TIDMKEFI
RNS Number : 3563W
KEFI Minerals plc
16 April 2019
The following amendment has been made to the Q1 2019 Operational
Update announcement released on 16 April 2019 at 07:00 under RNS
No. 2608W.
The expected plant commissioning date being Q4 2021 was
incorrect and should be Q4 2020.
All other details remain unchanged.
The full amended version is shown below.
16 April 2019
KEFI Minerals plc
("KEFI" or the "Company")
Q1 2019 Operational Update
KEFI Minerals (AIM: KEFI), the gold exploration and development
company with projects in the Federal Democratic Republic of
Ethiopia and the Kingdom of Saudi Arabia, is pleased to provide its
quarterly operational update.
This update encompasses the activities of KEFI Minerals
(Ethiopia) Ltd ("KME") and Tulu Kapi Gold Mines Share Company
("TKGM") in Ethiopia, and Gold & Minerals Ltd ("G&M") in
Saudi Arabia for the period from 1 January 2019 to 31 March 2019,
together with more recent developments where appropriate.
Since 1 January 2019, any material events have been reported in
separate announcements which are referred to below, along with
explanatory updates on those and other related matters. It has been
a very important quarter for the Company.
Tulu Kapi Gold Project in Ethiopia (the "Project")
Government:
-- Prime Ministerial go-ahead for the Project: Dr Abiy Ahmed,
Prime Minister of Ethiopia, issued the remaining instructions for
the Project go-ahead as announced on 5 March 2019.
-- Clearance of Community Resettlement: The Ethiopian Federal
Government has approved the resettlement plan and the Local
Government has now approved the compensation calculations. The
Regional Government has begun triggering the consecutive steps of
the resettlement programme in consultation with the community and
TKGM. The current focus is on the selection of individual
land-parcels, house locations and training. This is expected to
lead to compensation payments in July 2019 for the phase one move
of some 60 households, with the preparations being completed in the
meantime.
-- Clearance of other administrative matters: The Federal
Government consents have all been received from relevant Federal
agencies other than some final aspects of the Project finance
structure which has now been endorsed by the Prime Ministry.
Details are being documented with the central bank which has issued
approvals for capital ratios, hedging and bank accounts and we
expect residual matters to be resolved shortly.
Project Financing Activities:
-- TKGM project development funding:
o Project equity of US$58 million (Ethiopian Birr equivalent)
has been committed from:
-- Ethiopian Government project equity of US$20 million
(Ethiopian Birr equivalent), as detailed in the announcement of 25
January 2019; and
-- Ethiopian private sector partner ANS Mining Share Company
Limited ("ANS") equity of US$38 million (Ethiopian Birr
equivalent): injection of the first equity instalment of US$11.4
million will be upon satisfaction of certain conditions, as
detailed in the announcement of 8 April 2019.
-- The plan will result in KEFI holding 81% of KME which will
hold 59% of KGM. KEFI beneficial interest in TKGM thus being
45%.
o These project equity figures ignore past investment of c.
US$60 million.
o The mandated US$160 million bond issue preparations
continue.
Tulu Kapi Project development preparations:
-- Project development planning:
o Principal on-site Project contractors Lycopodium and Ausdrill
have re-affirmed the 24-month development schedule and the
18-months thereof that commences in Q4 2019, after the wet season
and phase one community resettlement. In the meantime, various
engineering and contractual tasks are in process including detailed
scheduling and updating of front end engineering and design.
o Principal off-site Project contractors Ethiopian Electrical
Power Corporation and Ethiopian Roads Authority have had budget
approvals for their works and are preparing their sub-contractor
tender documents for off-site infrastructure. Their work has
started because their deadlines are of a critical path nature to
allow plant commissioning to commence in Q4 2020.
o The preferred transport contractor is finalising route surveys
for deliveries.
KEFI Corporate
o Funding
-- GBP969,000 equity placing completed, as announced on 21
February 2019.
-- Initial GBP2 million working capital loan facility
(convertible at no less than 2p), as announced on 30 October 2018,
not yet utilised.
-- Project management and Project finance costs:
-- continue to be paid by KEFI as part of its Project equity
investment into TKGM. Some of this will be paid to service
providers in KEFI shares convertible at no less than 2p (see
announcement 28 November 2018); and
-- will be paid by TKGM directly (instead of by KEFI) once its
equity subscription funds become available in US$;
-- Once TKGM becomes financially self-sufficient, KEFI-borne
direct costs will contract back to c.GBP1 million p.a. (plus any
commitments to exploration as it is started-up in parallel with
construction at Tulu Kapi).
