Sign up Australia
Proactive Investors - Run By Investors For Investors
Why invest in KEFI?
KEFI Minerals plc: THE INVESTMENT CASE

KEFI Minerals scheduled to start work at Tulu Kapi this year

"During the next two years Tulu Kapi is to be built as a 140,000 oz pa gold producer"
Gold and dollars
INVESTMENT OVERVIEW: KEFI The Big Picture
Final funding sign off is still required for Tulu Kapi

KEFI Minerals PLC (LON:KEFI) expects to start construction of its Tulu Kapi gold mine in Ethiopia in the second quarter of 2018.

A consortium compromising mining contractor Ausdrill, engineer Lycopodium, and the Ethiopian government is responsible for the infrastructure and building work.

Innovative financing

Lycopodium will build the on-mine infrastructure (including the plant) under a hybrid EPC/EPCM contract, said broker RFC Ambrian.

This is planned to be funded through the issue of US$140mln, 9-year debentures with a gold price-related interest rate, which the broker anticipates will be 10% at a gold price of US$1,250/oz (rising to 15% at US$1,700/oz).

WATCH: KEFI Minerals targeting higher returns through Tulu Kapi production expansion

READ: KEFI Minerals expects to start work at Tulu Kapi next year

Some US$12mln of pre-production mining costs are planned to be deferred for a year and up to US$20mln of off-site infrastructure is set to be funded by the Ethiopian government.

That will leave US$42mln to be funded from other sources including an equity raise and working capital loan.

Production will amount to 980,000oz over a 7.5-year mine life at average sustaining costs of US$773/oz over its life.

Reserves stand at 1.05Moz, grading 2.1 g/t, with operations to be a conventional open pit and CIL-based project.

Expansion potential

A scoping study on a potential underground resource at Tulu Kapi suggests the production rate can rise to 150,000oz pa from Year 4,

In addition, KEFI has identified more satellite targets within trucking distance of the mine site.

January update

"The final Tulu Kapi project models were agreed within the consortium and uploaded into the formal financing data rooms,” said Harry Anagnostaras-Adams, executive chairman, in January 2018.

“They show some improvements for shareholders, as compared with recent company guidance," he added.

“During the next two years Tulu Kapi is to be built as a 140,000 oz pa gold producer and, at the current gold price of $1,300/oz combined with any of the contemplated financing scenarios, KEFI shareholders' beneficial interest in the net free cash flow per annum (after debt service and tax) exceeds the company's current market capitalisation.”

“A project-level transaction on the same terms as with the Government would imply a project valuation of c.US$100 million (100%) and, under that financing scenario, KEFI shareholders would expect to retain a beneficial ownership interest in the order of 55% in the project.”

Jibal Qutman still developing

In Saudi, KEFI has a 40%-stake in the Jibal Qutman project, where new country-wide mining laws are being introduced in a bid to encourage the development of the sector into an important part of the economy. 

Kefi said it is waiting for final clarification of the country's new policy.

Value undemanding says broker

The broker remains a buyer but has lowered its target price to 6.8p due to recent weakness in the shares.

RFC Ambrian assumes the company will raise US$25m in equity at a price of 3p and secure a US$17m working capital facility.

Shares rose 10% to 3.55p valuing the miner at £10.7mln.

View full KEFI profile View Profile

KEFI Minerals plc Timeline

Newswire
November 28 2017

Related Articles

1517846055_Cradle-Mine.jpg
February 05 2018
Cradle Arc is ramping up copper production at its Mowana project, and further expansion is on the cards
gold
March 14 2018
Orosur Mining is making great strides in its Colombian exploration programme
Tomingley gold open pit operation
March 27 2018
The Dubbo Project hosts zirconium, hafnium, niobium, tantalum, yttrium and rare earth elements.

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2018

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use