KEFI Minerals (AIM: KEFI), the gold exploration and development company with projects in the Kingdom of Saudi Arabia and Democratic Republic of Ethiopia, has given DriectorsTalk an update on development funding and announces its unaudited interim results for the half-year ended 30 June 2016. The statement below encompasses the activities of the Company’s subsidiary, KEFI Minerals (Ethiopia) Limited (“KME”), in Ethiopia and its joint venture, Gold & Minerals Limited (“G&M”), in the Kingdom of Saudi Arabia.
H1 2016 Highlights
— Despite the expansion of activities since the full permitting, in April 2015, of the Tulu Kapi Gold Project (“Tulu Kapi” or “the Project”), KEFI has maintained tight cost control, illustrated by Administrative costs at GBP861,000 (H1 2015: GBP876,000)
— At Tulu Kapi, the Company has assembled an experienced development team and first-tier backers, including government, industry and financial organisations, and is poised to trigger the development by the end of 2016. The Project targets:
o Steady-state gold production of 115,000 oz pa from 2018 from the open pit at an impressive All-in Sustaining Costs (“AISC”) level of c. US$746/oz
o Cash flows in the first 3 production years sufficient to repay all project debt, fund the development of the Tulu Kapi underground mine as well as the equity component of the initial operation in Saudi Arabia, exploration and consideration of the commencement of dividends
— In Saudi Arabia, KEFI’s gold discovery at Jibal Qutman has shaped up to be a viable project based on preliminary analysis, with a low-capex requirement and an apparent capacity to generate the net cash flows for financing an ambitious Saudi exploration program by the G&M joint venture, of which KEFI is 40% owner and operator. G&M targets:
o To apply for a mining licence at Jibal Qutman after assessing the outcomes of the Government sectoral policy review, which is expected by year-end 2016
o To explore its large portfolio of licences and applications, starting with the large target for precious and base metals at Hawiah, where G&M has commenced fieldwork, focusing on depth-measurement of large buried targets using geophysical surveys, as a prelude to drilling
— Raised GBP1.75 million (c. US$2.5 million) through the placing of new ordinary shares at 0.35p per share to provide working capital pending arrangement of Tulu Kapi project finance
— As part of preparations for the development phase, Mr John Leach has joined the senior executive team as Finance Director and Mr Mark Wellesley-Wood, experienced African mining operator, joined the Board as Non-Executive Director
— Since 30 June 2016, the Company has fully discharged the inherited VAT liability and is now entitled to an ETB73,497,020 refund (approximately GBP2.5 million) and also raised approximately GBP3.8 million (approximately US$5 million) on the 26 July 2016, before expenses, through the issue of 761,921,740 Placing Shares at a price of 0.5p per share.
Harry Anagnostaras-Adams, Executive Chairman of KEFI Minerals, commented: “We are pleased with the tremendous progress made in the first six months of the year as we built on the momentum of 2015. In particular, the progress made on the ground at the Tulu Kapi Gold Project in Ethiopia has been excellent. The project economics are better today than at any time and with all-in costs estimated at US$746/oz, we believe it puts the Tulu Kapi project in the lowest cost quartile of gold producers globally.
“In the second half of the year, our focus is on working with the Government of Ethiopia on the community resettlement, livelihood restoration and community resettlement programmes. Also, we are in advanced discussions with potential finance syndicate participants. As a result, the Board looks to the future with confidence.”
