Member Info for Simms45

One key factor for shareholder value creation, over the obvious transformational event in itself, we are not going to the market to raise our $60m equity but this included as what we have spent over the last 10 years getting to this point but equally has been largely written off by the company as is normal for investments over this timeframe. Therefore on the deal being signed we immediately bring back around $50m of equity ($10m we already have left on balance sheet) into the business as this will be recognised. This is a nice bonus as most gold miners raise the money and this causes a massive dilution and often a share overhang that takes a long time to clear. what we will have is same number of shares but our equity will massively rise. There is a big big difference. I was perfectly happy for Kefi to raise $15m or so to finalise the deal as i thought they were a bit short but the last RNS stated all project finance now agreed and waiting for signoff so that is great. The BOD also categorically said no raise until after financial completion as they are using short-term loans. This is a bold move by the BOD but they are super confident. as with any investment you should never rely on the past to judge the future and RAB Capital are making sure their investment is maximised. We should know soon enough but my view is that when financial completion happens Kefi will have the wind in its sails for next few years as Hawiah will be the biggest copper find as we have only just started and today is not even valued by the market. That project is more valuable than TK but all hinges on getting TK over the line. Could be this week or next as the last update said it would happen around end of July and early August so given history and Covid that might well drift into August but no biggie if it happens. The key is we continue to move forwards and de-risk the project.

Shall we stick to the last factual update from the BOD and checked by Nomads that even since the last webinar Kefi had moved on at pace. We have all the moving parts necessary to close the deal. we now just need to wait for that to complete, hopefully by the end of July :

“Of particular note is that we have this week formally confirmed to the regulatory authorities in Ethiopia that the Company, its subsidiary Tulu Kapi Gold Mines Share Company, our project contractors, the project finance syndicate members and the other Government agencies involved are all ready to proceed in July with finalisation of detailed documentation and the gaining of formal approvals.”

Have to agree that Eqtec compared to ITM is grossly undervalued on all metrics except hype. The conversion efficiency of electricity into hydrogen is relatively poor and certainly depends where that energy is coming from. Eqtec is already starting out with an input that would be going to landfill so in my view when Eqtec add the hydrogen module our power will be more efficient use of resources. Eqtec will be profitable and growing its revenue faster than ITM so ultimately i think the market will correct in favour of Eqtec in time.

In other words the whole area is awash with gold and everywhere you care to plunge a drill we strike more of it. 5m will accumulate pretty quickly the way things are going and barely touched Cacao. We just need to tie up the loose ends (land and finance) and start scooping up the soil into the crusher and wait for the cavalry in the form of 100k ounzes a year. Waiting a couple of years seems a pretty good outcome when we make $1k an ounze profit and finally market might value Condor at fair value.

We need to be reminded the EG are 20% shareholders so stand to gain hugely from financial closure and the EG will be creating the biggest export earner bringing in $100ms into the government that they desperately need for their own liquidity crisis that has affected all banks in the country. Everything is in place and Harry has continued to affirm that position. it is worth re-reading the last RNS but the key is the project is moving forward and for me that is key but Kefi has largely outperformed the market as many are down 30% + but a little mid month update might have helped but understandably in this key period now the only news can be financial confirmation.

Clearly not comfortable if your on a short-term horizon but now down 60% from highs of 3p so sll is not plain sailing, although that was reasonably fair given the £600m+ potential order book, 13 financial closures and only a handful of people to deliver. The pinch point has not been demand as that is vertical but project financing. We just need to see more of those financial closures so we can get back on the pony as that is key, even if DP and team stop taking orders and just focus on closing projects. Its a nice problem to have but at the same time it gets to a point when nothing seems to happen because no project is getting the correct concentration of time and team spread themselves thin. still a very strong believer and teething issues are almost always expected but its up to DP to get some of those projects financed and that will happen, not least dishy rishi and his green bonds that could propel new financing our way. looking down the back of the sofa for cash as i am eager to buy in at these levels for medium term. As long as Deeside is on track a few knocks like Northfork will get resolved with a bit of time but suspect on that project Eqtec were focused elsewhere and maybe company installing simply was not up to the job and needed tighter project management, ideally someone full-time from eqtec on the ground leading every step. I do not know that was not the case but just a hunch. Plenty of opportunity here and a little positive news will change perception and only needs a few falling into place over next month to do that.

