Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Thanks stringer and good luck to you and all holders.
It is potentially, at long last, looking as if things could come together nicely reasonably soon with the job ads adding weight to the likely timescales of the end of May given by HAA in his Proactive interview. There should be Saudi updates as well.
Here's another job listed and advertised on the 19th April that I don't think was in the list in one of the posts earlier - it's the key job of Project Manager for construction of the mine as well:-
https://ethio-jobs.net.et/vacancy-detail.php?id=3923
Job Purpose
Responsible for in-country activities related to the Tulu Kapi Process Plant, Accommodation Village, supporting infrastructure and dams, including the oversight, and quality assurance of construction activities manage by others on behalf of Tulu Kapi Gold Mine.
Responsibilities and Accountabilities
Responsible for all construction activities on Tulu Kapi site, including the oversight of the construction and construction supervision of the Tulu Kapi Village, Process Plant Area, Main Services Area, Mining Services Area, supporting infrastructure and dams managed by others.
Hi Stringer, a few variables will come into play - including the gold price, volume of trading, stale bulls selling and the remaining warrants. The latter matter might hold it back as a proportion will sell at say 1.8p to 2p to raise funds to exercise 1.6p warrants if Kefi starts to trade around that level. At 2p it would still only be about 30% of an NPV that is artificially low given Saudi assets for some reason have only been valued at a gold price of US$1,650/oz. We know as well that the Saudi resource is set for an increase and plenty of scope for TK uplifts.
Going forward there are other share price drivers - junior miners may well come off a decade of depressed levels and Kefi plans to list on the planned Ethiopia stock market. A Saudi listing would have dictated the price rather than AIM so it is a pity that's not planned just yet. It's more uncertain with the Ethiopian listing but there will be relatively few listed stocks and a fair amount of cash looking to invest so that could bring a pleasant surprise.
In short, it could trade above 2p short-term but there will be headwinds and holders will have to consider whether to take the money, hold for a takeover or re-rating after short-term trading settles at say 3p to 4p or hold even longer term for a potential double-digit share price. I think what we can say is that it will be the most significant news in the Company's history and the share price should reflect that very positively.
Https://www.weare121.com/121mininginvestment-london/kefi-gold-and-copper/
Kefi attending this on the 15th and 16th May Q & A confirms the anticipated timescales flagged up for funding completion.
"Estimated potential Net Operating Cash Flow (1) £137M (c. US$185M) per annum from the 3 development projects"
"KEFI targets becoming a mid-tier producer with 3 projects in production by 2026, at a net production rate of 187Koz gold equivalent (155Koz of gold)"
"What are your key goals for the next 3, 6 and 12 months?
3 Months:
Closing project finance for first development project and, in the meantime, reporting steady progress across all projects.
6 Months:
Starting construction of the first development project and, in the meantime reporting the grant of a second mining licence, the expansion of resources and the scheduled progress on development studies for projects 2 and 3
12 Months:
Scheduled construction progress in Ethiopia, the expansion of resources and the scheduled progress on development studies for projects 2 and 3"
The job ads bode well and HAA couldn't have been clearer that all their internal protocols were indicative of full sign-off by the second bank and associated documents by the end of May. He also said he would issue updates along the way during May before including an update on Saudi. The discount to the £348m NPV should close significantly on finding sign-off. There will be plenty of trading but I suspect the share price will eventually settle close to 2p and a circa £120m m/cap. Kefi is then a potential takeover candidate. HAA hinted at this acknowledging that the African junior mining has consolidated from 24 companies to just 12 currently.
Shorter link rather than the Google search link:-
https://www.africafc.org/news-and-insights/news/ethiopia-becomes-africa-finance-corporations-40th-member-state
This has gone under the radar but it looks like a very positive development in the context of the second bank (Africa Finance Corporation) signing off on the TK funding. AFC states that Ethiopia has become AFC's 40th member state and references "a $300m pipeline of projects ...including mining."
