Q and A

Q: What happened to the previous mining contractor?

A: They were replaced for the reasons given in the RNS.

Q: Did the change of mining contractor impact Lycopodium or other contractors? 

A: No

Q: Why did you not flag the possible change of mining contractor?

A: It was commercially confidential and in the Company’s best interests to keep it that way.

Q: Shareholders did not see coming that a new mining contractor would contribute to the TK funding syndicate. Are there more surprises coming?

A: We have always said we would optimise the finance plan and we will keep doing our best to maximise choices and negotiate best outcomes.

Q. The TK funding requirement of $320m is now serviced by reported commitments from the Federal Government ($20m equity in the JV company), the 2 banks ($240m in senior and subordinated debt) and the newly appointed Operator ($23m). That leaves $37m unaccounted for although our money has been relentlessly ploughed into the project and may have discharged that proportion of the budget already. Can you clarify this?

A: As regards your use of the term ”Operator", this conveys a fundamental misusnderstanding which deserves explanation. The Operator is the Owner, TKGM. The Guarantor of the Operator’s performance is KEFI which has undertaken contractually to provide the human and capital resources for TKGM to perform. That is because KEFI is accepted by the contractors and banks to develop TKGM into the organization it needs to become. Partes like Lycopodium and BCM (newly appointed mining contractor) are contractors to TKGM. 

As regards your “unaccounted”  $37 million, we do not really understand the question. EthioPrefs remain part of the plan and will provide the largest contribution to this portion, supplemented by capex already spent and any last-minute tweaks amongst syndicate members if and as required once final costings are certified. 

We maintain the Company’s focus on maximizing non-dilutive capital-raisings wherever reasonable to do so. This is succeeding with the contractor financings, debt capital, the TKGM share capital and the Equity Risk Notes to BCM and planned Ethiopreference Share investors. Accordingly we feel thatwe have removed any concern about whether the finance will close successfully. 

Q. Has the process for refreshing the contractors contract already started? If so, is it wise to spend 500k doing this (Harry's quote on the vox interview) before ratification has even been granted. If it isn’t being refreshed now and it takes 2 months to complete (Harry's timeline in the same interview) how are we going to be in such a position to (in Harry's words)  "look at each other in June" and start construction when this piece of work will still need to be done?

A: We agree that ratification needs to be clarified and we note that is reportedly imminent. The Lycopodium price-refresh then takes one month to yield results good enough to finalise negotiations. Certification and signing will take a little longer. 

Q. It seems with every update that resettlement of the community is being prepared. Yet preparations never seem to be completed?

A. That has not surprised anyone experienced in moving a community of 1000’s of people, besides it being  the first project of this nature in Ethiopia. The government has recently completed property surveys for Phase 1 of the resettlement which is the piece on the critical path at commencement of Major Works. 

Q. Harry mentioned that physicals such as starting the build of construction camp, drilling of water wells ETC will now be sequenced to start over the next 2 months.  Can this be elaborated on?

A. Current activities include a new security camp now being built adjacent to mining licence area, expanded water source installed. These are expansions of facilities as the numbers of people involved is increasing.

Q. The RNS dated 13 November clearly laid out the reasoning for the GMCO Strategic Review and sale of the Saudi assets.  This included prioritising its majority owned projects, focusing on a large Ethiopian pipeline and that raising sufficient funds for Saudi is considered too dilutive. How has the potential $23m injection into Tulu Kapi's pre-production costs changed the reasoning of the above?

A: We believe the combination of the Ethiopian Preference Share and the partnership with BCM will negate any pressure to dispose of our stake in GMCO in order to fund Tulu Kapi. And while we remain firmly focused on majority owned projects we also believe that there is tremendous value in the GMCO business.

Q. Why  is there  secrecy about the ratification process, I cannot understand why a timetable cannot be published?

A. Ratification is a parliamentary task, and we are advised in good faith that ratification is in process within project requirements. The company is in no position to dictate parliamentary timetables or advise on how long other agreements have taken to ratify. Today's RNS notes that the focus is to complete this quarter Government approvals of residual administrative matters, including AFC membership ratification by the Ethiopian Parliament.

Q. I note that the area surrounding TK and also to the North not only still belong to the Hong Kong shell company, but have recently been extended for another year. Can you please comment on what the company is doing in respect of this, and whether you still expect them to be “returned”?

A: We remain confident that the successful launch of Tulu Kapi will sort this issue and our administrative processes remain focused thereon. It is not in shareholders’ interests to elaborate publicly.

Q: Why is it that Ethiopia appointed KEFI’s Chairman as consul to Cyprus?

A: The Ethiopian Ambassador to Cyprus also looks after 11 other countries and she wanted support on certain specific economic initiatives in Cyprus, such as targeting Cyprus Pharmaceutical companies to manufacture in Ethiopia for import replacement – just as important as export generation.  

Pharmaceuticals is the largest export sector from Cyprus, exporting to over 120 countries from about 20 factories under a number of companies. The Chairman has successfully carried out those honorary duties during his brief stopovers in Cyprus.

Q: I read in the media that a civil war in Tigray has started again. Please comment.