The part of the Edison report that sticks out to me is subject to TK finance within a little over 4 years you could be receiving a yearly dividend, quite possibly for life given the expectation of new gold finds in areas, equaling your initial investment. Therefore if you invest £10k today from 2026 you could be receiving £10k per year for life. For many people this could allow them to retire if all the moons align. Now those moons are far from aligned today but that is the risk/reward. Also bear in mind that on top of the dividend your initial investment, on the basis of that sort of dividend, would be 10x todays price so your £10k investment would be worth £100k just for TK. Factor in Hawiah and that is a whole different ballgame. I need to caveat a long way to go but we will find out soon enough if these sorts of returns will largely happen as assuming Ethiopia stabilises further then its just a process we are following. The share will probably move much slower in the early days but it will quickly rise as we reach 2022 when the project commissioning will be insight and those looking for dividends and yield will start to move in. Hopefully Kefi will have also started drilling to look for the next 1m ounzes to extend mine to 10 years and so on. There is so much gold in this area of the world and our licenses are so vast that it is almost guaranteed that this will run for decades.

"We calculate that Tulu Kapi is capable of generating free cash flow of c £66.2m a year for seven years, from 2023 to 2029 (inclusive). This, in turn, drives average (maximum potential) dividends of 1.94p/share for the four years from 2026 to 2029"

All coming together nicely in Ethiopia and hopefully the EG will push their buttons and help move us along.

so what is new? Since when did any project ever come in on budget? $4.5m does not seem very much in the grand scheme of things and could be a great time for Eqtec to play their fund raise cash card and get a bigger slice of the action for a discount. Seems like a great opportunity if that ball comes free from the pack. we will see.

Edison report is probably quite conservative but in answer to your question all investments in development phases of mining companies are written down over a period of years to allow the company to book the writedown as a a loss for tax purposes. Therefore once Kefi does start to generate £60m of net profit we will not have to pay any tax for a fair while until all the tax losses are used up so should create bumper profits in the first 3 years. Tomorrow we find out election result but what i read it is a landslide for Abiy who has probably won 49 of 53 constituencies so once this is confirmed financing can move forward hopefully at pace. All factors are playing to Kefis advantage so there is more than a good chance we can conclude the TK financing this month and Hawiah will be closely behind. Have a great weekend.

I think they must and be expected to prepare the ground as comprehensively as possible as a little work between now and resuming trading could and should see the shareprice getting back to the IPO levels but CNEL must do that extra step now. My concern is if we resume trading with no resolutions it will not move CNEL forward and we might well be back in same place in 12 months with another year of news blackouts, no forward guidance, no dividend announcement, missed quarterly updates a and missed finanicial report.

Richard Bennett just made a helpful tweet saying changes will unlock the impasse and hopefully get CNEL back to trading. Really hope they set the scene before that happens as i think they need to make some serious effort on this front and maybe get those 2 PR agencies referenced in the strange payments list on the payroll to work for their money and make sure they deliver the PR and investor relations!

What we want is CNEL to pre-annouce before trading recommences what affirmative actions they are making to ensure a strong return to the market. This should include additional board members, dividend, update on new contract wins, forward guidance, more info on India efforts and everything else that shows how E10 and booming ethanol prices will have on sales. They cannot keep investors in the dark. The update so far did not even cover one of these basic changes i think is needed to see by the market.

i think its a bit strong to say Kefi got a "final warning" given this was the first communication largely aimed to hurry the TKGM syndicate along to financial closure. i think the idea of the EG back in May was some hope TKGM might have been able to announce the mine pre the elections or possibly that it would help push the fence sitters into place after 2 years of issues to get this over the line. I do not think it helped Harry as i am sure he did not enjoy a week of calls to investors but this is all old news as we got "formal" agreement from all parties this week including all agencies to do the deal in July and you cannot do much more to satisfy the government than that and given EG are in for 20% and spent $20m they must be also keen to get this finalised and would have nothing to gain from further "administrative consequences". It is now a month to crack on and potentially move onto a new discussions at the end of the month. As to the loan it is almost immaterial in the grand scheme of things and we do not know how much it might be or if the loan will be a straight loan or any potential for conversion in the future and presumably long after financial close so a conversion price well north of today. i suggest if financial close happens then Kefi will be strong financially and a future raise could pay off the loan again at a £100m+ valuation at least. Rab Capital, as much as i feel they got a great entry into Kefi i think are strongly opposed to diution from the last webinar contents. Lets hope July is in the month.

