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under
Article 17 of MAR. The person responsible for the release of this
announcement is Harry Anagnostaras-Adams (Executive
Chairman).
Enquiries
KEFI Gold and Copper plc
|
Harry Anagnostaras-Adams (Executive
Chairman)
|
+357 994 57843
|
John Leach (Finance
Director)
|
+357 992 08130
|
SP
Angel Corporate Finance LLP (Nominated Adviser)
|
+44 (0) 20 3470 0470
|
Jeff Keating, Adam Cowl
|
Tavira Financial Limited (Lead Broker)
|
+44 (0) 20 7100
5100
|
Oliver Stansfield, Jonathan
Evans
|
IFC
Advisory Ltd (Financial PR and IR)
|
+44 (0) 20 3934 6630
|
Tim Metcalfe, Florence
Chandler
|
3PPB LLC
International (Institutional IR)
Patrick Chidley
Paul Durham
|
+1 (917) 991 7701
+1 (203) 940 2538
|
|
Further information can be viewed
at www.kefi-goldandcopper.com