A: The past “civil war” was a 5% ethnic minority attempting a coup and being squashed by the 95%. The Tigray Region is on Ethiopia's border with Eritrea and about 1,300km from Tulu Kapi.

In Tigray last week, one Tigrayan seized power from another and then headed to the federal capital to talk it through. That is what we saw on the ground.

A: It might be one of many reasons and is managed by an officer duly experienced in compliance and acceptable investor relations for listed entities, including:

- Anything material must be via RNS; and

- The company website is not a publicity tool for unaccountable parties.

Q. Why one year later after stating AFC country membership has been granted, is country membership for AFC still going through the approval/ratification process? Not a worry as it is being fast tracked through Parliament but still a puzzle based on the above suggestion they already had membership on 3rd Jan 2024.

A: Ministry has approved. Parliamentary ratification awaited AFC credit approval, issued December 2024.

Q. Taking guidance from the Q&A reply on 24th May 2022 is it still a 24 month timeframe from mine construction to being fully operational or have you managed to shorten the timeframe? If it hasn’t been shortened,  how will you, as suggested in presentations, get commissioning in second half of 2026 and a full year of operation in 2027? Can other works proceed whilst the Community is being moved? Will it take up to a year to move the community?

A: Community resettlement starts at the beginning of Major Works. Commissioning starts before the end of Major Works which are designed to deliver full production. 

Q. What is the exact timetable for the resettlement of the local population at Tulu Kapi?

A: A small area is resettled prior to Major Works. The rest are sequenced as appropriate within the Major Works.  

Q. Does Kefi anticipate receiving an extension to the 2035 license expiry date as potential further discoveries are made extending the life cycle of the mine beyond this expiry date?

A: The Mining Licence contains the right to two 10-year extensions.

Q. Harry mentioned in his interview with Proactive Investors that developing a series of projects in Ethiopia to follow on from Tulu Kapi is planned as it’s what fund managers who he has presented to want to see.  Can he confirm that this will be funded at subsidiary/project level or via farm outs and the anticipated 80% holding in TKGM will not be reduced significantly?  

A: KEFI will maintain its stated focus on regional/subsidiary level funding.

Q. Most current investors would like to hear that no further placings will be done before before funds flow from Tulu Kapi in 2027. Can Harry confirm that in the event Saudi assets are sold for the valuation or more in the presentation ($80 an ounce) that, indeed, the Company does not anticipate any further placings before Tulu Kapi is operational with the proviso that it may keep that option open of the share price starts to reflect the NPV to a greater extent?

A: That is the intention.

Q. Kefi stated in the recent presentation: “up to US$30 million in the form of gold-linked preference shares of KEFI Minerals (Ethiopia) Limited expected to be issued as the Ethiopian Stock Exchange is launched (currently scheduled to be by the end of January)”. The Ethiopian Stock Exchange has launched - does this statement and timescale still apply?

A: All this advancing as foreshadowed.

Q. In the recent presentation Kefi stated that: “the remaining US$30 million is being finalised with certain Middle Eastern and other sectoral investors, as the Company looks to conclude the optimal financing scenario from interested parties.”  If this is finalised as envisaged in the statement above will this result in a reduction of the % holding of Kefi  in TKGM to say circa 70%?  With the Govt. investing $20m for 10% and up to $30m for 10% being raised from gold-linked preference shares of KEFI Minerals (Ethiopia) Limited  will this create a benchmark for the % that will be relinquished for “the remaining US$30 million being finalised with certain Middle Eastern and other sectoral investors"?

A: Yes, now that banking has settled down adequately, we will run-to-ground several parallel streams of work to optimise the outcome for KEFI. Please note that it is proposed that the gold-linked preference shares have no rights of conversion into voting stock.

Q: I read that Premier Miton is winding up its microcap fund. Also see that they were a recent KEFI investor. Does this have a serious impact on KEFI?

A. No impact. If Miton did sell, its holding is less than a day's average turnover in KEFI shares. 

The wind-up of the small-cap fund specifically reflects the general malaise of UK small stocks - KEFI is one of the survivors where many have fallen.

Q: KEFI shares turnover more than 100% per annum. You seem to deliberately attract share traders rather than long term institutional investors.

A: The 100% turnover is healthy. Institutional investors will get involved as the company’s business grows and matures.

We have in the meantime built a syndicate of large institutional financiers at the subsidiary level.

Q. Please provide detail on executive salaries.

A: We provide the following details in respect of the Executive Directors, whose remuneration is disclosed annually in statutory accounts.

The Executive Chairman (EC)and Finance Director (FD) were founding directors in 2006, when KEFI was spun out of Atalaya Mining (then EMED) to separately focus on exploration in frontier markets.

All their remuneration is detailed in the statutory accounts. Other personnel remuneration is subject to privacy.

The EC and FD received nil remuneration from 2006 until 2013 and since then received an aggregate of £250K in cash per annum and £270K in shares pa at prevailing market prices.

Approximately 75% of their aggregate remuneration was recharged to the operating joint ventures to compensate KEFI for services provided to partners.

All pay rates are based on independent industry surveys. Policy, implementation and review are in accordance with the details set out in the statutory accounts.