-- Capital inflows to KEFI are available under the working
capital facility (maximum of up to GBP4 million, convertible at no
less than 2p) and some cost-recoupments (estimated at GBP2 million)
at full finance closing for TKGM.
o Tulu Kapi Project economics:
-- Financing refinements:
-- The latest Project finance plans provide for equity-funding
of the first six of a twenty-four-month program. The important
consequence of this is that cash can build up before first
lease-payment i.e. cash can build to a projected c. US$80 million
from a projected c. US$40 million.
-- Likewise, gold in ore stockpiles is also projected to
increase, providing further "margin of safety".
-- TKGM projected financial statistics (as announced on 8 April
2019):
-- Based only on extracting its one million ounces of ore
reserves within the planned open pit section of the Project,
projections at US$1,300/oz gold price remain in accordance with
previous guidance, as supported by project feasibility studies and
updates:
o shareholders' aggregate invested capital of c.US$120-130
million including past and additional investment;
o NPV after debt and after tax, at 8% discount rate of:
-- US$117 million (GBP90 million) for 100% and US$53 million
(GBP40 million) for KEFI beneficial interest of 45% at start of
construction, and
-- US$193 million (GBP148 million) for 100% and US$87 million
(GBP66 million) for KEFI beneficial interest 45% at start of
production two years later; and
-- Estimated average TKGM EBITDA of US$72 million (GBP55
million) over 8 years and annual debt-service costs during
production of US$28 million (GBP22 million) over 8 years.
Ethiopian Exploration:
-- Ethiopia Regulatory Improvements:
o During 2018 Ethiopia emerged from two years of states of
emergency and is undergoing a rapid and progressive transformation.
The Ethiopian Government continues to push through an overhaul of
regulations for various prioritised sectors including mining, to
expedite development.
o TKGM is the first major development for decades and has been
honoured to be invited to be the industry representative for the
Ethiopian Extractive Industries Transparency Initiative.
-- Mobilisation into field for exploration at Tulu Kapi and for district exploration:
o TKGM will start examining development scenarios for the 5-6
g/t underground deposit once construction of the open pit is
underway.
o KME's exploration programs over its 1,900 sq km Tulu Kapi
district areas will also trigger when major works start at Tulu
Kapi. In the meantime, reconnaissance has commenced of the various
already-drilled mineralised zones for follow-up.
Saudi Exploration Project
-- Saudi Regulatory Improvements:
o The new Saudi Government continues to overhaul of regulations
for the extractive industries, to expedite development of what it
targets to be the third pillar of its economy.
o G&M has, over the past few years, positioned itself as the
only long-standing explorer with a large exploration portfolio and
non-Government-controlled.
-- Mobilisation into field at Hawiah:
o Hawiah is part of the 120 km long Wadi Bidah Mineralised
District ("WBMD") that is under licence or application for G&M.
It contains 24 mapped Volcanic Massive Sulphide ("VMS") systems for
exploration, which will start in Hawiah.
o The exploration team is in the field conducting trenching and
geophysical surveys to follow up high-resolution multi-spectral
satellite imagery analysis, in preparation for initial drilling in
Q3 2019 of high priority copper-gold targets.
-- The Jibal Qutman Project: this gold discovery of G&M sits
within the regulatory authorities as an application for a mining
licence and has been relegated in short term importance for G&M
vis a vis WBMD.
-- An announcement will be made providing details covering this
and related programmes in due course.
Investor Webinar
The Company will host a live webinar at 11am BST on Thursday 18
April 2019 which can be accessed via:
https://webcasting.brrmedia.co.uk/broadcast/5cb471a0eb566331974d6bf2
and also through www.brrmedia.co.uk
Listeners are encouraged to submit questions by emailing:
questions@brrmedia.co.uk
The webinar will subsequently be available on the Company's
website at http://www.kefi-minerals.com/news/webcasts.
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 20 3470 0470
Jeff Keating, Soltan Tagiev
Brandon Hill Capital Ltd (Joint Broker) +44 20 7936 5200
Oliver Stansfield, Jonathan Evans
SVS Securities Plc (Joint Broker) +44 (0) 203 700 0078
Tom Curran / Ben Tadd
IFC Advisory Ltd (Financial PR and IR) +44 20 3934 6630
Tim Metcalfe, Heather Armstrong
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 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 40% interest in G&M and is
the operating partner.
ARTAR, on behalf of G&M, holds over 20 EL applications. 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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