KEFI - 4.5p target25 Sep 2020 17:05
Kefi Gold and Copper (KEFI) has announced half-year results, but also more significantly “Hawiah Preliminary Economic Assessment”. The results showed cash at 30th June of £2.1 million, with administration expenses coming in at £1.6 million, and Hawiah is a project in Saudi Arabia with Kefi the operating partner of a joint-venture in which it owns 34% and it emphasises the preliminary assessment…
…“confirms Hawiah is a high priority project, with a significant maiden resource of 19.3Mt at 1.9% copper equivalent in-situ (0.9% copper, 0.8% zinc, 0.6g/t gold, 10.3g/t silver), after only seven months of initial drilling; the maiden resource alone potentially supports a production rate of 2 million tonnes per annum for seven years for net operating cash flow of c.$70 million p.a. at current metal prices. After initial and sustaining capital expenditure of c.$222 million and c.$46 million respectively, this would indicate an estimated net cash surplus of over $200 million before financing costs and tax; and clear potential for expansion of resources with further drilling below the currently drilled depth of 350 metres of this structurally consistent tabular structure. A doubling of the resource with material of similar characteristics as the maiden resource would indicate an estimated net cash surplus of over $500 million before financing costs and tax.”
There is now a work programme for further exploration and development, with further drilling to commence in the next quarter but at a 1.865p share price, the Kefi market cap is below £35 million. That is also with the Tulu Kapi gold project in Ethiopia, where “the focus remains on continuing offsite development activities, the closing of the full project funding package in October 2020, resettlement commencing in Q4 2020, site construction in early 2021 and for gold production to commence in 2022” – we previously noting at $1,400 and $1,700 gold respectively and an 8% discount rate, the company notes attributable Tulu Kapi NPV’s of $105 million (£85 million) and $180 million (£152 million).
As such the current valuation is crackers. At up to 2.5p, still a strong buy with a target of 4.5p. (Hotstockrockets).
Sign In
Follow the stocks
