TIDMKEFI
RNS Number : 6669R
KEFI Minerals plc
01 July 2020
1 July 2020
KEFI Minerals plc
("KEFI" or the "Company")
Tulu Kapi Gold Project Funding Update
KEFI Minerals (AIM: KEFI), the gold exploration and development
company with projects in the Kingdom of Saudi Arabia and the
Democratic Republic of Ethiopia, is pleased to provide an update on
the progress with securing development financing for the Company's
Tulu Kapi Gold Project (the "Project" or "Tulu Kapi") in Ethiopia
and the Company's Project subsidiary, Tulu Kapi Gold Mines Share
Company ("TKGM").
TKGM remains focused on the preparations and subsequent
completion of the outlined finance milestones to ensure the closing
of full Project funding in October 2020 and for gold production to
commence in 2022, in line with recent guidance.
This update focuses on TKGM's proposed finance sources, which
are summarised below:
-- As reported on 19 June 2020:
o all capital expenditure, operating and financing requirements
have recently been updated and incorporated into the final 2020
Tulu Kapi Plan, which shows total Project funding requirements of
US$221 million (compared with US$242 reported in the 2018 Annual
Report); and that
o planned funding sources will be approximately half as senior
debt (US$110 million) and half as project level equity, which for
these purposes includes any subordinated debt and offtake
facilities (US$111 million).
-- Now that the 2020 Tulu Kapi Plan is completed, TKGM will
proceed to finalise, with its shareholders and senior secured
lenders, the specifics of remaining funding sources.
-- It remains that Project level equity, through TKGM, is
expected to be funded by a consortium consisting of KEFI, the
Ethiopian Government, Ethiopian private sector investors (hopefully
including, but no longer limited to, ANS Mining Share Company ("ANS
Mining")) and one or more specialist mining financiers that provide
financing facilities under subordinated debt. Such facilities may
comprise the long-planned working capital and stockpile facilities
and associated forward sale, offtake, streaming, royalty or similar
arrangements ("Specialist Mining Financiers").
-- ANS Mining continues to affirm a strong interest in making an
investment in TKGM and we welcome this. However, ANS Mining has not
met the published deadline of 30 June 2020 for making its initial
investment. Consequently, TKGM has now served notice that it may
replace ANS Mining either in part or in full with other Ethiopian
and non-Ethiopian investors, including the potential for an
expanded role for the Specialist Mining Financiers.
-- TKGM is already in discussions with a range of Ethiopian
investors and a number of international Specialist Mining
Financiers, introduced by its shareholders KEFI and the Ethiopian
Government, to ensure the required Project equity is secured well
in advance of the closure of the full financing package in October
2020.
-- Following the passing of the 30 June 2020 deadline, KEFI is
now in a position to look to draw these discussions to a
conclusion.
-- As a new development, based on discussions and proposals
received to date from Specialist Mining Financiers and Ethiopian
investors, TKGM is now also seeking to potentially reduce the
number of shares it issues to any third party by increasing the
amount of funds raised by TKGM from the Specialist Mining
Financiers in other acceptable forms, and by doing so increasing
existing shareholders' ultimate beneficial interest in TKGM. If
successful, this would have the effect of increasing KEFI's
beneficial interest in TKGM above the planned base case level of
45%.
Harry Anagnostaras-Adams, Executive Chairman of KEFI, commented
: "KEFI has continued to work hard over recent months to support
the efforts of all our 'consortium partners' and avoid risk and
delay to the outlined timetable in these unprecedented times.
"However, whilst we continue to welcome ANS Mining and offer
them the opportunity to invest, this can no longer be on an
exclusive basis. The Project must and will keep moving forward
given that the other shareholders of TKGM are already actively
deploying funds and because of its prominence and importance in the
burgeoning Ethiopian mining sector.
"Given the robust economics of the Project we have received
significant interest to provide the outstanding asset level equity
and other forms of duly subordinated investment, not only from
other domestic investors, but also from international specialist
mining financiers. Now the deadline of 30 June 2020 has passed we
will look to draw these discussions to conclusion ahead of full
financial close in October this year.
"We are particularly fortunate that the gold sector is in robust
health and this potential change in the Project consortium has now
opened up new financing opportunities which may potentially improve
our ultimate beneficial interest in the Project.
"We will not allow any distractions from achieving our target to
close project financing in October this year and I look forward to
updating shareholders in the current quarter."
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Enquiries
KEFI Minerals plc
Harry Anagnostaras-Adams (Managing Director) +357 99457843
John Leach (Finance Director) +357 99208130
SP Angel Corporate Finance LLP (Nominated
Adviser and Joint Broker) +44 (0) 20 3470 0470
Jeff Keating, Soltan Tagiev
Brandon Hill Capital Ltd (Joint Broker) +44 (0) 20 7936 5200
Oliver Stansfield, Jonathan Evans
IFC Advisory Ltd (Financial PR and IR)
Tim Metcalfe, Florence Chandler +44 (0) 20 3934 6630
Notes to Editor
KEFI Minerals plc
KEFI is focused primarily on the advanced Tulu Kapi Gold Project
development project in Ethiopia, along with its pipeline of other
projects within the highly prospective Arabian-Nubian Shield. KEFI
targets that production at Tulu Kapi generates cash flows for
capital repayments, further exploration and expansion as warranted
and, when appropriate, dividends to shareholders.
KEFI Minerals in Ethiopia
Ethiopia is currently undergoing a remarkable transformation
both politically and economically.
The Tulu Kapi gold project in western Ethiopia is being
progressed towards development, following a grant of a Mining
Licence in April 2015.
The Company has now refined contractual terms for project
construction and operation. Estimates include open pit gold
production of c. 140,000oz pa for a 7-year period. All-in
Sustaining Costs (including operating, sustaining capital and
closure but not including leasing and other financing charges)
remain c. US$800/oz. Tulu Kapi's Ore Reserve estimate totals 15.4Mt
at 2.1g/t gold, containing 1.1Moz.
All aspects of the Tulu Kapi (open pit) gold project have been
reported in compliance with the JORC Code (2012) and subjected to
reviews by appropriate independent experts.
A Preliminary Economic Assessment has been published that
indicates the economic attractiveness of mining the underground
deposit adjacent to the Tulu Kapi open pit, after the start-up of
the open pit and after positive cash flows have begun to repay
project debts. An area of over 1,000 square kilometres adjacent to
Tulu Kapi has been reserved for exploration by KEFI upon
commencement of development, with a view to adding satellite
deposits to development and production plans.
KEFI Minerals in the Kingdom of Saudi Arabia
In 2009, KEFI formed Gold & Minerals Limited ("G&M") in
Saudi Arabia with local Saudi partner, ARTAR, to explore for gold
and associated metals in the Arabian-Nubian Shield. KEFI has a
37.5%% interest in G&M and is the operating partner.
ARTAR, on behalf of G&M, holds over 16 Exploration Licence
(EL) applications pending the introduction of the new Mining Law.
ELs are renewable for up to three years and bestow the exclusive
right to explore and to obtain a 30-year exploitation (mining)
lease within the area.
The Kingdom of Saudi Arabia has announced policies to encourage
minerals exploration and development, and KEFI Minerals supports
this priority by serving as the technical partner within G&M.
ARTAR also serves this government policy as the major partner in
G&M, which is one of the early movers in the modern resurgence
of the Kingdom's minerals sector.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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