While not defending Harry i think you will find that the consultancy fees are split with the finance director and they might cover other costs but presumably its a tax wheeze but agree i think he does take out a fair chunk when similar companies i monitor pay closer to £100k a year and share bonus. However when he completes the financing largely all his historic costs get converted into project equity so i might let him off. Last year Harry did have on the record that he put in more money than he had taken out so not sure how this all squares as he has been around 8 years but lth might know the reason he said that. Maybe a comm into Kefi in the meantime might provide clarity on total emoluments for Harry including consultancy, shares, pension contribution in the last year. It is not correct to place no value on Jibal Qutman, TK or Hawiah asset. Any of these projects do have a value especially in the current market and could be used as collateral. I do have some concerns that Kefi has paid contractors with shares and converted loans in the past and i suspect a lot of the shareprice headwind is coming from contractors selling for working capital needs. This has certainly not helped and perhaps why we seem to stick so rigidly around 2p for last 6 months. we should soon see a step up to 2.5p-3p on a bit more tangible news just as it moved from .9p to 2p last year ,again after months and months stuck at this level. plenty of news this month as the AGM has spelled out that everyone has moved to a "formal" agreement to finalise this month. for me that word is strongly positive.

I would add Kefi has plenty of assets that a loan can get secured on as we currently have no liabilities as we have never borrowed to any extent. We have in accounts £26m of net assets so a £2.6m loan is 10% gearing so small. What the assets also hide is Kefi has written off in books the £60m of historic investment in TK. What Harry has engineered is to get that investment recognised as our equity contribution into the project and hence our 75% beneficial interest. Therefore subject to financing its a double whammy as we will see around £60m appear back into our assets and a lot lot more besides. Essentially its the same as if Kefi did a £60m placing so we are all getting a piece of that £60m investment back in our pockets. To make some people happier that probably includes a lot of salaries to key people in that investment so we technically will get it all back in our equity in the project. Its one seriously good reason to be investing now at sub £40m as subject to completing we will all benefit from that £60m being recognised and a whole lot more besides.

While we can all take swipes that financial closure has been slower than envisaged to come to fruition the key to all this is that we are everyday moving forward and adding to the chances that it will be successful. We have todays news that everyone has "formally" agreed to July being the month so that is tangible as that means signed documentation and not verbal agreements as it is all with the national bank. That is significant and just happened in the last week. We have almost certain news of Abiy re-election in next day oro so and that is massively positive for the project as it is the Abiy government that have invested $20m and endorsed and assisting the project as best they can to create the largest export project in the country. Finally Tigray ceasefire has provided a backdrop of some semblance of stability. We also have news that at 10.30am today every resolution was passed with 90% votes in favour so there is almost no real opposition to what is going on. Yes there is risk but then again we are worth £40m???? and sitting on a possible "$320m" finance package and 2 massive projects worth around £2bn a piece at least just on base case. The risk/reward is increasingly favouring reward and while Harry has stretched this out his actual plans on commissioning the plant have never actually changed in all this time. I am sure there will be a slippage but lets see. Certainly today it has only added positives to the project on every front. Getting closer.

Its clearly excellent for Kefi as any instability cannot help but we are in a frontier country and its really just expected. What is most important is Abiy will win by a landslide in the elections and plans to continue at speed the liberalisation of the economy and making sure the gold wealth reaches the governments coffers and off the black market. As reports below state this has had a massive increase in revenues and a lot of the abnormal gold activity is happening in certain regions. Obviously many regions who have taken advantage of not paying taxes do not like change but Abiy is pushing to change that. All very positive and right on time to National bank approval and finaling bringing this financial closure to a head with Abiy once confirmed re-elected will help move things along at pace.

So we largely have evidence La India comtines all the way to Cacao and its 4km away and its gold is better than La India. I am pretty sure if you do the calculations we are well on our way to the fabled 5m ounze district. Now just need to start proving this up but its a major bit of the puzzle and creates a potential 30-50 year mine life at 100k ounzes a year. Would be great to now get the last land purchased, producer status and a toll agreement and things will be motoring!

The chances of being delisted are extremely small as the requirements from CNEL are not so complex to achieve and on paper have delivered the revenue and profits expected. If they did delist it would simply become a private company but doing so would limit shareholders opportunity to buy and sell shares. I have several investments in companies not listed on a stock exchange so while not great having spent millions listing on the Hkex not the end of the world but suspect recent investors who bought at at IPO will be very angry if that happened. We just need more time and very soon we should get an update on trading and where things are and we are already 6 months into very profitable year and one where Ethanol prices have doubled so CNEL should be booming unless this suspension news had dented project conversion. The eoy results werd stellar and suspect if we did not get suspended i suspect we would be in a very different place but its a strong warning in the future that if the BOD are hiding commercial news something is not quite right.