KEFI Minerals confident government support will continue in Ethiopia under new PM #KEFI

By James Moore


KEFI Minerals (LSE:KEFI) has told investors it is confident it can continue to collaborate with Ethiopia’s government following the appointment of a new prime minister earlier this week. Under new leader Dr. Abiy Ahmed, KEFI expects the government to continue to provide strong support for the firm’s wholly-owned Tulu Kapi advanced gold development project, which is based in the country.

Ethiopia’s government has partnered with KEFI on Tulu Kapi and has already committed $20m to developing off-site infrastructure for the project including roads and power. KEFI is preparing to trigger the development of 140,000oz gold per year from Tulu Kapi for a seven-year period with all-in sustaining costs of around $800/oz.

In today’s Q1 2018 update, KEFI said it has been in contact with the government at a federal, regional, zonal, and local level throughout the transition of leadership and hopes now to extend the collaboration. It added that pre-work progress had been made on the infrastructure surrounding Tulu Kapi, meaning project commissioning is expected to commence by the end of next year.

On the development side, KEFI said an aggressive exploration program is scheduled to begin in the second half of 2018 to tackle a recently expanded exploration land-package now totalling 23,000km2. The beginning of the program relies on governments in both Ethiopia and Saudi Arabia formalising licences. The company is targeting satellite gold deposits under or within trucking distance of Tulu Kapi. One area contains historical drill intercepts such as 19m at 9.21 g/t Au and 21.8m at 6.1 g/t Au.

The goal of the exploration program is to support and expand Tulu Kapi’s production beyond the initial 14,000MMoz a year. It is also intended to justify and support the start-up of KEFI’s Jibal Qutman project in Saudi Arabia to generate cash flow that can self-fund a further large exploration program. Jibal Qutmann is one of the five exploration licences granted to date to G&M, a collaboration formed in Saudi Arabia in 2009 between KEFI and a local Saudi partner to explore for gold and other metals in the Arabian-Nubian shield. The site’s mineral resources are estimated to total 28.4Mt at 0.80g/t gold for 733,045 contained ounces.

Elsewhere, KEFI said it had made good financing progress, assembling a full consortium focused on raising all development funding at the project-level. The firm is planning a $150m bond issue for the debt side and around $40m of project-level equity, including the government’s existing $20m contribution. This does not include the $60m of project equity that has already been invested. Under the terms of the financing, it is intended that KEFI will remain the operating partner in G&M and majority shareholder of TKGM, the business it owns with Ethiopia’s government to develop Tulu Kapi.

Author: Daniel Flynn

Disclosure: The author of this piece does not own shares in the stocks mentioned


Author: James Moore

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

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