The pay rates and systems are also independently reviewed on behalf of the partners and financiers providing development capital.

KEFI's Executive Chairman Harry Anagnostaras-Adams was asked a number of questions by Ethiopia's Capital Newspaper.

This recent interview is available via this link Tulu Kapi’s Impact on Ethiopia’s Mining Future or can be found on pages 14 and 15 of this PDF of the Capital Newspaper which also contains articles on Ethiopia's recent banking reforms.

Q: Where is the Q3 operational update? And accompanying webinar?

A: An update will issue in early January and webinar will follow. We can take a poll at the next webinar as to whether shareholders want Quarterly Updates, as we have been lobbied to stop the quarterlies as we release news on a continuous basis, as and when events happen. 

Q: Why issue shares at a discount to market?

A: The price was set on Friday 29 November at a small discount on VWAP for previous 5, 10 and 20 days. This is a normal process. Placing executed along with retail offering on Monday 2 December.

Q. What dates are now being worked for financial close? This year?  Q1 2025?

A. The transition from Early Works to Major Works will take place as community and security readiness is independently confirmed. Financial closing and government clearances are planned to be sequenced within this process during early 2025.

Q: Who are Safaya? A new investor in KEFI?

A: Yes. Safaya is an investment vehicle of a number of Middle East family offices.

Q. Please provide a breakdown of the costs for the remuneration package proposed to be issued as stock (decision at the GM in the new year). Are you part of this? …and Are you prepared to push/cut back any or your director remuneration until after the banks have signed off the financing? 

A. Remuneration packages are, in accord with industry standards, made up of Base Salary and Short Term and Long-Term Incentive payments on the achievement of certain milestones. The signing off of the bank funding is one such milestone as set in the remuneration report of our annual report. 

Q. Why is the GM being held in Australia? Is it just to ensure that no shareholders turn up?

Q. Is it not dangerous selling Saudi interests and putting all our eggs in one basket, especially as we have not yet managed to get Tulu Kapi through the full financing process with the Ethiopian Government? KEFI has previously stated having more than one project is a strength.

A. Generally speaking, having more than one project remains a strength, but it became a capital allocation issue, and it was decided to focus our attention and resources on Tulu Kapi which is, by far, our most advanced project and in which we have the most significant interest.

Q. When do you envisage consolidating the shares in issue, as surely a mid cap miner will not be taken seriously with over 8 billion shares (so far) in issue?

A: Share consolidation has not been considered at this time but will be as and when necessary.

Q. In November 2023 Eddie stated at a presentation that the banks had indicated they required another 2 to 3 weeks to finalise the finance, what has happened since to delay? It has obviously cost the company dearly with more than 4 billion share dilution since.

A . Eddie would have been referring to lenders ‘credit approval’ which is different than finalising the finance, by which I think you mean getting the funds.  There is still a process that needs to be done ahead of getting access to funds but in the meantime,  we have to continue with work on the ground which of course requires funds – hence the equity issue.  

Q. If we are as close to financing as the company claims should we not at least have a chart available on the website that shows everything that is required being ticked off when completed (we seem to always have one more thing added that was unknown) and maybe a few pictures of things that are going on on Facebook or twitter. The company needs to up its communications we are to see an improvement in shareholder sentiment that is currently very low after the latest delay and discounted share issue.

A. Our communications are quite frequent and extensive especially for a small company. I think what you really mean is that we need to show progress on the ground and report that, which we will do in due course. 

Q    Why do certain journalists/tipsters seem to get information for their private use when surely it should be in the public domain?

A. This is simply not the case.  Information released by KEFI is always done in accord with regulatory norms and procedures.

Q. At the last webinar I asked a question on the day, "As you've just stated, if the timing of the financial close with the banks slips does Kefi have sufficient funds to see us through to financial close without a raise." The response was yes. The truth No, as we've just seen another dilutive raise.

A. We always give the best estimate we can of the timing of an event. However, there are many variables in a project like this and the potential for timetable slippage is significant.

A: Unlike many other companies, KEFI writes off all expenditure in its accounts until the application for a Mining Licence which reflects a decision being made reflecting a development commitment . There is no “right” or “wrong” - this is just our policy which we believe conservative for statutory reporting.

Therefore at KEFI, book value in the statutory accounts is always less than historical expenditure which usually involves extensive exploration, feasibility study, permitting, financing and other costs. 

And, asset market value would be expected to vastly exceed both the historical cost and the reported book value in the statutory accounts - if exploration is successful and/or development studies are positive.

On the other hand, as we all know, stock market values in each different jurisdiction varies on a daily basis from any of these numbers due to any number of factors.

In that context, we provide the following statistics with respect to each of GMCO and TKGM.

GMCO:
Cost was c. $12 million since 2008, accounting book value nil, indicated market value $50-80 million based on the opinions of research analysts who have issued reports.

TKGM:
Cost was c. $50 million since 2014, book value $35 million, indicated market value $495-835 million based on the opinions of the research analysts who have just issued reports.

Q: Please explain who the people are in the community meeting photo that KEFI recently posted on X. Where are they, who hosted them, the agenda and further details?

