Shareprophets: Kefi remains a BUY12 Jun 2019 15:23
KEFI Minerals - remains a Buy
An intra-day announcement typically is not good news but that’s not the case for one made at a 12:27pm from KEFI Minerals (KEFI)…
That was that the company “is pleased to announce that it has received the last remaining federal government consent for the financing and development of the company's Tulu Kapi gold project from the National Bank of Ethiopia, the Ethiopian central bank… clears the way for KEFI's project-level partners… combined US$58 million (Ethiopian Birr equivalent) equity investment and also for the mandated US$160 million infrastructure financing… the project can also proceed on the ground with the community and localauthorities”.
It is noted that “upon the execution of subscription documents… this will allow execution and settlement of the first ANS Mining equity instalment of US$11.4 million (Ethiopian Birr equivalent) in June 2019, as outlined in the company's announcement on 8 April”. That announcement also outlined “the implied NPV of KEFI beneficial interest in TKGM's After Debt and After Tax NPV (at a gold price of $1,300/oz, on the open pit only, ignoring the underground deposit and KEFI's other interests) is £40million as at today and £66 million at the start of production”. Shares in KEFI have currently responded more than 15% higher on its latest – though a current 1.65p still capitalises the company at little more than £11 million and compares to approaching2p even earlier this year.
There clearly remain risks e.g. financial delivery and with the project being “the first-mover in modern Ethiopian mining”. However, there is clear upside potential also – and it is certainly sufficient at anywhere around current share price levels for us to maintain our stance. Buy.
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