"Addis Ababa, 3rd April 2023 – Africa Finance Corporation, the continent’s leading infrastructure solutions provider, today announces Ethiopia as its 40th member state ....
AFC has already identified a US$300 million pipeline of projects to capture value from Ethiopia’s metal and mineral exports and bring jobs in catalytic sectors including power, renewable energy, logistics, telecommunications and mining, advancing the country’s position as one of Africa's fastest-growing economies.... We are committed to working closely with the Ethiopian government and stakeholders to develop and finance integrated ecosystem projects that support the country’s vision for rapid and sustainable economic growth.”
https://www.google.com/search?q=ethiopia++imf+loan+africa+finance+corporation&sca_esv=6b1c5e95a3d0b06b&ei=9okhZrnPC9SThbIPxcaeoA4&ved=0ahUKEwi5ooOb1MyFAxXUSUEAHUWjB-QQ4dUDCBA&uact=5&oq=ethiopia++imf+loan+africa+finance+corporation&gs_lp=Egxnd3Mtd2l6LXNlcnAaAhgCIi1ldGhpb3BpYSAgaW1mIGxvYW4gYWZyaWNhIGZpbmFuY2UgY29ycG9yYXRpb24yCBAAGIAEGKIEMggQABiABBiiBDIIEAAYgAQYogQyCBAAGIAEGKIESPqjAVCACVjNngFwAHgBkAEAmAHpAaABlCCqAQcyNi4xMC4zuAEDyAEA-AEBmAInoAKJIMICBBAAGEfCAhQQABiABBiRAhimAxioAxiKBRiLA8ICDhAAGIAEGJECGIoFGIsDwgIdEC4YgAQYkQIY0QMY0gMYpgMYxwEYqAMYigUYiwPCAggQABiABBiLA8ICERAuGIAEGKIFGKgDGIsDGJ0DwgIOEC4YgAQYqAMYiwMYnQPCAgsQLhiABBiRAhiKBcICBRAAGIAEwgIaEC4YgAQYkQIYigUYlwUY3AQY3gQY4ATYAQHCAgYQABgWGB7CAgoQABgWGAoYHhgPwgIFECEYoAHCAgUQIRifBcICBxAhGKABGAqYAwCIBgGQBgi6BgYIARABGBSSBwcyNS4xMS4zoAex8AE&sclient=gws-wiz-serp
Https://www.proactiveinvestors.co.uk/companies/news/1045172/kefi-chair-says-stars-are-aligning-with-gold-at-2-400-1045172.html
One of the best interviews Harry has done and full of specific and positive content. Focused on the gold price and junior mining index which was interesting in itself. Highlighted that in 2011 when Gold was at record lows the index was at record highs at 700 now it is at record lows (40) when the gold price is at a record high. As he says it's lagging but inevitably will play catch up and when it pops it will do so significantly.
Updates on TK and Saudi flagged up for this month and next month, expected full docs sign off by end of May for TK (internal processes showing it’s all on track) and confirmation there is now a specialist police force permanently assigned to maintain security for mining projects including TK.
Seems to suggest Saudi resources have been expanded from recent drilling. We’ll hear more this month on that and they are of course getting closer to producing an NPV for the Saudi assets which will be a trigger in itself for a KEfi re-rate.
He made the point that the producers will be throwing off cash and looking for acquisitions. It was clear that he was implying with gold at its current price and trend that Kefi is very much in play. Or more accurately it will be when TK funding is signed off. That comment in this interview ties in with his aside in the Investor Meet presentation where he said he was regularly being approached by people at Saudi conferences making all sorts of offers.
Impressive CV FiveCandles. Due to your modesty, many readers won't know that aside from your business career, you worked as an astronaut and nuclear physicist after an illustrious footballing career with Barcelona. How you managed to translate the complete works of Shakespeare into Swahili during one of your rare weekends off I'll never know.