A: Our community liaison team comprises 25 people and our Country Director is Abera Mamo. They meet with community and local government agencies regularly. As a policy, we refrain from giving details of meeting attendees without their explicit permission and we generally consider it unnecessary risk to their privacy to do so.

Q: Have both banks confirmed that no more site visits are required for their credit committee approvals?

A: Yes. They sent their inspectors and are happy for the purpose of credit approval, already granted by one of them.

Q: Please explain why the compensation calculations in respect of the temporary construction camp set a useful precedent?

A: Simply that it is a small read and the relatively small area allows the precedents to be set for amounts payable per eligible item. This assists greatly in confirming our overall budget.

Q: Has KEFI caught up with its GMCO contributions or is there a risk of dilution by ARTAR?

A: No. there remains the risk of dilution.

A: There are no negatives. And it is consistent with foreshadowed policy  reform which goes hand-in-hand with the huge IMF funding package to support Ethiopia’s economic recovery after the self-inflicted damage of the last five years. The democratic and economic reforms provide an excellent backdrop for our project. 

This is also a very positive backdrop for our two development banks whose roles are now clearly up front and centre as part of a big push by western development financing institutions.

The regional investor interest in our project has just been reinforced because of its natural protection against devaluation and inflation, by generating exports in USD.

Q1: What is overall timetable to production?

A: Early Works plus Major Works are designed to result in production operations starting mid-2026.

Q2: What is the bank by bank progress with the project financing? And how does drawdown happen?

A: Both long-standing banks have signed a 30-page Terms Sheet with all the conditions precedent to signing the already drafted detailed definitive documentation and both have gone through initial approvals. One has also issued final approval ratification by its board of its own country member representatives. The other expects to issue its final approval following independent safety reviews during the Early Works period. Other banks have expressed interest but that is not today’s priority.

All parties are now agreed to the process and timing thereof and, in order to move to signing by all of them, we have collegiately triggered Early Works so as to achieve production mid-2026;

As regards drawdown:

• TKGM past share capital investment of $100M for calculating capital ratios is obviously done and its regulatory registration completed up until 2020. The rest is in process’
• Equity Capital:
  
  • via TKGM share capital disbursement by Government and KEFI that is already flowing; and
  • via the Equity Risk Note that will trigger with Major Works.
• Debt Capital disbursement occurs when all Equity Capital has been invested in Tulu Kapi but it is committed up-front

Q3: Please break down Early Works.

A: The RNS of 20 May 2024 set this out at a high level as did webinar slide show.  We herein add some elaborations:

• Completion of preparation for community resettlement:
  • Continually expanding community resettlement-preparations down to individual households.

• Detailed engineering for procurement;
  • Detailed construction engineering on key long-lead items being prepared for placing orders.
• Community consultations on social development plans:
  • Plans for community development being explained as it is a new experience for local people.
• Recruitment and other organisational development.
  • Local employment will climb as we complete the dismantling of the old exploration camp on top of the orebody installation and installing the initial policing camp,
  • More Ethiopian recruits onto Boards of Directors and management teams.
• Concurrent closing of project financing:
  • We will be pleased to provide a monthly Tulu Kapi update RNS on:
    • Independent monitoring of Early Works;
    • Satisfaction of other conditions precedent, all usual and mostly Government-administrative;
  • Execution of definitive detailed documentation;
  • Drawdown equity-risk capital October 2024 to mid-2025 followed by debt capital. All committed up-front

Therefore Early Works fall into two sets of tasks:

• demonstrating that Early Works on the ground have been completed safely for the protection of the community following the recently installed Federal Mining Police; and
• dotting the i’s and crossing t’s on all administrative matters and the associated administrative documents, all of which have been drafted.

This sequence is designed to protect all stakeholders, including KEFI shareholders.

Q4: Milestones ahead?

A: We will report any material matters as they occur from week to week. KEFI will also issue monthly update RNS’s as regards Tulu Kapi Early Works, along with any other material developments in Ethiopia or Saudi, which include:

• Ethiopian initiatives to add value to Tulu Kapi and KEFI’s in-country position;
  
  • We are evaluating a number of complementary projects and partnerships
• Saudi JV resolution of preferred development strategy for:
  
  • Jibal Qutman Gold Project and Hawiah Copper Gold Project:
    • preferred Stage 1 development and indicative final stage development
    • updated Mineral Resource Estimate
• Saudi JV resolution of preferred funding strategy for GMCO’s aggressive growth plans.

Q5: I'm confused about the timing of the various 60 day and 90 day periods discussed in the webinar? Do these periods commence at the end of the Early Works stage and signify formal commencement of the Major Works stage? Essentially at FID - the Final Investment Decision?

A:  the Final Investment Decision has been made by the project partners KEFI and its Government partners, the Lead Bank, the Lead ERN Investor and then the project company Board at TKGM. This was announced 20 May 2024 after checking that no syndicate member was out of step. That is what triggered the Early Works component of the overall development program. We have enough progress with all other parties to have taken that decision and set out two-stage project timetable.

