KEFI Minerals plc (LON:KEFI) Executive Chairman Harry Anagnostaras-Adams caught up with DirectorsTalk to discuss a reduction in admin costs, burn rates and syndication of the finance
Q1: Now Harry, you reported that you’ve reduced admin costs despite a higher activity rate, what’s the overall burn rate today compared with a year ago?
A1: We’re currently spending at about $600,000 a month, it was about $1 million a month last year when we were preparing the full definitive feasibility study running tenders for the various contracts and we also have an inherited tax liability from the previous owner that’s since been discharged so it’s down by about two thirds from where it was before.
Q2: What will be the burn rate when you trigger project development at TK?
A2: Well the TK project will be about $140 million funding package spread over 24 months of expenditure so about $76 million a month so obviously 10 times or more than what it is at the moment as a spending rate. On the other hand, it’s the whole object of the exercise to be generating, getting the company into position after construction, to be generating $12-$17 million per month of revenues so a large programme ahead for both for costs and bigger programme for revenues.
Q3: What’s left to complete in the syndication of the finance?
A3: We’ve just completed a project readiness review with the contracts and the project team in Perth, the whole group together and our new non-exec director Mark Wellesley-Wood leading the charge on that review, essentially ore is in place for the project to be triggered by Christmas at planned. The other 2 processes, we’re managing other resettlement process, the government has to close out some compensation negotiations between with government and the community, we need that to be settled won also by Christmas and of course finishing off the finance syndication. All of these things being pushed to trigger the project across the board by the end of this year.
On the legal side, there’s a lot of drafting taking place and we’re in advanced stages of drafting on the plant construction contract and with Lycopodium and also shareholders agreement with the government, central bank has already approved the gearing structures, the range of gearing for the debt.
On the debt side, we’re frankly working our way through a number of alternative choices there, the market has opened up in some sectors over the last few months and we’ve got more choices than we’ve had before. So we’re working through the best structure to shareholders and with a view to wrapping that up as and when the community settlement programme is sorted out by the government so we’re taking that extra time that the government’s given us to get the best deal we can on the debt side so we’ve got a first-tier syndicate but there’s a bit of work to go but we’re certainly getting there.
Q4: Finally then, as a Chairman what keeps you awake at night?
A4: We have enough support and momentum I think from what is a first-tier syndicate and I feel confident that we’ll proceed with some strength on the project. The rise in the gold price in the last 3-6 months has sort of attracted more people to the sector and opened up some choices that weren’t there before, that reinforces the confidence. On the other hand, just literally working through and nailing down without in anyway compromising shareholders position and without in anyway compromising the quality the syndicate we’ve already assembled. It’s just arduous, thorough-going detail and grunt work for the whole team to work through it but they’re doing it so I’m not worried about the project ahead I’m merely just working through the process of nailing down the best deal for shareholders. It’s not often that one has the good fortune, albeit that we haven’t reaped any rewards from it yet but it appears at this stage, touchwood, that we’ve got the good fortune of bringing this project to development just as the market is rising for gold projects. So I think the fact that we’ve got the leadership position we have in Ethiopia and Saudi Arabia, in the context of now rising gold markets, is flushed out quite a bit of interest in KEFI Minerals and we just need to work through it, long-winded answer but the only thing that keeps me up at night is just working through each of these things and nailing them down properly and looking forward to it.
