TIDMKEFI
RNS Number : 7654I
KEFI Minerals plc
28 November 2018
28 November 2018
KEFI Minerals plc
("KEFI" or the "Company" or together with its subsidiaries the
"Group")
Secured Convertible Loan Facility and Operational Update
Notice of GM
KEFI Minerals (AIM: KEFI), the gold and copper exploration and
development company with projects in the Federal Democratic
Republic of Ethiopia and the Kingdom of Saudi Arabia, is pleased to
announce that, further to the announcement made on 30 October 2018,
the Company has entered into an up to GBP4,000,000 secured
convertible loan facility (the "Loan Facility") with a longstanding
institutional shareholder of the Company.
The Loan Facility will expand the Company's flexibility for
progressing the Tulu Kapi Gold Project (the "Project") and other
operations, in particular, catering for decisions taken recently
amongst the TKGM (Tulu Kapi Gold Mines Share Company, the Company's
Ethiopian project subsidiary) consortium to start certain
high-impact tasks for community resettlement, project development
and the initial reconnaissance of a now-enlarged area reserved by
the Ethiopian Government for Tulu Kapi district exploration.
The Loan Facility will not only also expand the Company's
working capital, but will also complement the existing Project
financing plans, including the committed investment of US$30-38
million (Ethiopian Birr-equivalent) at the TKGM level by Ethiopian
institutional investors, of which the initial release of US$9
million (Ethiopian Birr-equivalent) to TKGM is due in December 2018
for funding of community resettlement and other TKGM development
costs in early 2019.
The Loan Facility shall also provide the Company with the funds
to enable the procedural and documentary closing of the US$260
million project financing of the Project, which it is envisaged
will be entirely funded at the Project level. Such costs include
those associated with implementing the full project closing for
construction, mining and finance, as well as legal and community
resettlement costs associated with the Project. As announced on 10
October 2018, the Company has now assembled the proposed full
project funding consortium including contractors (approximately
US$50 million mining contractors' equipment fleet), equity ($50
million) and non-equity capital (US$160 million). For the Project
to proceed, all stakeholders now rely on closing out the remaining
Ethiopian Government processes and approvals, along with completion
of due diligence and formal documentation.
Operational Update
It has been a challenging year with many changes to the
political landscape of the jurisdictions within which the Company
operates. It is however refreshing that the changes during 2018
have been overwhelmingly positive and the Company now stands with
assets, relationships and people that provide a great platform to
deliver shareholder value by developing profitable mines and
exciting exploration programs in Ethiopia and Saudi Arabia.
Over the previous two years, political changes in Ethiopia have
caused some material delays and it is today pleasing to see a rapid
and smooth transition to new national leadership over the past six
months with widespread support in Ethiopia and what appears to be a
progressive attitude to reform on various fronts. Throughout these
recent political events the Company and its consortium for Tulu
Kapi remained steadfast and took the opportunity to refine and
improve project plans.
Economic estimates for 100% of Tulu Kapi at US$1,300/oz are for
average net cash flow (after debt repayments and all other planned
commitments) of US$32 million per annum from the open pit only.
All-in Sustaining Costs remain c. US$800/oz and All-in Costs c.
US$1,000/oz. Tulu Kapi's Ore Reserves of 1.0 million ounces and
Mineral Resources of 1.7 million ounces have significant upside
potential. The Net Present Valuations of project cash flows have
been completed to DFS (Definitive Feasibility Study) level for the
open pit (with supporting draft project contracting and independent
technical reviews completed for the debt-financiers) and have been
completed to PEA (Preliminary Economic Assessment) for the
underground mine, the mineral resources of which remain open.
In both Ethiopia and Saudi Arabia, the Company has applied for
regulatory permission for exploration concurrently with the
development of Tulu Kapi.
The Company has achieved progress with a very small team around
whom the full operating team is being built in conjunction with the
project contractors, both of whom have over 20 years of mine
building experience in Africa. The Company is also well supported
by a number of specialist advisers who have been selected for their
pre-eminence in start-ups of this nature. The finance plan remains
subject to completion of all Government approvals and processes,
due diligence and documentation - all of which is progressing
well.
On the ground at Tulu Kapi today, the community is preparing to
be moved and construction managers are preparing for commencement
of initial works.
The Loan Facility
Pursuant to the Loan Facility with Sanderson Capital Partners
Limited (the "Lender"), the Company has the right to borrow up to
GBP4,000,000 from the Lender, which is split into the First
Facility (the initial GBP2,000,000 working capital facility), the
Second Facility (the optional additional working capital facility
of GBP1,000,000) and the Third Facility (the optional additional
working capital facility of GBP1,000,000).
Amounts drawn under the Loan Facility are not subject to any
interest payments. The Company may draw down the loans under the
Loan Facility for a period of 12 months. This can be extended by a
further six months if agreed by the Company and the Lender.
The Company may draw down the First Facility in five
instalments, of which the first four instalments shall be in an
amount of GBP450,000 and the fifth instalment shall be in an amount
of GBP200,000. Any drawdowns of the First Facility will be at least
30 days apart and subject to, inter alia, conditions precedent,
such as the Company's shareholders having approved the share
conversion aspects of the Loan Facility at the General Meeting and
that there are no materially adverse economic and/or political
conditions, events or circumstances existing in Ethiopia or
elsewhere at the time of the requested drawdown which would impact
the Company's prospects.