Following through onto Major Works relies on Government finishing the preparations we require, mainly on the ground at the site and for the community. The Government also holds the key for nearly every residual administrative matter. It was important to make it clear that the project syndicate is ready and now the Government and community need to get ready also. We see no obstacle to this process and it now requires a big last push by Government and community in particular to get into Major Works. We are always pushing and we need to see progress with all others to ensure everyone is protected.

The triggering of Major Works is planned to occur October 2024 and follows the closing roadmap set out in RNS of 20 May 2024 and Webinar Slide Show 22 May 2024.

As regards the request for clarification on 60 or 90 day “timed fuses” that need to be triggered at certain moments during the closing process, we elaborate as follows:

• Final refreshed fixed price lump sum components of capex budget will only hold for 60 or 90 days (for placing the procurement order) or they have to be reset afresh. So we would need to trigger the refreshing exercise in August. The price may go down as well as up, given the loosening of supply chains since the last pricing exercise
• The bankers’ commitment fees and other closing fees need to be paid within 30, 60 or 90 days, as the case may be, of signing detailed definitive documentation. These add to $ millions, so we keep the documents ready for signing and sign at the last minute.
• The resettlers amongst the community must relocate within 90-120 days of having received their compensation ie at drawdown of equity funds. And their property surveys need to be refreshed to ensure they are compliant for paying the compensation – this exercise picks up any CPI adjustments and extra improvements built on the land since the last survey.

These procedures are typical for any such projects and project financing transactions, and the mining industry and its financiers would expect nothing different from country to country. The conditions on the ground along with the commitment of Government and community is now in place to align with the push from KEFI and the syndicate, Ethiopia has made it clear that it has prioritized this project ,e.g. the exemptions from exchange and capital controls in October 2023.

Q: Was just wondering could the company clear something up for shareholders. During the last placing a remuneration for directors was announced which detailed executive chairman (Harry) & finance director (John Leach) receive 50'000'000 shares and 33'333'333 split between two corporate advisers. Can you break down what these payments were for, for example base salary, bonuses, commission payments, overtime or monetary benefits?

A: The sums involved were part of the amounts owing to the participating executives and advisers.  All details for PDMR’s are set out in the company’s statutory reports. By way of background, our remuneration levels are set by our remuneration committee (non-executive directors) in accord with the company’s remuneration policy (on our website) and are consistent with externally prepared independent industry remuneration surveys. It is important we remain competitive in order to retain staff and we review each year. Advisory costs are also market-based.

Our senior executives have historically always elected to take some of their remuneration in the form of shares and always at the arms length price already set with third parties. The executives don’t have to accept shares in lieu of cash, but typically choose to do so that their interests are more clearly aligned with shareholders, and cash is preserved which has helped the Company in weak market conditions..

The market-based pricing of the issue was a discount of 18% on the 10-day VWAP and 10% on the 20-day VWAP. You will note that the placing was also offered (via Primary Bid) to all who wished to participate via Primary Bid.

A: Ethiopia is not an island and is a country the size of Spain and France combined in which the Government has plenty of land to assign to the resettlers. This is compulsory expropriation implemented in the same manner as in any established mining jurisdiction and certainly in accordance with World Bank IFC Performance Standards. These standards are publicly available and are worth perusing and understanding. The Company has always respected what are today promoted internationally as ESG principles.

Q: How much do KEFI currently owe Artar to pay the share of expenses in GMCO and how much do you expect it to be by the end of the year?

A: That will be published in the accounts.
 
Q: What are your plans to fund KEFI’s share of GMCO for the 2 years up to commencement of production at Jibal Qutman to ensure we do not dip below the important 25% share of the project?

A: Our negotiations with regional investors addresses both Ethiopia and Saudi Arabia.
 
Q: Are you contemplating listing GMCO on the Saudi stock exchange?

A: Yes.

In a chat with Proactive's Stephen Gunnion, Harry Anagnostaras-Adams, chairman of KEFI Gold and Copper PLC (AIM:KEFI, OTC:KFFLF), shared the latest achievements and future directions of the company, particularly focusing on its ventures in Ethiopia and Saudi Arabia. With a recent discovery at the Jibal Qutman Gold project and significant financial strides, KEFI's narrative is one of resilience, strategic growth and promising prospects.

Stephen Gunnion (SG): Harry, KEFI has reported encouraging updates this quarter. How do these align with the company’s long-term strategic goals?

Harry Anagnostaras-Adams (HA): Our journey in frontier markets over the last 15 years has been about identifying and capitalizing on low-cost, high-yield opportunities, a strategy that has yielded around 5 million ounces of gold discoveries. With a discovery cost of $32 per ounce, we've substantially undercut the industry benchmark. Our approach, anchored in strong local partnerships and a keen focus on cost-effective discoveries, has positioned us exactly where we aimed to be.

SG: Operating in Ethiopia and Saudi Arabia presents unique challenges. Can you provide updates on these jurisdictions?

HA: Indeed, both regions presented their fair share of hurdles, from security concerns to regulatory and property rights issues. However, recent years have seen a positive shift, with both Ethiopia and Saudi Arabia demonstrating a strong commitment to developing their mining sectors. This change has significantly benefited KEFI, positioning us at the forefront of these emerging mining hotspots.

