News & Analysis

Kefi Minerals secures agreement for minimum US$30m investment from ANS Mining – Is bottom in? (KEFI)

28 Sep 2018 | by: Richard Mason

Kefi Minerals (LSE:KEFI) pleased the market early afternoon with an RNS announcing it has now signed a binding Project Equity Investment Agreement with ANS Mining Share Company for a subscription of new equity capital into Tulu Kapi Gold Mines Limited (TKGM). The investment is for a minimum of US$30m, which would earn ANS a 23% interest in TKGM. There is also scope for ANS to invest up to US$38m for a 29% share, but Kefi stresses it will remain the majority shareholder of TKGM and the aggregated share of other parties, including the Government of Ethiopia will not exceed 49.9%. The funds will be provided in two tranches, the first one being $9m receivable in Q4 2018 and the remaining US$21-29m will be due in early 2019.

Shares hit 2.41p on the release of today’s news and a quick glance at the weekly price chart reveals the stock potentially has a long way to go in the event it manages to turn the current downtrend around. One of my favourite patterns, the ‘Falling Wedge’ has been forming over a two-year period and usually the coiling up of the price in such a manner results in a reversal of the trend.

This is, of course, reliant on the fundamental story providing the necessary impetus to trigger buying of the stock. But today’s news is another key part in the jigsaw puzzle for Kefi and if other pieces continue to fall in place, the stock could well have already bottomed.

Although it’s very early days, the Relative Strength Index (RSI) has just popped up out of its declining demeanour which also shows promise of a possible prolonged recovery.

Another potential angle to consider is Kefi being a possible candidate for a play on the gold price. With a potential resurgence in precious metals likely to happen at some point in the future, Kefi’s valuation may well follow suit, particularly as it edges closer to its production phase.

Author: Stuart Langelaan              

Disclosure: The author holds a position in the company mentioned above

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