Moving swiftly on, for what it's worth TW exchanged emails with HAA on Monday evening and, whilst he is not inside, he is completely relaxed about Kefi. He added that if there were any changes to the RNS released on 25th March (extract below) there would have to be an announcement and, as there hasn't been, then everything can be assumed to be on track:-
"I can also advise the Company has received confirmation from the co-lender Africa Finance Corporation ("AFC") that its approval processes are underway and progressing well for its-intended US$95 million investment, which would provide the balance of the required funding for Project launch”
Fivecandles, from posting about an imminent takeover at 3 or 4p it's now down and gloom. For the last two weeks or so you have sounded like someone who had a short-term trade or spread bet and needed a takeover within a two-week timeframe before possible forced closure. Sorry if that's that's the case and you have had to close but the bi-polar posts are transparent.
It is frustrating but I am sure the patient will be rewarded and TK will get funding. As HAA pointed out the banks stayed with the project throughout the civil war and if they did that in the very worst of times they are not going to back out now with relative peace, a liberalising of the economy, prospects of an IMF loan being sorted this month and an increasingly strong gold price. And yes, there is the prospect of a takeover as well but not until TK funding is sorted..
Yes, the second bank is being annoyingly slow. HAA referred in the recent Investor Meet presentation to an agreement with the Ethiopian Govt to provide permanent security around TK even though it is not a red zone. He said they have found a solution to the issue in response to the banks' preferences. He also added he was being "very frank as it is a sensitive topic and you'll hear about it (the revised security arrangements) very soon. " If finalising this development is the reason for the delay, and there is a good chance it is, then approval from the second bank shouldn't be far away and Kefi's share price will start to reflect the NPV more accurately.
HAA mentioned before that normally pre- production companies trade at an average of 44% of NPV. That would put Kef around 3p and a fair bit more once they get the feasibility study done for the Saudi resources and obviously after TK funding is over the line. I don't expect a jump to 3p immediately on funding news but after trading settles down I think it will head there in the coming months and the prospect of a takeover will also drive the price along with the backdrop of the gold price. In short, the patient should be rewarded.
I assume the update HAA flagged up in the RNS release on 19th Feb. as due in the last quarter will be imminent. As he said in the Investor Meet presentation, the Saudi assets will dwarf those of TK.
Ethiopia finally moving towards getting its finances sorted:-
https://www.mofed.gov.et/blog/ethiopia-signs-172-billion-usd-financing-agreements-with-the-world-bank/
I have no doubt Rob is a genuine holder and have even exchanged private messages with him on advfn. He provides exactly what share forums should be - an insightful exchange of information.
It kind of grates when boards are so full of brainless argumentative one-liners when someone has a go at a poster who contributes really useful information. His posts are always devoid of mindless ramping as well.
Worth keeping an eye on the chart for this ETF which is the VanEck Junior Gold Miners ETF. Beginning to trend up but has yet to break out. It includes 'juniors' with a minimum m/cap of £100m or USD 100m but it gives some indication of where even the microcaps (Kefi) are heading.
https://finance.yahoo.com/quote/GDXJ/
Agreed DVH that it is TK finance second bank approval that is the trigger to move Kefi on for a significant re-rating from the current ludicrously low valuation. I am glad that Kefi has a decent amount of funds so that there is no 'when is the placing coming' drag on the share price when good news comes. Any residue of the placing churn should be mostly gone by then as well.
The positive impact of the gold price will begin to be factored in at some stage for the junior exploration and mining sector as well. So the stars are aligning for a very significant uplift this year. Patience is the key although I appreciate it is not the word a lot of much longer-term holders than me want to hear. But the best stock returns are always those when investors get in before the crowd and the crowd will flock to Kefi when TK is over the line and on a macro level if sentiment shifts for the junior miners.