SG: The recent discovery in Saudi Arabia is quite significant for KEFI. Could you elaborate on its importance?

HA: The discovery at Jibal Qutman, our first in the country, marks a significant milestone for us, especially after an eight-year regulatory hiatus. This discovery not only underscores our resilience but also opens up exciting prospects for further exploration and development on the property, much of which remains unexplored.

SG: How does the funding from your joint venture partner ARTAR contribute to KEFI’s operations?

HA: ARTAR's support is a testament to our strong, trust-based partnership, allowing us to maintain momentum across our projects despite financial constraints. This collaborative approach is somewhat unique in the corporate world but underscores the deep mutual commitment to advancing our shared objectives.

SG: The financing package for the Tulu Kapi gold project is a significant development. Can you detail the structure of this financing?

HA: The $320 million financing package is led by the Eastern and Southern African Trade and Development Bank and the African Finance Corporation, covering approximately 70% of the project costs. The Ethiopian government and multinational corporations' subsidiaries contribute to the funding, showcasing the diverse and strategic support for the project. This financing underscores the robust backing for KEFI's initiatives and our strategic approach to project development.

SG: Looking ahead, what developments can investors anticipate from KEFI Gold and Copper?

HA: In the coming months, investors should watch for progress on the Tulu Kapi gold project's finance closing, community preparation, and legal formalities. Additionally, we'll be defining the development project for Jibal Qutman in Saudi Arabia and ramping up exploration efforts to maintain and expand our project pipeline. The positive shifts in Ethiopia and Saudi Arabia's mining sectors have allowed us to accelerate our activities, promising a rich news flow and significant advancements.

Q: As a long-standing shareholder, I just want to say well done on the progress made in the year 2023 and hope all team members have a relaxing Christmas and New Year.

A: Thank you from all the team, whether on rostered break and or on duty. All the best to you and yours also.

Q: However, I am looking for some clarification on when the credit approvals process started with the banks:

In a recent presentation in November, Eddy Solbrandt said: "Where we are today; we are actually about 2 weeks away from credit approval. Our banks had committed to finishing credit approval at the end of this month (November), they've just written to us and said they need another two weeks." (Video attached). 

In an interview with Swiss Resource Capital AG , Eddy states: "We're ready for start once we get credit approval, which we hope will be middle of December" (https://www.youtube.com/watch?v=c_ngr9jLbzo)

A: Eddy’s statements were simply based on what he factually observed in the discussions with financiers. We cannot be further drawn into publicly reporting the step by step informal processes within the banks. The banks and whole syndicate are working seriously and all parties continued working through the traditional holiday season. Some  further elaboration provided below in respect of your next questions.

Q: This morning's RNS states (pertinent parts in bold):

"The presentation is designed to provide, in particular, an update on the Company's Tulu Kapi Gold project (the "Project") following the successful conclusion of stakeholder workshops in Addis Ababa on 7 December 2023. Following these meetings, the Ethiopian Government has taken proactive action by mobilising additional support to the Tulu Kapi district to adequately prepare the local community for the upcoming resettlement and Project launch. As a result, the Project's lead financiers have promptly initiated their internal approval processes for Project debt financing and the Company believes that notable progress is being made. A regulatory announcement will be made as soon as appropriate following the conclusion of these processes."

I believe the presentation and interview contradict the RNS. If the lead financiers initiated their internal approval processes after the 7th of December, how could they previously have committed to finishing credit approvals at the end of November, and subsequently asked for an additional 2 weeks? 

Did the credit approvals process start in November and if so is this morning's RNS incorrect?

If the approvals process had not started, why did Eddy Solbrandt state that it had? 

Are the credit approvals at all reliant on the locals being resettled, or agreements having been made for them to be resettled?  

A: The credit approval process started years ago and successfully went through its initial stages. Readiness to proceed was preserved (but obviously suspended) during the years of significant internal conflicts in Ethiopia which peaked at the end of 2021 with the end of the Tigray civil war. With the benefit of hindsight, we obviously lost years protecting the project on several levels whilst our risk-mitigants were tenaciously refined as required by our changed environment. We have always highlighted the need to ensure we can proceed safely in terms of protecting our people, our c. $100M historical investment and the c. $400M capital planned to be provided by the syndicate.

As reported, the project finance syndicate lifted the project suspension in mid-2022 and set out its conditions; it reiterated the conditions in mid-2023; the approvals processes stepped up in November with the completion of the updating of all due diligence ready for final approvals; all-stakeholder meetings called in December on the back of the 3 key conditions having finally been satisfied plus all due diligence updated:

-  AFC being granted country membership in March, like Lead-Lender TDB;
- Government stepping up security, started in April and reinforced in December;
- Central Bank formalising its  exemptions from capital controls, started in May and being completed in October;
- All technical and legal due diligence updated;
- Checklist of conditions precedent agreed for launch.

