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KEFI Minerals

KEFI Minerals Project Equity, Exploration Licences & Placing

Project Equity Subscriptions

KEFI Minerals (LON: KEFI), the gold exploration and development company with projects in the Federal Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, is pleased to announce that in relation to the Company’s Tulu Kapi Gold Project all the updated relevant shareholder and subscription agreements were distributed to its Ethiopian partners during the week commencing 9 December 2019. These agreements are expected to be duly executed and returned by both the Ethiopian Government and ANS Mining Share Company this month to allow their subscriptions for equity into the Project company, Tulu Kapi Gold Mines Share Company. The Company is pleased to announce that some of these subscription proceeds have already been deployed by the Ethiopian Government in order to construct a new road of 11 km from the main highway to the Tulu Kapi Project site.

The terms of the Project equity subscription remain as previously stated and summarised in the Company’s announcement on 25 November 2019. The Company expects the transfer of the first tranche of the ANS Mining funding of US$9.5 million (Ethiopian Birr equivalent) to TKGM shortly after the return of the subscription agreements. These funds will enable the commencement of phase one of the community resettlement, debt implementation trigger and detailing the final procurement and contractual arrangements with the principal Project contractors in January 2020.

Stakeholder Meeting and Additional Acreage

An important Project stakeholder meeting took place in the Addis Ababa Oromia Regional Government offices on 11 December 2019. At that meeting, which included representatives of KEFI, ANS Mining and local interested parties, the Oromia Region Vice President Dr Girma Amente advised: “We consider the Tulu Kapi Gold Mine as a top priority and also a model for the Oromia mining sector, with modern standards for social and environmental aspects and a true public-private partnership including maximum community participation in the Project.”

As further evidence of government support, following extensive regional work and consequential applications, KEFI is delighted to confirm that the Ethiopian Ministry of Mines has now registered the Company’s application for regional exploration licences over an area of 1200 km2, one of the first to be registered under the newly launched licencing system for the country. KEFI has always maintained the Tulu Kapi Project is not simply one deposit, but part of a larger mining district. Following this award Ethiopian exploration will restart during 2020 and will be funded by a modest part of the Project equity subscriptions outlined above.

Placing

The Company is pleased to announce a firm placing to raise gross proceeds of £1,862,500, before expenses, through the placing of 149,000,000 new KEFI ordinary shares of 0.1p each at a price of 1.25 pence per share with both existing and new shareholders. The Placing has been co-ordinated through Brandon Hill Capital Limited as agent of the Company pursuant to the terms of a Placing Agreement and utilises the Company’s existing share issuance authorities.

Subject to shareholder approval, parties participating in the Placing will also receive one share warrant for every two Placing Shares. Each Warrant will entitle the holder to subscribe for one new KEFI ordinary share at a price of 2 pence per share and must be exercised by 30 April 2020 (following which unexercised Warrants will lapse and be cancelled).

Settlement of debt and accrued directors’ fees

Also subject to shareholder approval, the Company is intending to issue a further 149,000,000 new KEFI ordinary shares of 0.1p each at a price of 1.25 pence per share as follows:

· 99,580,400 ordinary shares which the Company has agreed to issue to Project contractors and other third parties in settlement of outstanding invoices and debt of £1,244,755; and

· 49,419,600 ordinary shares representing an aggregate value of £617,745 which are intended to be granted to certain directors and management of the Company to satisfy accrued fees and salaries.

Subject to shareholder approval parties receiving either Settlement Shares or Remuneration Shares will also receive one Warrant for every two Settlement Shares or Remuneration Shares. Each Warrant will entitle the holder to subscribe for one new KEFI ordinary share at a price of 2 pence per share and must be exercised by 30 April 2020 (following which unexercised Warrants will lapse and be cancelled).

The number of Remuneration Shares intended to be granted to each KEFI Director or manager and their resulting shareholdings are set out below:

NameNumber of existing ordinary shares in KEFIPercentage of existing issued share capitalNumber of Remuneration SharesNumber of ordinary shares in KEFI on Second AdmissionPercentage of total share capital enlarged by Placing SharesWarrants to be granted
H Anagnostaras-Adams14,169,7851.42%11,811,52725,981,312 2.26% 5,905,763
J Leach5,602,2230.56%8,923,52014,525,7431.26%4,461,760
Norman Arthur Ling295,4860.03%2,000,0002,295,4860.20%1,000,000
Mark Tyler00.00%2,000,0002,000,0000.17%1,000,000
Richard Lewin Robinson00.00%1,000,0001,000,0000.09%500,000
Other employees and PDMRs39,393,4803.94%23,684,55363,078,033 5.49% 11,842,276

A circular convening a general meeting to approve the issue of the Settlement Shares, Remuneration Shares and Warrants will be sent to shareholders shortly.

