shareprophet2 Sep 2017 11:20
Kefi - Tulu Kapi update: BUY at up to 6p
By HotStockRockets | Saturday 2 September 2017
Kefi Minerals (KEFI) has updated the market on the latest developments at the Tulu Kapi gold project in Ethiopia. All of the news is expected, but positive and reinforces our view that this is coming together well and that the value of this asset is simply not discounted in the current share price. Indeed with gold starting to move ahead, the shares look ever cheaper.
First we are told that all VAT refunds due from the Ethiopian Government (c£2.5 million) have been received in full. Kefi has agreed with Oryx a schedule for completing the documentation to ensure everything is fully funded by later this year. You will remember that Kefi still has a small $24 million funding gap which it will close via offtake agreements and other deals that do not dilute PLC shareholders. Meanwhile field work on site will start as soon as the rains stop next month to keep everything on track for first gold pours in late 2019.
Kefi and the Ethiopian Government have launched a new company to own the asset, Tulu Kapi Gold Mines Share Company Limited (TKGM). Based on current estimates of capital spending and capital contributions, respective shareholdings will be 75-80% to Kefi and 20-25% to the Government. TKGM is now implementing the agreed project plan.
At gold prices well below today's levels, we value this company at well in excess of 15p per share. Leading mining analyst Asa Bridle at Cantor's values the shares at 26p. We are more conservative but at 5p-5.25p the stance remains a VERY STRONG BUY at up to 6p with a target to sell of 13p+.