So we are now literally in the midst of final approvals. Having weathered years of challenge, we believe that we understand the syndicate members and their own processes well enough to allow us to prepare for launch of the fully project-financed project. That means we have enterred the community to prepare the individual households for resettlement and legal teams prepare final documentation for executions amongst the multitude of individual counter-parties . There are other tasks in the list of conditions precedent but nothing unusual to such transactions. But all are necessary to provide the risk-managed protection required for the first bankable mining project ever in Ethiopia. Full launch means that all is deemed safe, funds flow, the community gets moved, construction contracts signed and orders placed for equipment. Whilst all parties commit at launch, equity gets used first and debt accessed about 9 months later.

We will issue RNS updates as formal confirmations are received.

Q. When do the 1.6p warrants relating to the placings KEFI made in December 2021 and April 2022 expire?

A. The first tranche of 393.1M warrants expire on 13 January 2024. The second tranche of 500M warrants expire on 17 May 2024.

Q. When do the warrants become exercisable?

A. The warrants become exercisable following a Warrant Trigger Event provided that such Warrant Trigger Event occurs during a two year period The Warrants will become exercisable provided that, during a two year period following the Admission, the on market share closing price of the Ordinary Shares for five consecutive days reaches or exceeds 2.4 pence (being a 50% premium on the Warrant exercise price) (the "Warrant Trigger Event").  If the Warrant Trigger Event occurs, then (i) the holders of the Warrants may exercise the Warrants within 30 days from the occurrence of the Warrant Trigger Event; and (ii) the Warrants will expire following the end of the 30-day period referenced above if not exercised.  If the Warrant Trigger Event has not occurred within two years following the date, then the Warrants shall lapse and will no longer be capable of being exercised.

Q.Sorry to keep asking the same question but others keep confusing me. What has been cash paid to KEFI's Executive Chairman since the IPO in 2006?

A: Average of £75,000 per annum.

The disclosure in KEFI's annual reports aggregate any cash payments to the Executive Chairman plus other benefits such as travel for family reunification plus insurance coverage for emergency evacuation and medical procedures plus payments in shares plus ascribed value for options received.

Q: How can the company report 3 years ago that the government had started work on the power connection and roads in the Tulu Kapi district and yet these projects have not been finished and the company still refers to those works starting.

A: Because it is fact. The Tulu Kapi project overall and all its sub-projects were disrupted by the well publicised and regularly reported internal conflicts of the country.

A: There has been no negative development other than the process taking longer than all parties in the syndicate had estimated.

Q: No offence to management, but could the Ethiopian Government need to see local people appointed to leadership positions before granting final permits to proceed. As was the case in Spain for EMED?

A: Every situation is different.  Effecting change clearly involves making changes. In Spain the non-locals had to clean up the project and set it up for launch. Then the appointment of locals as management empowered the company for the next step..

The Ethiopian project is permitted and there are no such impediments with Government or any other stakeholder. Quite the opposite in that the stakeholders need to see committed leadership pending locals being groomed for succession in this new sector, wherever feasible. In Ethiopia we are simply (and frustratingly) grinding through the process of making bankable a first-mover project in a country which has had a lot of turbulence recently and which has had to change laws and regulations to accommodate us.

Q: Who are the people paid historically via companies Nancito and Winchcombe?

A: Nancito is the company of former TKGM Managing Director and Winchcombe of the current GMCO Managing Director and Group COO and their former colleague who also supported KEFI at times.

The remuneration attributable to the individuals involved has been reported in the PDMR section of the Annual Report.

Q: How much does the Chairman get paid by companies other than KEFI?

A: The Chairman does not serve in an executive capacity for any entity other than KEFI. As a non-executive director of Venus minerals he is entitled to receive fees of GBP15k per annum. Other matters are purely family based and private.

Q: Sorry to bother you again but someone is publishing that the Chairman was paid fees via a company Winchcombe. And that these were in addition to fees reported for him.

A: This has been answered before and is incorrect. Please send us the repeated accusations you refer to.

Q: Why did KEFI not keep its original 40% interest in the Saudi Arabia JV?

A: Because of the dilution effect at the parent company level.

Q: How do we avoid dilution to an immaterial ownership level in the Saudi assets?

A: As recently reported,  the corporate structure is being revised to allow more financings at the level of different subsidiaries which, themselves, may consider an IPO in regional stock exchanges.

Q: The Chairman is critical of AIM. Has he ever done well from the stockmarket? I ask because I can see the strength of the team on the ground pulling through all the challenges of these projects and hopefully soon-to-be-start-ups in frontier markets, but I am looking for evidence that KEFI’s leadership understand markets.

A: It is a statistical fact that the AIM market is currently at its weakest since being formed in 1995. And that the sectoral index has performed worse that the KEFI share price since both peaked in 2011.

For that and other reasons, KEFI has arranged project financing in the local unlisted markets. We consider that to reflect an uncommon strength of the team.  And we consider that it emanates from a record of successful start-ups in Europe and Australia in a number of commodities as well as in the non-mining sector.

Q: Why are KEFI staff based in so many locations rather than in England?

A: All project staff are at project sites. All corporate governance staff are in Cyprus. A handful of other staff and most specialist consultants are in various time zones around the world, designed to maintain momentum 24/7 on key functions.

Q: Why do you not eliminate the material uncertainty noted in the financial accounts given that it is suppressing the share price?

