Interim Results

29 September 2023

KEFI Gold and Copper plc

("KEFI", or the "Company", or the "Group")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023

KEFI Gold and Copper plc (AIM: KEFI), the gold exploration and development company with projects in the Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, is pleased to announce its unaudited interim results for the six months ended 30 June 2023.

The interim results for the Group encompass the activities of KEFI Minerals (Ethiopia) Ltd ("KME"), Tulu Kapi Gold Mines Share Company ("TKGM") in Ethiopia, and Gold & Minerals Ltd ("GMCO") in Saudi Arabia.

The Tulu Kapi Gold Project ("Tulu Kapi") is currently 95% beneficially owned by KEFI through KEFI's wholly owned subsidiary KME. The Hawiah Copper-Gold Project ("Hawiah"), the Jibal Qutman Gold Project ("Jibal Qutman") and other Saudi projects are held by GMCO in which KEFI currently has a 26.8% interest. 

Both TKGM and GMCO are being developed by KEFI and its partners as separate operating companies so that each can build a local organisation capable of developing and managing long-term production and exploration activities, as well as fully exploit future development opportunities.

Highlights

Working Capital

KEFI has working capital in place to underpin its planned runway to the intended closing of the Tulu Kapi project finance and launch in the coming months. This follows the Company's repayment of all debts in June 2023 upon completing an equity placing that raised gross proceeds of £7.2 million via a £5.50 million Firm Placing, £0.70 million Conditional Subscription, £0.24 million Retail Offer and £0.75 million issue of Remuneration Shares in lieu of cash to senior executives. The issue of the Conditional Subscription, Retail Offer and Remuneration Shares were approved at the Company's Annual General Meeting on 30 June 2023 and these shares have subsequently been issued.

Board and Management Team

KEFI welcomed Non-Executive Director Dr Alistair Clark to the Board on the 1 July 2023, who is a pre-eminent authority on environmental, social, and corporate governance matters. From 2001 until 2021, Dr Clark was Managing Director, Environment and Sustainability Department, at the European Bank for Reconstruction and Development ("EBRD"). KEFI's recently appointed Chief Operating Officer, Eddy Solbrandt, has assumed formal responsibility for all project development activities with operational line management of the Company's majority-owned projects and provides support and advice for its minority-owned projects. The in-country project teams have been expanded under Managing Directors Theron Brand in TKGM in Ethiopia and Brian Hosking in GMCO in Saudi Arabia. General Manager Corporate Development, Rob Williams, has switched from part-time to full-time and the Tulu Kapi Project development execution team is now being assembled within TKGM and Lycopodium. Investor relations arrangements have also been enhanced to capture the heightened interest from regional, corporate and sector specialist international investors.

Quarterly Webinar

The Company will host its next quarterly investor webinar in London in late October 2023, the details of which will be announced in due course.

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

Enquiries

Condensed interim consolidated statements of comprehensive income

(unaudited) (All amounts in GBP thousands unless otherwise stated)

The notes are an integral part of these unaudited condensed interim consolidated financial statements.

Condensed interim consolidated statements of financial position

(unaudited) (All amounts in GBP thousands unless otherwise stated)

The notes are an integral part of these unaudited condensed interim consolidated financial statements.

On 29 September 2023, the Board of Directors of KEFI Gold and Copper Plc authorised these unaudited condensed interim financial statements for issue.

John Leach

Finance Director

Condensed interim consolidated statement of changes in equity

(unaudited) (All amounts in GBP thousands unless otherwise stated)

Attributable to the equity holders of parent

The following describes the nature and purpose of each reserve within owner's equity:

The notes are an integral part of these unaudited condensed interim consolidated financial statements.

Condensed interim consolidated statements of cash flows

(unaudited) (All amounts in GBP thousands unless otherwise stated)

The notes are an integral part of these unaudited condensed interim consolidated financial statements.

Notes to the condensed interim consolidated financial statements

For the six months to 30 June 2023 (unaudited) and 2022

(All amounts in GBP thousands unless otherwise stated)

1. Incorporation and principal activities

Country of incorporation

The Company was incorporated in United Kingdom as a public limited company on 24 October 2006. Its registered office is at 27/28 Eastcastle Street, London W1W 8DH.

Principal activities

The principal activities of the Group for the period are:

· To explore for mineral deposits of precious and base metals and other minerals that appear capable of commercial exploitation, including topographical, geological, geochemical and geophysical studies and exploratory drilling.

