REG - Kefi Gold and Copper - Tulu Kapi Gold Project Launch Update

KEFI Gold and CopperAnnouncement

07/05/2024 07:15

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RNS Number : 2856N  Kefi Gold and Copper PLC  07 May 2024

7 May 2024

KEFI Gold and Copper plc

("KEFI" or the "Company")

Tulu Kapi Gold Project Launch Update

 

·    Remaining finance syndicate approvals expected to be granted during
May 2024

·    Project launch preparations progressing

·    Ethiopian gold sector taking off

 

KEFI Gold and Copper (AIM: KEFI), is pleased to report good progress to
schedule at the Company's high-grade Tulu Kapi Gold Project in Ethiopia ("Tulu
Kapi" or the "Project"). The remaining finance syndicate board processes are
on track for final (conditional) approvals during May 2024, whilst Project
launch preparations have commenced at Tulu Kapi.

Notably, these developments coincide with construction works commencing at
another Ethiopian industrial scale gold-mine development, west of Tulu Kapi,
and the commencement of a modernisation programme at the only pre-existing
large Ethiopian gold mine, south of Tulu Kapi.  Taken as a whole, these
developments reflect the positive turnaround in Ethiopia over the past two
years. On the back of wide-sweeping reforms, some of which were absolutely
critical for the mining sector, as negotiated and previously reported by KEFI,
the country is now striving hard to reclaim its previous long-standing ranking
amongst the world's top ten growth countries.  Particularly important for
KEFI is that Ethiopia's top five gold development projects look likely to
raise Ethiopia's aggregate annual gold production from c.400,000 oz per annum
at present to an estimated 1.5 million oz per annum within the next five
years, which today would rank Ethiopia amongst Africa's top ten gold
producers.

KEFI recently reported (see announcement of 25 March 2024) the following:

·    all of the required development budget of US$320 million (exclusive
of the historical equity investment of c.US$100 million) has been assembled at
the subsidiary level in the form of US$190 million secured debt, US$100
million Equity Risk Note ("ERN") and US20-40 million share subscriptions to
KEFI subsidiaries;

·    the receipt of final approvals from the Federal Government of
Ethiopia (co-shareholder in TKGM), Eastern and Southern Trade and Development
Bank ("TDB") (the lead lender of secured debt) and the lead-investor in the
ERN (a multinational organisation which has operated in Ethiopia for decades);
and

·    approval processes having been triggered for the remaining parties,
in particular the long-planned co-lender of secured project finance debt,
Africa Finance Corporation ("AFC") and investors in the ERN.

We are pleased to now report the following further progress:

Financing Progress:

·    all syndicate parties have now either confirmed final (conditional)
approval or that they target theirs this month;

·    KEFI now targets an elevated beneficial interest in TKGM of 80%; and

·    corporate activity is increasing in the Arabian Nubian Shield and
KEFI has received expressions of interest from other parties to potentially
participate should the opportunity arise in Ethiopia, either at Tulu Kapi or
in other growth opportunities being considered.

Operational Progress:

·    Jacques Kruger has been appointed as the new Project Development
Manager and is working closely with Project Director Norman Green, the founder
of Green Team International; and

·    Simon Cleghorn, KEFI's original Resource Geologist and a core team
member during our overhaul of the Project in 2014-2015, has rejoined the
Company at the Executive Committee level after serving as Chief Geologist and
Chief Operating Officer respectively at leading Kazakh mining groups, Eurasian
Resources Group and JSC AK Altynamas.

Preparing for a safe construction programme at Tulu Kapi:

·    dedicated policing has been formed for permanent presence around Tulu
Kapi and the other strategic mining projects, reporting to the Prime Ministry
to ensure safe working conditions for the community and any parties brought to
site by the Company;

·    whilst no-one is threatening the Project or Company, these
precautionary measures are requirements for compliance with international
standards and our arrangement is being formalised and signed off to satisfy
all stakeholders of the commitment to safety and international standards by
Government and the Project syndicate;

·    independent international experts have already confirmed that Tulu
Kapi Gold Mines Share Company's ("TKGM") Project launch plans, and the
arrangements with Government, adhere to the leading international standards
for environment, community and safety.  This follows the equivalent reports
late last year in respect of the technical aspects;

·    these experts, including SLR for environment and social, Constellis
for safety and security systems, and Behre Dolbear for technical matters and
operational systems, oversee all critical aspects of Project implementation
ensuring compliance and excellence;

·    additional independent security experts are now being instructed to
also monitor and report to their individual clients within the syndicate, as
an added layer of due diligence; and

·    these commitments and independent checks have allowed the syndicate
parties to advance their processes and remain on track for completing final
approvals this month, May 2024.

These activities are focused on the Tulu Kapi Project launching in mid-2024
for production in mid-2026.

Harry Anagnostaras-Adams, KEFI Executive Chairman, commented:

"I am delighted with the continuing progress on subsidiary-level project
financing for launch in mid-2024 of the high-grade Tulu Kapi Gold Project, the
current Mineral Resources of which are 1.72 million ounces at 2.65 g/t.
 Following previously reported final approvals by syndicate leaders for
project debt, equity risk notes and share subscriptions to subsidiaries, we
can now report further progress with those outstanding syndicate partners,
such that all final approvals are on track to be received this month.

"All very exciting. In the meantime, we will escalate community consultations
and preparations. All stakeholders in the community will be invited to engage
for briefings to understand our requirements on all matters, ranging from
safety procedures and precautions, to environmental policies and programmes,
to development projects for the community - all at the same time as
constructing the gold mining and processing infrastructure.

"Closing this US$320 million international project finance package will be a
notable accomplishment in today's tough capital market conditions for the
junior mining sector and will be testament to KEFI's persistence and hard-won
position within Ethiopia, which itself has withstood the many widely
publicised challenges in recent years. The timing of our launch is
fortuitously coinciding with the improved conditions in Ethiopia and the
increased gold price. The Standard and Poor's consensus long term forecast for
the gold price is now US$1,965/oz and spot is higher.

"Combined open pit and underground production is targeted at +/- 200,000 oz
p.a. of gold production which now represents an estimated gold export revenue
of circa US$400 million per annum (assuming a gold price of $1,965/oz), which
would today be Ethiopia's largest single export generator and a significant
economic engine for local and regional benefits.

"With projected all-In-sustaining costs of approximately US$860/oz and
break-even costs (after all debt-service) of approximately $1,200/oz, this
presents a solid position for generation of net cash flow to KEFI. With a
now-targeted KEFI beneficial ownership 80%, this represents net cash flow
entitlement to KEFI of approximately £63 million (US$74 million) per annum
over the first 9 years, commencing from H2 2026."

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR. The person responsible for the release of this announcement is Harry
Anagnostaras-Adams (Executive Chairman).

Enquiries

 KEFI Gold and Copper plc
 Harry Anagnostaras-Adams (Executive Chairman)        +357 994 57843
 John Leach (Finance Director)                        +357 992 08130

 SP Angel Corporate Finance LLP (Nominated Adviser)   +44 (0) 20 3470 0470
 Jeff Keating, Adam Cowl

 Tavira Financial Limited (Lead Broker)               +44 (0) 20 7100 5100
 Oliver Stansfield, Jonathan Evans

 IFC Advisory Ltd (Financial PR and IR)               +44 (0) 20 3934 6630
 Tim Metcalfe, Florence Chandler

 3PPB LLC International (Institutional IR)

 Patrick Chidley                                      +1 (917) 991 7701

 Paul Durham                                          +1 (203) 940 2538

Further information can be viewed at www.kefi-goldandcopper.com
(http://www.kefi-goldandcopper.com)

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