KEFI Gold and Copper (KEFI): On the cusp

London, UK, 7 July 2021

KEFI Gold and Copper (KEFI): On the cusp

After a period of uncertainty, the peaceable conclusion of the recent general election in Ethiopia should provide KEFI with the opportunity to fund Tulu Kapi in an environment in which the Ethiopian government is keen to both encourage investment and generate tax and export earnings. Since our last note on the company, we have updated our project timings, costings and funding assumptions to come up with a valuation for KEFI of 4.35p/share (cf 4.05p/share previously), based largely upon its greater equity interest in the project (75% cf 45% previously) and notwithstanding its delayed start up.

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 and values KEFI at 4.35p/share (cf 4.05p/share previously) fully diluted to account for an assumed US$11m parent company equity issue within the next nine months. This confirms a current value for KEFI of £93.7m or US$129.8m, based on Tulu Kapi alone. It reduces to 3.95p/share in the event that all convertible instruments are converted at our valuation of the shares in two to three years' time (see 'Sensitivities' on pages 14-15), once the mine has started production. However, it excludes any value for KEFI's portfolio of exploration assets, which we estimate could double its valuation to 8.79p/share.

Click here to view the full report or here to sign up to receive research as it is published.

All reports published by Edison are available to download free of charge from its website

www.edisongroup.com

About Edison: Edison is a leading research and investor relations consultancy, connecting listed companies to the widest pool of global investors. By focusing on the volume and quality of investors reached - across institutions, family offices, wealth managers and retail investors - Edison can create and gauge intent to purchase, even in the darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings.

Having been the first in-market 17 years ago, Edison now has more than 100 analysts covering every economic sector. Headquartered in London, Edison also has offices in New York, Frankfurt, Amsterdam and Tel Aviv and a presence in Athens, Johannesburg and Sydney.

Edison is authorised and regulated by the Financial Conduct Authority.

Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities.

For more information, please contact Edison:

Charles Gibson +44 (0)20 3077 5724 mining@edisongroup.com

Learn more at www.edisongroup.com and connect with Edison on:

LinkedIn www.linkedin.com/company/edison-group-/

Twitter  www.twitter.com/Edison_Inv_Res

YouTube www.youtube.com/edisonitv