KEFI Minerals (KEFI) “has conditionally raised £3.7 million, before expenses, through a placing… at an issue price of 0.65 pence per ordinary share”, with Chairman Harry Adams arguing it “stands KEFI in promising financial shape and highlights the upside offered by its asset base”. But haven’t we heard similar before?...
We have heard similar before… but now reaction to COVID-19 has meant financial uncertainty and task adjustments and reschedulings. However, it was also noted then that the Tulu Kapi gold project “will not only generate substantial local employment in these difficult times, but will also generate substantial tax revenue and export income… Government has now also advised both KEFI and ANS Mining that it will this quarter look to arrange either direct or indirect funding into TKGM from its investment institutions for the required amounts if there is any further delay in investment via ANS Mining”. It is stated the placing “will provide the company with the funds to enable the closing of the c.US$260 million project financing of the company's Tulu Kapi Gold Project. This includes the anticipated initial closing of the project level equity in Q2 2020, along with that of the identified debt funding in October”.
The placing would see the issued shares up to 1,867,103,933 and thus a prospective market cap - at a current 0.81p share price - of just over £15 million. We’ve previously noted even at $1,300 gold and an 8% discount rate, a suggested Net Present Value of $93 million (currently approx. £75.5 million or 4p per share) for KEFI’s planned 45% beneficial interest in the Tulu Kapi gold project and it also states “we are also highly encouraged by the results to date of our ongoing drilling programme in Saudi Arabia, which has encountered drill intercept grades of up to 5% Cu equivalent this year. KEFI is targeting a maiden JORC resource mid-2020, following the completion of the current drilling programme, on what already appears to be an attractive copper-gold system with in-situ metal content potentially larger than that of Tulu Kapi”.
The shares were below the placing price as recently as early last month, but also that followed a fall from heading towards 2p early this year and the prior close was 1.1225p – the company stating “the placing price was set by applying an approximate 12.5% discount to the VWAP for ordinary shares for the three-day period prior to the commencement of the marketing of the placing on Thursday 30 April”. Considering also the emphasised asset potential, we’re disappointed by the price – and Tom Winnifrith has now written to AIM CEOs on this subject. However, we do believe in the noted assets potential and COVID-19 reaction disruption and still good upside here, though the dilution sees our target price reduced to 3.25p.
Filed under: KEFI Minerals, Bidstack, Tern, Tri-Star Resources, Purplebricks, HotStockRockets
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