KEFI Gold and Copper Plc (LON:KEFI), the gold and copper exploration and development company focused on the Arabian-Nubian Shield, has announced its audited financial results for the year ended 31 December 2024.
AGM and Annual Report
The notice convening the Company’s Annual General Meeting, which is currently expected to be held on 17 July 2025 in London, will be sent out in the week commencing 9 June 2025 and will be available for download on the Company’s website: https://www.kefi-goldandcopper.com. A further announcement will be made when the Notice of AGM is published.
EXECUTIVE CHAIRMAN’S REPORT
KEFI’s key focus over the past year has been to complete the steps required to bring Tulu Kapi into production in Ethiopia. This process has required assembling, preserving through in-country challenges, working with, and occasionally refining the Project Syndicate which is comprised of a number of stakeholders including community, government, contractors, lenders and equity providers. We are now very close to completing this process, closing the c.$320 million project finance package and deploying substantial capital into developing Tulu Kapi.
On the other side of the Red Sea, our GMCO joint venture is now well-established as the leading private sector explorer/developer in the fast-emerging Saudi mining sector and its growth has coincided with the Saudi Government’s widely publicised recent initiatives to welcome international expertise.
In late 2024, KEFI Gold and Copper and our partner ARTAR decided to undertake a strategic review of GMCO and of KEFI’s 15% shareholding in GMCO in light of its next stage of aggressive growth that included further building the GMCO leadership team and progressing development of Hawiah and Jibal Qutman. We believe there is great value in developing these projects and the substantial exploration potential. Unfortunately, during recent years the cost of raising sufficient funds via the issue of KEFI equity to maintain its interest was deemed to not be in the best interest of KEFI shareholders. This was due to the disconnect between the KEFI’s current market capitalisation and the Board’s considered view of the inherent value of KEFI’s minority shareholding in GMCO and of KEFI’s majority-owned flagship Tulu Kapi Project. This assessment will be kept under review as we trigger full launch of Tulu Kapi development and offers for the GMCO shareholding are evaluated. We are also seeing in international stock markets an increased capital allocation to the mining sector which, if it continues, will also potentially lower the cost of capital for KEFI.
The Company has received significant interest in its GMCO shareholding and GMCO’s Saudi portfolio and is continuing discussions prior to finalising with its Saudi majority partner, ARTAR, the course of action deemed to provide the greatest value to KEFI.
GMCO continues to progress towards initially mining the oxidised gold portions of the Jibal Qutman and Hawiah deposits, as well as undertaking exploration programs over 14 recently granted Exploration Licences (“ELs”) and a new 50/50 Joint Venture with Australian major mining group Hancock Prospecting.
Despite the exciting potential of GMCO’s assets, KEFI’s clear and immediate priority for its equity capital is to invest in our Ethiopian projects. At a gold price of $3,000/ounce, Tulu Kapi’s net operating cash flow after royalties and taxes for the first full year of production is estimated at c.$304 million. This would be more than sufficient cash flow to repay the planned $240 million debt in the first full year of operation.
Ethiopia – Tulu Kapi (KEFI beneficial interest targeted at circa 80%)
Ethiopia is demonstrating a clear determination to expedite its economic recovery after the damage of the internal conflicts of 2020-2021 and, once again, be among the world’s top 10 growth countries, as it was for nearly 20 years up to 2017. A key part of the Ethiopian Government’s strategy to achieve this strong growth is for the mining sector to increase from 1% of GDP today to 10% of GDP ten years from now. During 2025, gold for the first time ranks as Ethiopia’s largest single export sector.
Tulu Kapi is designed to the highest international standards and will generate significant local and regional benefits. A similar gold project has also recently been launched in Ethiopia by Canadian company Allied Gold. Local conglomerate MIDROC operates the +100,000 ounce per year Lega Dembe Gold Mine and has two less advanced similar-scale projects. Ethiopia’s mining sector is coming alive for gold and other minerals and metals.
There is significant potential to increase Tulu Kapi’s current Ore Reserves of 1.05 million ounces of gold and Mineral Resources of 1.7 million ounces. Tulu Kapi is a high-grade (2.7g/t Resource) and high-recovery (94% metallurgical recovery) gold project in a quiet rural district, with a supportive community and no environmental or social legacy issues. Our fiscal arrangements are reasonable, clear and protected in a bilateral agreement with Government.
Economic projections for Tulu Kapi based on the open pit mine and an initial contribution from the underground mine indicate the following returns assuming a gold price of $3,000/ounce:
· Average EBITDA of $387 million per annum in the first 3 years of the project (KEFI’s now planned c. 80% interest being c.$310 million per annum) For good order, it should be noted that this ownership calculation is at the TKGM level and we expect that mining contractor BCM will have the right to convert into equity at the parent company at future share prices;
· All-in Sustaining Costs (“AISC”) of $960/ounce (note that royalty costs vary with the gold price); and
· All-in Costs (“AIC”) of $1,206/ounce.
The assumptions underlying these projections are detailed in the footnotes to the table on page 23 of this Annual Report.
KEFI’s business plan goes beyond the open-pit development and includes our intention to trigger early underground work to extend the existing underground Indicated Resource of 220,000 ounces (1.2 million tonnes (“Mt”) at 5.7g/t). The Preliminary Economic Assessment (“PEA”) estimates recovering about 200,000 ounces (1.5Mt at 4g/t) underground, supplementing open pit ore for the first seven years. The deposit is open down plunge with a last drill intercept of 90m at 2.8g/t, containing high-grade zones. KEFI estimates at least 1-million-ounce potential for underground ore.
Excluding the down-plunge potential of the underground, the ‘Business Plan Model’ projections show that running the plant at 2.3 million tonnes per annum results in over seven years of production averaging 164,000 ounces per year, generating a net cashflow to project shareholders of $1.1 to $1.6 billion at gold prices of $2,400 to $3,000/ounce over the initially defined life of the project. It is worth noting that on this basis net operating cash flow in the first full year of production is estimated at $231 to $304 million, compared to project finance debt of $240 million.
In Ethiopia, our focus is now on successfully closing the $320 million project finance package and the full launch of developing Tulu Kapi. Successful implementation of our plans will result in Tulu Kapi reaching full gold production in late 2027.
Saudi Arabia – GMCO Overview
GMCO has, since its formation in 2008, focused on discovery of economic mineralisation in the Kingdom of Saudi Arabia, particularly gold and copper. GMCO has developed into arguably the most successful explorer in the Kingdom.
Jibal Qutman and Hawiah are enjoying positive regulatory support as we assess the choices of development plans. Substantial drilling programmes at both projects over the past year have better defined the known Mineral Resources as well as discovering nearby deposits. Given the expected expansion in resources, the ongoing development feasibility studies are focused on establishing the optimal start-up strategies (Stage 1 development) for both projects whilst defining the ultimate potential scale (Stage 2 development).
During the past two years, the Saudi Government has been implementing positive regulatory changes and providing incentives to fast-track the growth of their mining sectors. This has transformed GMCO’s ability to make progress on the ground. GMCO has been granted more than 14 ELs recently along with being selected as one of six companies awarded exploration funding subsidies by the Government. We have also been awarded a strategic minerals belt exploration licence in joint venture with major Australian group Hancock Prospecting.
Saudi Arabia – Hawiah (15% KEFI Current beneficial interest)
GMCO first focused on the Wadi Bidah Mineral Belt (“WBMB”) and Hawiah in particular, shortly after launching our exploration programs. Regulatory overhauls allowed us to start drilling in 2019. Three VMS discoveries have been announced since then – Hawiah plus its discoveries at Al Godeyer and Abu Salal. We consider it likely that an expanding cluster of VMS deposits will be identified as we explore the expanded Hawiah Copper-Gold Project. The WBMB has also recently attracted extensive pegging around GMCO’s tenements by the exploration joint venture of Government-controlled Ma’aden and Ivanhoe Electric.
GMCO drilling confirmed the Hawiah deposit in 2019 and it now ranks in the:
· top three base metal projects in Saudi Arabia; and
· top 15% VMS projects worldwide.
Our drilling since 2019 has delineated a Mineral Resource Estimate (“MRE”) of 36.2Mt at 0.82% copper, 0.85% zinc, 0.64g/t gold and 10.0g/t silver.
Recent exploration has discovered two potential satellite orebodies near the proposed Hawiah processing plant. The nearby Al Godeyer deposit was discovered in 2022 and an initial MRE was estimated in 2023. Drilling at Abu Salal, approximately 50km south of Hawiah, intercepted sulphide mineralisation containing copper, gold, zinc and silver in multiple horizons in early 2024.
In addition, the granting to GMCO of the Umm Hijlan Exploration Licence (“EL”) in early 2025 has almost doubled the targeted strike length of the Hawiah mineralised system. Drilling teams have already been mobilised.
Over the coming year, Hawiah development studies will be progressed in conjunction with drilling programmes to upgrade and expand the GMCO’s copper-gold zinc-silver Mineral Resources in this major VMS district.
The new joint venture between GMCO/ARTAR and Hancock Prospecting will focus on a the recently granted 910km2 EL over the adjacent Wadi Shwas Mineral Belt parallel to and geologically analogous with the WBMB.
Saudi Arabia – Jibal Qutman (15% KEFI Current beneficial interest)
The aim is for Jibal Qutman’s initial development to be triggered during 2025 focusing on open pit mining the oxide ore and Carbon-In-Leach (“CIL”) processing.
Jibal Qutman is GMCO’s first discovery in Saudi Arabia with initial development studies completed in 2015. Following a long hiatus whilst tenure security and regulatory reform were sorted out, drilling re-started in 2022. In early 2025, an increased Jibal Qutman MRE was released of 37.0Mt at 0.76g/t gold, containing 902,000 ounces of gold, 30.5Mt at 0.76g/t of gold (including 748,000 ounces in the Indicated category).
Systematic exploration is ongoing across the expanded Jibal Qutman tenure to identify further resource potential and confirm structural controls on recently identified higher-grade gold mineralisation. Drilling to date has focused only on an 8km long section of the original Jibal Qutman EL. The full 35km mineralised strike length remains to be tested.
Summary and Conclusion
KEFI’s targeted beneficial interest in Tulu Kapi has an NPV at construction start of $1,069 million or £804 million (see footnotes to the table on page 23 for assumptions and further information). This valuation indicator is approximately 16 times KEFI’s current share market capitalisation of c. £50 million ($66 million). The Directors consider this a conventional industry measure of potential value once the projects have been successively de-risked.
Going forward, one would normally expect that as milestones are achieved, the Company’s share price should redress the gap between our stock market capitalisation and the Company’s underlying intrinsic value. As we move forward to production and profit-generation, we will concurrently explore the pipeline of targets we have cherry-picked since 2008, as well as consider other opportunities that will take advantage of, and add value to, our hard-earned, early-mover position in the Arabian Nubian Shield.
We are indeed at an opportune moment, made possible by our team’s hard work, your support and patience as shareholders and now we are seizing the opportunities presented by the positive turnarounds in our host countries and the strengthening of metal prices. Together with my fellow Directors, I am committed to generating returns on investment. Management’s personal alignment with shareholders is illustrated by my having formed and initially funded Atalaya Mining and consequently its then subsidiary KEFI during 2003-2005 and, since assuming executive duties at KEFI in 2014, taking much of my remuneration in shares. Atalaya now has a stock market capitalisation of c.£600 million which we expect will be surpassed by that of KEFI within a few years.
By emphasizing joint ventures and project-level development financing, we have reduced the pressure on KEFI shareholders to provide funding. In fact, at Tulu Kapi, the development capital is planned at the project or subsidiary level from regional investors, bankers, contractors, and other syndicate parties. We have also recently introduced Tier 1 institutional investors to the KEFI share register, as part of corporate organizational development.
KEFI’s directors are deeply appreciative of our personnel’s tenacity, as well as the support the Company receives from our shareholders, in-country partners, lenders, contractors, host communities and other stakeholders. It is certainly overdue for all stakeholders to share the success that the Company has worked for.
We have continued to build our team as we progress into developing Tulu Kapi. Operational management was installed at project company TKGM, with Simon Cleghorn as Managing Director and Theron Brand as Finance Director. Our Group Chief Operating Officer Mr Eddy Solbrandt leads KEFI’s development team. Nearly all personnel are based in Ethiopia whilst Financial control and Compliance is based in Cyprus overseen by Financial Controller Laki Catsamas.
I welcome Mr Addis Alemayehou who became an independent Non-Executive Director in July 2024. Addis is based in Ethiopia and is the Chairman of Kazana Group, a diversified investment firm. He is well known for having launched several ventures in Ethiopia. His appointment is also part of our ongoing commitment to maximise local participation in both management and financing at all levels of our projects. Conversely, KEFI and I have been honoured by the Ethiopian Government appointing me as Honorary Consul to Cyprus, focused on developing economic ties between the two countries and starting with a focus on inviting Cyprus’s world-class pharmaceutical industry to establish in Ethiopia.
We will further build the team and systems as KEFI moves towards production and as we expand our project pipeline, which we are well-positioned to do. KEFI’s Arabian-Nubian Shield platform is second to none.
Harry Anagnostaras-Adams
Executive Chairman
5 June 2025
FINANCE DIRECTOR’S REPORT
During the past year, the primary focus has been on advancing the funding package and the regulatory and other preparations for the development of Tulu Kapi as well as moving Jibal Qutman and Hawiah towards development. The Ethiopian and Saudi Arabian Governments have made changes that have facilitated and expanded financing options in each country. The Ethiopian Government has removed various obstacles to financing by providing key approvals and policy changes. Similarly, the Saudi Government’s policies have attracted significant capital investment into its mineral exploration and mining sector from both domestic and international investors. That is expected to also happen in Ethiopia.
Ethiopia has shown support for the Project by making security commitments, regulatory concessions, and other initiatives to ensure the Project proceeds according to international standards. The Tulu Kapi funding syndicate consists of leading banks, contractors of process plants and mining, and other specialists, all of whom are at advanced stages of their respective approval processes. KEFI has structured its development funding at the subsidiary level in both Ethiopia and Saudi Arabia to maximise local stakeholder alignment and minimise reliance on weak stock markets for financing.
Alliancing Strategy
A notable reason for our solid position in the region is our alliancing strategy. Our operating alliances are with the following strong organisations:
· Partners:
o in Ethiopia:
§ Federal Government of the Democratic Republic of Ethiopia
§ Oromia Regional Government
o in Saudi Arabia: Abdul Rahman Saad Al Rashid and Sons Company Ltd (“ARTAR”)
· Principal contractors:
o for process plants in both Ethiopia and Saudi Arabia: Lycopodium
o for mining in Ethiopia: BCM Group
· Senior project finance lenders:
o For Tulu Kapi:
§ East and Southern African Trade and Development Bank Ltd (“TDB”)
§ African Finance Corporation Limited (“AFC”)
o For Saudi Arabia:
§ Saudi Industrial Development Fund
· KEFI’s public shareholder base:
o KEFI’s initial public offering in 2006 was sponsored by Atalaya and UK-based retail investors. The weakness of the sector, combined with our in-country challenges, until recently attracted limited and short-lived Western institutional investor involvement in KEFI;
o the recent improvement in the gold price, combined with the positive turnaround in host country conditions and KEFI’s own solid progress on the ground, now make it possible to introduce a set of institutional investors to the KEFI share register – an important requirement for the long-term as we move into development and production; and
o as a result of our investor relations program, several prominent investment institutions are now KEFI shareholders including Ruffer Gold Fund, Konwave Gold Equity Fund, Phoenix Gold Fund, Premier Miton and RAB Capital.
Financing Tulu Kapi Project Development
Tulu Kapi has particularly robust economic metrics, based largely on lack of overburden, high gold grades and high gold recoveries. As the first internationally project financed mining project in Ethiopia, it has taken many years to complete extensive regulatory reform. The patience and support of the Ethiopian Government is much appreciated.
TKGM is structured as a public-private partnership with Ethiopia’s Federal and Regional Governments.
Current cost estimates (including finance costs and working capital) for the development of Tulu Kapi are c.$320 million, last updated in late 2022. The funding offers and commitments are conditional on finalising the cost estimates at signing of detailed definitive documentation and project launch. While cost-inflation appears to have decreased within the international gold industry, pricing will be updated to lock-in fixed-price lump sum contracts where possible prior to full project launch after which the final finance arrangements will be refined accordingly.
The $320 million funding package (excludes the mining fleet provided by the mining contractor and TKGM’s historical equity investment of c.$100 million) is now expected to be sourced from:
| · | $240 million of debt from TDB and AFC; |
| · | $10 million invested by KEFI as part of its historical investment; |
| · | $45 million of Equity Risk Notes in the form of a bespoke arrangement with mining contractor BCM Group and as Gold-Linked Preference Shares (“EthioPrefs”) for local qualified investors; |
| · | $20 million of Government share investment into TKGM; and |
| · | Fees and costs to be paid for in KEFI shares at closing. |
In March 2025, our co-lending-bank AFC received support from all their respective committees and Boards to proceed. Following Ethiopian Parliamentary Ratification of AFC’s Country Membership in May 2025, co-lender TDB is updating its formal approvals reflecting the expanded $240 million offering. The next steps are:
| · | Updating of all banking details and arrangements for latest approvals and associated plans; |
| · | Formal receipt of the remaining Government confirmations on various well understood and already discussed issues; |
| · | Up to the minute certifications of security, community readiness and project financial model; |
| · | Finalising the US$-linked ‘EthioPrefs’ to be issued by a newly formed Ethiopian holding company designed for qualified Ethiopian and, potentially, other African investors later. Listing of the EthioPrefs on the newly launched Ethiopian Securities Exchange is expected to also follow at a later date; and |
| · | Finalising arrangements with the BCM Group, the recently appointed mining contractor, which has confirmed its intention to subscribe to $23 million of a bespoke Equity Risk Note comprising an equity-risk ranking debt note with limited rights to convert into KEFI shares at the share market prices prevailing once operations have commenced. |
After approval by all syndicate members, we can then proceed to trigger Major Works by:
| · | Signing the definitive documentation between the respective syndicate counterparties; |
| · | Placing insurances and complete other administrative tasks; |
| · | Drawing down first capital, starting with project equity and then debt months later; |
| · | Commencing staged resettlement of approximately 350 households near Tulu Kapi; and |
| Beginning procurement of plant and mining fleet as well as tendering by local sub-contractors. |
GMCO Ownership and Strategic Review
In order to maintain rapid progress on GMCO’s projects in Saudi Arabia, ARTAR sole-funded GMCO’s exploration activities during 2024. KEFI’s net share of this expenditure totalled £3.7 million.
Given the disparity between KEFI’s market capitalisation at that time, the Board’s assessment of the intrinsic value of KEFI’s minority shareholding in GMCO, and KEFI’s majority-owned flagship Tulu Kapi Project, it was determined that raising sufficient funds through the issuance of KEFI equity to maintain our interest in GMCO would not serve the best interests of KEFI shareholders. Consequently, rather than contributing £6.8million to address the outstanding exploration liabilities, KEFI elected to reduce its stake in GMCO from 25% to 15%.
While ARTAR has the right to buy-out KEFI at fair market value, and while KEFI has the right to seek acquirers of its GMCO shareholding, we are examining a number of scenarios to optimise the future GMCO ownership structure for mutual benefit and to reciprocate ARTAR’s continued support of the joint venture relationship. This much-appreciated support from ARTAR reflects the strong partnership relationship and the priority given to production start-up.
GMCO partners KEFI and ARTAR are currently conducting a strategic review. KEFI has received significant interest in its Saudi portfolio and is discussing with ARTAR to determine the best course of action to provide the greatest value to KEFI and the joint venture.
Financing Working Capital for KEFI’s Activities to Date
KEFI has funded all activities since it was formed through equity capital raised at then prevailing share market prices.
Importantly, this strategy has allowed KEFI to avoid imposing debt-repayment risk on top of the inherent risks associated with exploration, permitting, and other initial phases of project development, particularly in frontier mining markets. However, we have occasionally utilised short-term unsecured advances organised by our Corporate Broker to provide working capital while awaiting the accomplishment of short-term business goals.
The Directors underscore the challenges of managing working capital within the context of high-growth and high-risk exploration activities in the Going Concern Note of the Financial Statements, which shareholders are advised to review.
Material Accounting Policy
KEFI Gold and Copper expenses all investment in GMCO in Saudi Arabia as part of its conservative accounting approach, but we will review this upon Definitive Feasibility Studies being approved by the GMCO Board. KEFI’s carrying value of the investment in KEFI Minerals (Ethiopia) Limited (“KME”), which holds the Company’s share of Tulu Kapi is only £31.4 million as at 31 December 2024. It is important to note KEFI’s planned c.80% beneficial interest in the underlying valuation of Tulu Kapi is c.£804 ($1,069) million based on project NPV at a gold price of $3,000/ounce and including the initial underground mine.
John Leach
Finance Director
5 June 2025
