The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
Posts: 12,284
[KEFI] http://www.beaufortsecurities.com/img/pdfs/research/kefiminerals250815.pdf
Posts: 12,284
[KEFI]the gold exploration and development company with projects in the Kingdom of Saudi Arabia and the Federal Democratic Republic of Ethiopia, is pleased to report an increase in planned production at Tulu Kapi to an average of c. 100,000 oz per annum over a 10-year period, compared with the previous estimate of an average of c. 75,000 oz per annum over a 13-year period, and that a winning bidder has emerged from the tender for the mining contract. Expansion in planned production The expansion in anticipated production is a result of a planned increase, based on the Company's ongoing discussions with potential project contractors, in process plant capacity from 1.2Mtpa to 1.5Mtpa. Based on the bids received from construction contractors, this expanded plant capacity does not increase the assumed level of funding required to develop Tulu Kapi. The construction contractors short-listed from the eleven candidates have now been invited to submit fixed price bids for the larger plant. This c. 33% increase in planned average annual gold production has no effect on the open-pit mine plan as set out in the recently-released 2015 Definitive Feasibility Study ("2015 DFS") as the 2015 DFS envisaged processing stockpiles over the final three years of 13 years of gold production. However, KEFI expects it to reduce All-in Sustaining Costs from c. US$779/oz (estimated in the 2015 DFS) to c. US$760/oz. The planned process plant expansion increases Tulu Kapi's after-tax Net Present Value at the start of construction from US$125 million to US$147 million (approximately £92 million), based on unleveraged cash flows, a gold price of US$1,250/oz and an after-tax discount rate of 8%. At the current spot price of US$1,122/oz, Net Present Value is US$90 million (approximately £56 million) on the same basis. Selection of mining contractor A winning bidder has emerged from the five short-listed candidates who were asked to bid on a 6-year mine operation contract. The five candidates had previously been reduced from ten candidates, all of whom are international leaders and experienced in Africa. The tender's result has also re-affirmed the assumptions underlying the cash flow estimates for the period of the planned banking arrangements covering two years of construction plus six years of operation. The winning bidder and the nearest under bidders have been invited to bid for an expanded scope of work to include the pre-mining site earthworks and the full 10 years of mining the open pit. This is expected to further improve the mining cost per tonne. The Company will then formalise an appointment. Harry Anagnostaras-Adams, Executive Chairman, said: "We are pleased to report an increase in Tulu Kapi's planned gold production and, in particular, that it is likely to have a favourable impact on the All-in Sustaining Costs and cash flow, thereby further improving the economics of the project. "The emergence of the least-cost mining contractor, who will now need to bid for an expanded scope of work, also represents an important step towards reaching the development stage. We look forward to being able to report further improvements in project economics once the final bids have been received."
Posts: 12,284
[KEFI] the gold exploration and development company with projects in the Kingdom of Saudi Arabia and the Federal Democratic Republic of Ethiopia, is pleased to report that the Board of KEFI has approved the development funding plan for Tulu Kapi Gold Project, which includes equity capital for development to be raised at project level, rather than at the London-listed PLC level, to minimise value dilution for Company shareholders. In addition the approved plan has reduced the estimated peak funding requirement. KEFI's discussions with the shortlisted construction contractors, including further opportunities for value-engineering, has yielded potential reductions in the peak funding requirement from the US$130 million estimated in the 2015 Definitive Feasibility Study ("2015 DFS") to US$120 million as had previously been foreshadowed. This is despite the planned gold production being increased to an average of c. 100,000 oz per annum, as announced on 7 September 2015. Debt-style funding facilities may be up to US$100 million via a senior secured syndicate arrangement. A portion of these facilities is likely to have a tenor greater than the eight years proposed by conventional project finance banks, which is considered prudent due to volatility in markets generally. Planned contractor and financier commitment levels have been incorporated into estimated project cash flows. The remaining equity investment to develop Tulu Kapi is estimated to be c. US$20 million (in addition to the equity of US$65 million invested in the past). KEFI plans to source this capital as minority equity investment in the project subsidiary, to be priced at a valuation based on Tulu Kapi's Net Present Value, which is c. US$90 million at current gold prices. The Company is in advanced discussions with several interested parties, including the Government of Ethiopia. Formalisation of this funding plan, which requires multi-party agreement of detailed documentation with the mine contractor, construction contractor, financiers and the Government of Ethiopia, is scheduled for Q4 2015. KEFI and the Government have already formalised many of the principal terms within the detailed Mining Agreement executed in April 2015, which reflected the key outcomes of the preliminary negotiations to that point with contractors and financiers. Harry Anagnostaras-Adams, Executive Chairman of KEFI, commented: "KEFI has, in the two years since acquiring Tulu Kapi, overhauled all project development plans and permitted the development of Tulu Kapi. Significantly, project development funding has been more than halved to US$120 million. KEFI is continuing to move forward according to the plan as agreed with the Government of Ethiopia and as laid out in the past to our shareholders. We look forward to updating shareholders upon the finalisation of funding and the commencement of construction by year end."