Following the Placing, all drawn funds under the Company’s existing convertible financing arrangements will have been repaid. The Company confirms that following the issue of the Placing Shares the £3.5 million undrawn balance under these outstanding facilities will be cancelled. The proceeds of the Placing will also be used for the provision of working capital for the Company pending funds becoming available from Project equity subscriptions to TKGM and the payment of other amounts owing.

Harry Anagnostaras-Adams, Executive Chairman of KEFI Minerals, commented:

“The Company is excited to report that it anticipates being in a position to commence Project development from January 2020. KEFI has established a powerful public-private partnership platform for the highly prospective Oromia Region, which now stands to benefit from modern industrial-scale mining for the first time”.

“Documentation relating to the Project level subscriptions has been issued to our partners and I look forward to announcing both the return of these subscriptions and the subsequent funds flow in the near term. In the meantime I am pleased by the support shown by those investors participating in the Placing and those parties who have agreed to receive shares as remuneration for their services.”

Further details of the Placing, settlement of debt and accrued fees and issue of Warrants

The Placing and issue of Settlement Shares, Remuneration Shares and Warrants will be undertaken as follows:

· The Placing shall consist of 149,000,000 new ordinary shares conditional, inter alia, on the admission of the Placing Shares to trading on AIM becoming effective (“First Admission”), which is expected to occur on or around 20 December 2019;

· The issue of the Settlement Shares and the Remuneration Shares shall consist of 149,000,000 new ordinary shares and requires shareholder approval at a General Meeting of the Company to be convened for 6 January 2020; and

· The Warrant issue will entitle the holder of Placing Shares, Settlement Shares and Remuneration Shares to one Warrant for every two Placing Shares subscribed or every two Settlement Shares or Remuneration Shares issued. Each Warrant entitles the holder to subscribe for one new ordinary share and is exercisable until 30 April 2020 at an exercise price of 2 pence per share. The issue of Warrants requires shareholder approval at the General Meeting.

The Grant of Shares and Warrant issue are conditional, inter alia, on First Admission becoming effective, the passing of the resolutions to be proposed at the General Meeting and the admission of the Settlement Shares and Remuneration Shares to trading on AIM becoming effective on or before 8.00 a.m. on or around 7 January 2020 (or such later date as Brandon Hill may agree being not later than 30 January 2020).

Shareholders are reminded that because the Grant of Shares is conditional, among other things, on the passing of the resolutions to be proposed at the General Meeting, should the resolutions not be passed, the Grant of Shares will not proceed and all amounts otherwise being repaid by the Settlement Shares and the Remuneration Shares will remain due and payable by the Company.

The Warrants will be issued in certificated form and will not be admitted to trading on AIM. The Warrants will be transferable in accordance with the terms of a warrant instrument to be entered into by the Company. Any shares issued pursuant to the Warrants will, when issued, be admitted to trading on AIM.

The Company has appointed Brandon Hill as its agent pursuant to the Placing Agreement. The Company has agreed to pay Brandon Hill certain commissions and fees (some of which will be satisfied through the grant of warrants over KEFI ordinary shares) in connection with its appointment.

Under the terms of the Placing Agreement, the Company has given certain customary warranties and indemnities to Brandon Hill in connection with the Placing and other matters relating to the Company and its affairs.

General Meeting

A circular convening the General Meeting to be held on 6 January 2020 to grant the board authority to allot the Settlement Shares and the Remuneration Shares on a non-pre-emptive basis and authority to allot the Warrants, will be sent to shareholders in due course and once published will be available to download from the Company’s website at www.kefi-minerals.com.

Total Voting Rights

Application will be made to the London Stock Exchange for First Admission of the Placing Shares to trading on AIM and it is expected that Admission will become effective and that dealings in the Placing Shares will commence at 8.00 a.m. on 20 December 2019. Following First Admission of the Placing Shares, the total issued share capital of the Company will consist of 1,148,873,172 Ordinary Shares each with voting rights. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of voting rights in the Company will be 1,148,873,172 and this figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA’s Disclosure Guidance and Transparency Rules.

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