· To evaluate mineral deposits determining the technical feasibility and commercial viability of development, including the determination of the volume and grade of the deposit, examination of extraction methods, infrastructure requirements and market and finance studies.

· To develop, operate mineral deposits and market the metals produced.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these condensed interim consolidated financial statements are set out below. These policies have been applied consistently throughout the period presented in these condensed interim consolidated financial statements unless otherwise stated.

Basis of preparation and consolidation

These condensed interim financial statements are unaudited.

The unaudited interim condensed consolidated financial statements for the period ended 30 June 2023 have been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting. IFRS comprise the standard issued by the International Accounting Standard Board ("IASB"), and IFRS Interpretations Committee ("IFRICs") as issued by the IASB as adopted for use in the UK.

These unaudited interim condensed consolidated financial statements include the financial statements of the Company and its subsidiary undertakings. They have been prepared using accounting bases and policies consistent with those used in the preparation of the consolidated financial statements of the Company and the Group for the year ended 31 December 2022. These unaudited interim condensed consolidated financial statements do not include all the disclosures required for annual financial statements, and accordingly, should be read in conjunction with the consolidated financial statements and other information set out in the Group's annual report for the year ended 31 December 2022.

Going concern

The financial report has been prepared on the going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

The annual financial statements of Kefi Gold and Copper Plc for the year ended 31 December 2022 were prepared in accordance with UK adopted international accounting standards in conformity with the requirements of the Companies Act 2006. The Independent Auditors' Report on the Group's 2022 Annual Report was an unqualified audit opinion with a material uncertainty relating to going concern noted.

We draw attention to the financial statements, which indicate that the Group incurred a net loss of £3,416,000 (2022: loss of £2,894,000) during the period ended 30 June 2023 and, as of that date, the Group's current liabilities exceeded its current assets. As stated in this note events or conditions, along with other matters as set forth in this note, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern.

The assessment of the Group's ability to continue as a going concern involves judgment regarding future funding available for the development of the Tulu Kapi Gold project, exploration of the Saudi Arabia exploration properties and for working capital requirements. In considering the Group's ability to continue as a Going Concern, management have considered funds on hand at the date of approval of the financial statements, planned expenditures covering a period of at least 12 months from the date of approving these financial statements and the Group's strategic objectives as part of this assessment. 

As at the date of approval of the financial statements, the Group expects to be able to obtain bridging short-term financing to fund activities until financial close of the Tulu Kapi project. The Group has previously been successful in arranging such funding when required and expects to be able to continue to do so. Financing will also be required to continue the development of the Tulu Kapi Gold Project through to production as set out in a company announcements 'Ethiopia Operational Update' dated 5 September 2023 and 'Tulu Kapi Project Update' dated 12 September 2023.

The Group's ability to continue as a going concern is contingent on raising additional capital and/or the successful exploration and subsequent exploitation of its areas of interest through sale or development. If sufficient additional capital is not raised, the going concern basis of accounting may not be appropriate, and the Group may have to realise its assets and extinguish its liabilities other than in the ordinary course of business and at amounts different from those stated in the financial report. No allowance for such circumstances has been made in the financial report.

Notwithstanding the existence of material uncertainty that may cast significant doubt over the Group and Company's ability to continue as a going concern based on historical experience and ongoing proactive discussions with stakeholders, the Board has a reasonable expectation that the Group will be able to raise further funds to meet its obligations. Subject to the above, the Directors have concluded that it is appropriate to prepare the financial statements on a going concern basis.

3. Operating segments

The Group has two distinct operating segments, being that of mineral exploration and development and corporate activities. The Group's exploration and development activities are in Ethiopia and Saudi Arabia held through jointly controlled entities in each jurisdiction with KEFI administration and corporate activities based in Cyprus.

4. Loss per share

The calculation of the basic and fully diluted loss per share attributable to the ordinary equity holders of the parent is based on the following data:

The effect of share options and warrants on the loss per share is anti-dilutive.

5. Trade and other receivables

¹These funds pertain to the June 2023 share placement and amount outstanding on the 30 June 2023 will be settled subsequent to the reporting date. This delay is attributable to the timing variance between the issuance of shares and the receipt of cash in the bank account.

6. Intangible assets

7. Share capital

Issued capital

On the 5 June 2023 the Company admitted 785,714,285 new ordinary shares of the Company at a placing price of 0.7 pence per Ordinary Share.