From the link below:- "it is notable in gold equivalent terms, the Hawiah resource is already larger than Tulu Kapi and Jibal Qutman combined before any resource uplift." So when Kefi do get an NPV for Saudi then it will be well into double figures when combined with Tulu Kapi.
https://www.kefi-goldandcopper.com/files/announcements/kefi-positive-pfs-for-hawiah-28june23.pdf
Five Candles, I agree that Kefi will probably become a takeover target for its assets sometime this year but I would just caution on expecting it near term as opposed to the medium term. The big players aren't always the fastest to act but we do know HA is starting to get unsolicited deals offered in Saudi in particular. I don't think anyone will make a move for Kefi until TK is sorted and I don't mind that as there are plenty of other drivers of the shares this year aside from a takeover. Much better to get takeover interest from a higher share price base.
What will propel the share in the near to medium term? Removal of the placing overhang followed by the second bank's initial and full lending approval, further Saudi discoveries and, perhaps the biggest factor, a change of sentiment towards the junior gold mining sector on the back of a strong and rising gold price.
This link is one of the best bits of analysis I have seen regarding the junior sector and the interview was done in January and his gold price analysis has been spot on (no pun intended!).
Jeff Clark highlights that last year was the worst performance for junior miners but anticipates a sharp turn in sentiment for the sector this year as the gold price gets above $2200. He suggests that as sector sentiment changes many of the junior gold miners could triple. He's been right on the gold price and I suspect he'll be right on the junior mining sector as well. For Kefi it could be a very good year on both the micro and macro level.
https://investingnews.com/jeff-clark-gold-silver-forecast/
I agree eventually FOMO and a more bullish sentiment toward Kefi and junior miners in general will kick in.
We'll see if it happens as quickly as you think Five Candles. I think firstly the overhang from the placing needs to be removed and, secondly, I think any predator will wait to see TK over the funding line.
We'll see the share price move on the former. I don't know the extent of the overhang but no doubt a fair bit was forward sold. A few high-volume days should do it. Then, after TK funding, I do believe Kefi will be in play and from a higher share price base as well.
HA's comments about being approached by companies offering deals at Saudi conferences suggest it's far from guesswork. On the contrary, it sounds like serious interest is already starting to happen now. Just need to throw a change of sentiment toward junior miners into the mix and the share price will get interesting. Logic suggests that it should happen as the juniors have had a rough time for many years but hopefully, there should be a tailwind for the sector from the buoyant gold price to change that. It's well overdue.
Just going by HA's words in the Investor Meet presentation there is a distinct possibility of an offer. The surging gold price only increases that possibility.
Harry said in respect to Saudi in particular:- "There is pegging all around us. Companies are coming to conferences, strutting around and offering us deals and so on."
That was when he was saying what a joy the work currently is compared to the difficulties in the extreme during the civil war in Ethiopia and before the sea change in the Saudi approach to overseas miners. He makes the key point that the banks remained supportive during the civil war and remain so as funding formalities are awaited now.
Earlier in the presentation he said they didn't anticipate selling but acknowledged Kefi is a public company with a duty to maximise value for shareholders. He knows if a decent formal offer came he would be duty-bound to put it to shareholders. I don't think he wants to sell because he said he envisages shareholders including himself of course getting dividends once the mines are in production. He's also aware that Kefi will almost certainly have an NPV well into double figures when in production and the share price will reflect that and probably even be above NPV.
It's easy to say that the current share price might mean a low bid but, realistically, any interested party would have to make a bid that would succeed and that means one that would be recommended to shareholders by the board - in effect HA. I am sure he doesn't want offers and wants to see things through to production, but a 3p to 4p offer right now would almost certainly be successful. I guess the ideal scenario is that sentiment toward junior miners changes in line with the gold price increase and Kefi trades at around 3p with offers around 5p plus coming in and being more palatable to HA.
He did say that he wouldn't be averse to selling down in TK but, in terms of an outright sale, added that Kefi has social responsibilities in Ethiopia. I don't see that as a barrier to a takeover as any acquirer just inherits the social responsibilities and is obliged to ensure they are upheld.
I'd quite like to see an offer at a reasonable price. Based on the presentation answers I suspect there is tentative interest.
Harry mentioned in the presentation that there were a lot of new arrivals in both Saudi and Ethiopia. He added that he was getting all sorts of offers. Not firm takeover offers presumably as that would have to be announced but probably JV's etc. or perhaps even some parties doing some tentative sounding out. If the gold price advances or even stabilises around current levels then the interest is only likely to increase.
Without any sizeable institutions in the Company it would be P.I's who would determine the outcome of a bid. The board would either recommend acceptance or rejection to shareholders. At current levels, 2.5p to 3p might well succeed. I get the impression HA wants to see it through to production and is looking for a share price that is approaching or even above NPV which might well be 10p plus after Saudi feasibility studies allow for an NPV for those assets. So it's an ideal time for an acquirer to get Kefi on the cheap. Realistically, any offer is likely to come once TK funding is finalised.
Aside from Newmont, the likes of Barrick and MA'ADEN (Saudi Arabian Mining Co) might be interested. It might well be the Saudis who are the likeliest acquirer given they have pledged to invest USD10-billion in African mining projects over the next five years.
https://www.africanmining.co.za/2024/03/01/saudi-arabia-investing-in-african-mining/#:~:text=The%20Kingdom%20is%20aiming%20to,Vision%202030%20economic%20diversification%20plan.
The valuation for Kefi will be even more absurd when they do the feasibility studies for the Saudi assets and get an NPV. They are of course still discovering additional resources there so it's a little premature. HA stated the NPV value of the projects in Saudi will dwarf that of Tulu Kapi and the NPV for TK is £304 million. I wonder what that means in reality for Saudi ...double that of TK?
Simms, that is exactly how I would like to see things pan out with a sale of TK post-funding and a focus on Saudi with a GMCO listing. Not sure if Kefi would get £150m for a funded TK but who knows with the current buoyant gold price that is set for potential further uplift.
The Ethiopian stockmarket launch is planned for mid-24 and should give the economy and Govt reserves a boost as I think the plan is to list and privatise a few of the Govt owned sectors.
A Saudi listing looks the way to go for a substantive re-rating and Kefi just needs to get TK over the line but I believe it will be Saudi that drives the share price over the next year or so.
Kefi recently confirmed in the Q&A update with a one-word 'yes' to a question asking if it was the intention for GMCO to list in Saudi. Just a timetable detailing timescales for this intention would get the share price re-rated.
The listing criteria isn't onerous at all with a USD minimum market cap of $80m and a minimum of one years cash which GMCO would have. That's for the main market which would be appropriate for GMCO but there is a junior market as well.
https://resourcehub.bakermckenzie.com/en/resources/cross-border-listings-handbook/europe-middle-east--africa/saudi-stock-exchange/topics/quick-summary#:~:text=A%20market%20capitalization%20of%20at,listing%20for%20the%20Parallel%20Market.
I must have missed this on how Kefi intends to fund the Saudi exploration contribution costs.
"Going forward, Kefi said it expects most of the financing at GMCO to be low-cost loans utilising the Saudi Industrial Development Fund."
https://www.proactiveinvestors.co.uk/companies/news/1038838/kefi-gold-tweaks-saudi-jv-terms-ahead-of-rush-of-news-1038838.html
That is massively reassuring for me given it means the 25% stake is secured without having to tap into substantive equity funding. Plus the opportunity to avail of the Saudi grant funding flagged up in Rob's post and Saudi prospects are lining up to give a substantive re-rating to the share price. Harry needs to prioritise getting a listing there but the frustrating wait for TK credit approval from the secondary bank probably needs to be ticked off first.
An Ethiopian stock market listing for TK would also be interesting. HA flagged this up as on the agenda.
https://www.linkedin.com/pulse/upcoming-ethiopian-capital-market-capitalmarketet-i8aqf/