The Company may draw down the Second Facility in three
instalments of which the first two instalments shall be in an
amount of GBP450,000 and the third instalment shall be in an amount
of GBP100,000. The Company may not draw down the first instalment
of the Second Facility unless 15 days have passed since the
previous date on which a drawdown was made. The Company may not
draw down the second and third instalments of the Second Facility
unless 30 days have passed following the previous date on which a
drawdown was made.
The Company may with the agreement of the Lender draw down the
Third Facility which shall be drawn down in one instalment. The
Company may not draw down the Third Facility unless 30 days have
passed following the previous date on which a drawdown was
made.
The Company shall repay the Loans by a single repayment amount
on the date falling 12 months from the date of the Loan Facility
which can be extended by a further six months if agreed by the
Company and the Lender. The Loans may be repaid early without
penalty. It is intended that the Company will repay any drawn
amounts outstanding under the Loan Facility upon closure of the
full equity and then debt funding of the Project, expected from the
second quarter of 2019.
The Lender has the right, at any time, to convert any amount
outstanding under the Loan Facility into new ordinary shares of
GBP0.017 each in the capital of the Company ("New Ordinary Shares")
at 2p per New Ordinary Share (the "Conversion Price"). If the
Company makes a repayment then the Lender will have an option to
convert half of any repayment by the Company into New Ordinary
Shares at the Conversion Price.
The Loan Facility is secured by the Company's shareholding in
Kefi Minerals (Ethiopia) Limited.
Fees and expenses
The Company has agreed to pay the following First Facility
fees:
a) a commitment fee of 7.5% of the First Facility (being GBP150,000);
b) a voluntary prepayment option fee of 2% of the Loan Facility (being GBP80,000); and
c) an option fee of 5% of the Second Facility and the Third
Facility (being GBP100,000) for the right to utilise the Second
Facility.
All of the above fees will be satisfied by the issue of New
Ordinary Shares issued at 2p per New Ordinary Share (the "Issue
Price"). In addition, the Company has agreed a drawdown fee equal
to 5% of each drawdown amount under the First Facility which will
be paid by the issue of New Ordinary Shares at the higher of the
Issue Price or the preceding 5-day VWAP.
The Second Facility and the Third Facility provide additional
flexibility for a further GBP1,000,000 under each facility, but the
Company is under no obligation to exercise each option. The Lender
and the Company must agree that the Third Facility be available for
the Company to drawdown.
If the Company exercises the option to drawdown the Second
Facility, it has agreed to pay the following Second Facility
Fees:
a) a commitment fee of 7.5% of the Second Facility and the Third
Facility (being GBP150,000) which will be paid by the issue of New
Ordinary Shares at the Issue Price;
b) an arrangement fee of 5% of the Second Facility and the Third
Facility (being GBP100,000) at the exercise of the Second Facility
which will be paid by the issue of New Ordinary Shares at the Issue
Price; and
c) a drawdown fee equal to 5% of each drawdown amount under the
Second Facility which will be paid by the issue of New Ordinary
Shares at the higher of the Issue Price or the preceding 5-day
VWAP.
If the Company and the Lender agree for the drawdown of the
Third Facility, the Company has agreed to pay a drawdown fee equal
to 5% of the drawdown amount which will be paid by the issue of New
Ordinary Shares at the higher of the Issue Price or the preceding
5-day VWAP.
The Company shall pay the Lender an amount not exceeding
GBP50,000 (or the equivalent of such amount by way of issue of New
Ordinary Shares at the Issue Price by the Company) in respect of
legal fees and due diligence fees reasonably incurred in connection
with the execution of the Loan Facility.
New ordinary shares to be issued to service providers
As an additional part of the Company's working capital
management, the Company has agreed to issue new ordinary shares, at
no less than the Issue Price, to third-party service providers in
relation to the provision of certain services with regards to the
Project. As such, the Company is seeking additional shareholder
authorities to enable it to issue such new ordinary shares as the
Company deems appropriate in order to appropriately manage its
working capital.
Capital Management
The Lender is a long-standing institutional shareholder who
currently holds Existing Ordinary Shares amounting to approximately
1.11 % of the issued share capital of the Company. The Loan
Facility and the proposed arrangements to be entered into with the
service providers provide much-needed flexibility in managing the
working capital of the Group whilst the development of the Project
is triggered and TKGM sources the Development Project Financing
Package.
Whilst the triggering of community resettlement and development
activities in early 2019 are planned to be funded at the project
level by TKGM share issues to local Ethiopian investors, these
proposed working capital arrangements provide important capacity
for the Group.
Entry into the Loan Facility is the first occasion that
loan-funding has been used and the Company intends that the Loan
Facility is fully repaid upon drawdown of the development project
financing package.
The share issuance authorities being sought at the General
Meeting are designed to provide the Company with appropriate
flexibility and to provide sufficient headroom to satisfy the
maximum potential drawdown and conversion of the Loan Facility,
together with payments to third party service providers. It is the
Directors intention to minimise the issue of further New Ordinary
Shares as far as possible.
Notice of General Meeting
A notice convening a general meeting to be held at the Marlin,
Lower Ground Floor, 111 Westminster Bridge Road, Waterloo, SE1 7HR,
United Kingdom on 17 December 2018 at 11.00 a.m. will shortly be
sent to shareholders.
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
Ewan Leggat, Jeff Keating, Soltan Tagiev
Brandon Hill Capital Ltd (Joint Broker) +44 20 7936 5200
Oliver Stansfield, Jonathan Evans
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, Abdul Rahman Saad Al Rashid & Sons Company Limited
("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
NOGMMMZMGRRGRZM
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