At the AGM on the 30 June 2023, shareholders approved the issue 133,145,208 new ordinary shares of 0.1p each at a price of 0.7p per share. 34,820,080 of these shares were placed with retail investors and the balance were issued to new and/or existing investors. ¹These shares were admitted for trading on the 3 July 2023.

Furthermore, following the AGM approval, the company also issued 107,142,857 new ordinary shares on July 3, 2023. These shares of 0.1p each, were placed at a price of 0.7p per share. See also Note 14.

8. Share Based Payments

Broker Warrants

Pursuant to shareholder approval at the AGM, certain Broker commissions and fees were satisfied through the grant of 39,285,714 warrants granted to Tavira Securities. Each Broker Warrant entitles the Broker to subscribe for one new Ordinary Share at a price of 0.7 pence per share, exercisable for a period of three years from 3 July 2023.

Details of warrants outstanding as at 30 June 2023:

The estimated fair values of the warrants were calculated using the Black Scholes option pricing model. The inputs into the model and the results are as follows:

These warrants were issued to advisers and shareholders of the Group.

Share options reserve

Details of share options outstanding as at 30 June 2023:

The Company has not issued share options to directors, employees and advisers to the Group during the period.

The option agreements contain provisions adjusting the exercise price in certain circumstances including the allotment of fully paid Ordinary shares by way of a capitalisation of the Company's reserves, a subdivision or consolidation of the Ordinary shares, a reduction of share capital and offers or invitations (whether by way of rights issue or otherwise) to the holders of Ordinary shares.

The estimated fair values of the options were calculated using the Black Scholes option pricing model.

9. Trade and other payables

10. Loans and Borrowings

10.1. Short-Term Working Capital Bridging Finance

The Group has the option to access working capital from certain existing stakeholders. This unsecured working capital bridging finance is short?term debt which is unsecured and ranked below other loans. Bridging Finance facilities bear a fixed interest rate and were set off in shares by the lenders participation in the Company placements. In the event the Group was unable to pay this finance it would be repaid after other debt securities have been paid, if any.

10.2. Reconciliation of liabilities arising from financing activities

¹The lenders agreed to set off their short term loans owed by Company against amounts owed by the lenders as a result of their participation in the Company share placements during the year. The payment netting procedure was utilized to streamline the cash settlement process for participating in share placement and repaying bridging finance.

11. Joint venture agreements

KEFI is the operating partner with a 26.8% shareholding in GMCO with ARTAR holding the other 73.2%. KEFI provides GMCO with technical advice and assistance, including personnel to manage and supervise all exploration and technical studies. ARTAR provides administrative advice and assistance to ensure that GMCO remains in compliance with all governmental and other procedures. GMCO has five Directors, of whom two are nominated by KEFI However, decisions about the relevant activities of GMCO require the unanimous consent of the five directors. GMCO is treated as a jointly controlled entity and has been equity accounted and has reconciled its share in GMCO's losses.

During 2023, the Company has diluted its interest in the Saudi joint-venture company Gold and Minerals from 30% to 26.80% by not contributing its full pro rata share of expenses to GMCO. Given that the carrying value of the GMCO assets in the Company accounts at the date of dilution was nil because the Company's has a policy of expensing all the costs related to GMCO to date. By diluting its interest to GMCO to 26.8% the Company was released from this liability. This resulted in a gain of £1,169,181. In accordance with the group's accounting policy gain of £1,169,181 was reported in the profit or loss during the six-month period ended 30 June 2023.

A loss of £2,571,000 was recognized by the Group for the period ended 30 June 2023 (2022: £1,230,000) representing the Group's share of losses for the period. As at 30 June 2023, KEFI owed ARTAR an amount of £ 1,776,000(2022: £nil).

12. Related party transactions

The following transactions were carried out with related parties:

12.1. Compensation of key management personnel

The total remuneration of the Directors and other key management personnel was as follows:

Share-based benefits

The Company has issued share options to directors and key management. On 27 March 2014, the Board approved a new share option scheme ("the Scheme") for directors, senior managers and employees. The Scheme formalised the existing policy that options may be granted over ordinary shares representing up to a maximum of 10 per cent of the Group's issued share capital.

12.2. Transactions with shareholders and related parties

12.3. Payable to related parties

13. Capital commitments

14.  Events after the reporting date 

On July 3, 2023, the Company issued 107,142,857 new ordinary shares at a placing price of 0.7 pence per Ordinary Share, following the Annual General Meeting held on June 30, 2023. The total number of shares issued on July 3, 2023, for services and obligations is outlined below: