# KEFI Gold and Copper updates JV strategy in Saudi Arabia amid growth plans

- Link: https://www.directorstalkinterviews.com/kefi-gold-and-copper-updates-jv-strategy-in-saudi-arabia-amid-growth-plans/4121177129
- Published: 2024-11-13T07:21:51+00:00
- Author: Amilia Stone

**KEFI Gold and Copper plc **([LON:KEFI](https://www.directorstalkinterviews.com/company/kefi-gold-and-copper/kefi.l)),
the gold and copper exploration and development company focused on the Arabian-Nubian
Shield since 2008, has provided an update regarding the Company’s Gold and Minerals
SLA (GMCO) joint venture in Saudi Arabia.

A strategic review is being conducted by the two partners of GMCO, KEFI and its 
majority partner, Abdulrahman Saad AlRashid & Sons (“ARTAR”).  Initial conclusions
include that KEFI forego its right to contribute US$10 million and maintain its 
25% GMCO shareholding and, instead, accept dilution to 15% of GMCO.  That is now
being implemented formally.  

In addition, the ongoing business planning scenarios currently being evaluated include
the potential sale of KEFI’s residual 15% shareholding, the potential proceeds of
which would be receivable by KEFI.

KEFI’s decision is reflective of:

·    GMCO will shortly be looking to trigger its initial development and increase
regional exploration

·    GMCO’s commitment to growth would normally see KEFI funding its pro rata share

·    For the past 12 months ARTAR has sole-funded exploration activities of GMCO
in Saudi Arabia, including KEFI’s net share of US$10 million

·    The cost of KEFI raising sufficient funds via the issue of KEFI equity to maintain
KEFI’s interest in GMCO is considered dilutive to KEFI shareholders, given the disconnect
between the current market valuation of the plc and the Board’s considered view 
of the inherent value of KEFI’s shareholding in GMCO, of KEFI’s majority-owned flagship
Tulu Kapi Project, and of KEFI’s pipeline of projects offering majority ownership

·    The dilution for KEFI’s non-contribution in GMCO has been based on the historical
cost of investment by the partners

·    Any sale of KEFI’s remaining GMCO shareholding will be based on open market
valuations which, the KEFI Director’s believe is expected to be, following consultations
with market analysts, at a significant premium to the read-through valuation of 
this transaction with ARTAR which was based on historical cost only.  However, this
is a potential future transaction and there can be no guarantee of the outcome

·    KEFI is prioritising its majority-owned projects, in particular:

o  its Tulu Kapi Gold Project in Ethiopia, being prepared for finance closing, construction
and production;

o  Tulu Kapi’s significant underground resources to develop and with potential to
explore; plus

o  a large wholly owned pipeline of additional opportunities in Ethiopia and elsewhere
in the region

GMCO has ambitious growth plans.  To date approximately US$80 million has been spent
by the joint venture on making its discoveries and on the development feasibility
studies thereon.  GMCO has so far reported gold-equivalent resources of c.3 million
oz on orebodies that remain open.  GMCO preparations for its next stage of aggressive
growth include:

·    Continuing to build GMCO’s leadership team for the next stages of growth

·    Evaluating a two-stage development of both the Hawiah Copper-Gold-Zinc-Silver(“
Hawiah”), and Jibal Qutman Gold (“Jibal Qutman”) discoveries which now have advanced
feasibility studies for development of the initially defined Mineral Resource Estimates.
along the following lines:

o  first stage development of both Jibal Qutman and Hawiah, being open-pit mining
combined with carbon-in-leach processing on the shallow oxide ore;

o  second stage development to follow further exploration of ore body extensions
along strike and at depth of both projects noting that the majority of the known
mineralised structure at both projects has yet to be drill-tested, along with optimisation
of metallurgical recovery for their fresh ore; and

o  expanding the regional exploration programme utilising all knowledge acquired
to date over the 15 year period since launching exploration in Saudi Arabia.  GMCO’s
long-standing and highly successful exploration team is one of the largest in Saudi
Arabia and its next challenge is to execute an efficient and focused exploration
strategy for discovering world class deposits

GMCO’s partners will over the next six months assess the various alternative strategies
for optimising GMCO’s growth and value, and their respective involvement.

**KEFI Gold and Copper Executive Chairman, Harry Anagnostaras-Adams commented:**

_“Both of KEFI’s host countries, Saudi Arabia and Ethiopia, have recently pivoted
towards an improved environment for mining. And the gold price is at all-time highs.
In that context, KEFI considers it important that the two operating partnerships
play to their strengths and capitalise on the market dynamics in each country._

_“Today’s announcement of the strategic review at GMCO reflects that the partners
will, over the next six months, review various scenarios to determine the best way
forward for the joint venture to build on its successful discoveries and feasibility
studies.  In the meantime, the KEFI board believes it is in the best interests of
KEFI shareholders to remove the outstanding exploration liabilities with a consequential
reduction in the Company’s stake in GMCO.  KEFI has made it clear that the priority
for its capital is to now optimise shareholder value via majority-owned projects.”_

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