A: The material uncertainty has existed since the IPO in 2006 and may remain the case until we are in production and generating positive cash flows.

Q: The interims accounts refer to a legal claim and to a problem with an Exploration Licence. Do these problems affect the credit approval?

A: No. These do not affect the Tulu Kapi Project which is being financed. Both have been known for a year or two and are symptomatic of attempted last-minute money grabs that neither the banks nor we will tolerate.

Q: Is it not provocative to publicize that you are taking action to recover the Eexploration Licences near Tulu Kapi? Would it not disturb the banks or the government?

A: Legitimately and collaboratively protecting the Company’s rights is both a mandatory responsibility and, more so, is how we have achieved strong working relationships with all the parties involved. We talk to all these parties continually and all are comfortable with our conduct. Also, it is quite clear that the exploration areas have no bearing on the Mining Licence or the Tulu Kapi Project itself.

Q: The central bank of Ethiopia has published another Directive onto its website. Does that cover what was raised only last Friday by KEFI and our banks.

A:  Yes, it covers what we wrapped up on Friday and had been discussing for some time.

Q: I would like to ask why the Chairman is the only spokesperson for the company?

A: KEFI is more transparent and communicative than is required by regulation or is conventional by market practice. Plus it has many more stakeholders than many companies, with funds being raised mostly away from the stock exchange and with a multitude of regulatory authorities examining our communications.

In that context, the most appropriate spokesperson is the head of the company

Q. I expand on some statistics referred to in the annual report before putting my question. The junior gold miners index (GDXJ) started in 2004. It comprises companies with market caps over usd150m. GDXJ started at nil in 2004, 240 in 2011 and is now negative. Could the Chairman give his opinion on whether only a minority of investors ever make money out of junior resources?

A: I will start off by saying that an index for sub-US$150M market cap companies, if such an index existed, would likely display higher highs and lower lows.

Secondly, I think the statistics give us the answer. Between 2004 and 2011 an investment in a cross-section of junior mining stocks made good returns. But the opposite happened since 2011. Tha is a fact.

Thirdly, I can see and feel the despair on AIM. But I am a contrarian. The worst AIM feels, the more I am convinced that it will outperform going forward. Not necessarily next month or next year. But in my view it will outperform as it plays catch-up.

Fourthly, whether or not the cycle now turns positive for the sector or for AIM as a whole, the current positive turnaround of KEFI’s situation augurs well for us regardless of the indices and sectoral averages.

Q: Most people understand that the conflict in Amhara Region is far away from Tulu Kapi. But could you please give some insight from KEFI’s viewpoint into the Amhara state of emergency and how the Company manages the indirect effects of such distant factors?

A: When TKGM signed the initial Umbrella Agreement in mid-2022, marking the lifting of the Project’s suspension and the re-commencement of launch preparations, TKGM’s commitment to its syndicate and all stakeholders was to manage security in accordance with “red zone” (higher risk category) protocols despite the project area typically rating as “green” (low risk). One of the reasons for this approach is that all syndicate parties are experienced with Ethiopia and expect localised tensions from time to time as democratic reforms initiated in 2018 work their way through society.

TKGM has honored its commitment as regards “red zone” precautionary risk-management and has accordingly expanded its security systems as we approach launch and preparations intensify at the community level as well as corporate.

The TKGM plan is unaffected and is to launch Tulu Kapi over the next few months in line with the Ethiopian Government’s continued upgrade of security protections in the country and preparation of the community.

Independent security assessors Constellis provide detailed monthly reports for the syndicate on Government and TKGM’s preparations but also on the country and regional issues, including insight into the tensions in Amhara which are not a surprise. The recent Constellis reporting has been with a sharpened eye to launch preparations, and has reported that “TKGM’s approach to security at the project site and the transport routes in and out, are sensible, pragmatic and in line with security best management practice”. 

As regards distant observers’ perceptions of the potential influence of internal conflicts such as that currently in Amhara, it is worth noting that Gondar, where the current conflict is centred in Amhara, is more than 700km from Tulu Kapi compared with say 500km from Belfast to London. All road routes from Djibouti through Addis Ababa and to Tulu Kapi are unaffected.

To provide some broader context, Ethiopia is approximately five times the size of the UK and double its population. History shows that it is an especially unified and powerful country despite having 80 ethnic tribes and 80 languages, the only one of 54 African counties never to have been colonised, the largest contributor globally to UN Peacekeeping forces and the base for the African Union with over 100 foreign embassies located in Addis Ababa.

Q: How does this conflict in Amhara differ from that in Tigray 3 years ago?

A: The Tigray conflict was a long-planned but failed federal coup alongside an attempted expansion of territory for that region. The Amhara  situation is a push by a region to allow its militia to remain armed following the end to the Tigray conflict, as a self-defence mechanism.

A: Undertaking the required drilling and studies to upgrade the current ore reserve to proven category has not worth been worth the expenditure. And no one simple rule applies to every deposit.

The key is for financing Tulu Kapi's development to be bankable, which the project is based on the 130,000 metres of 40 metre-spaced drilling completed and having run the geostats with various independent checks for lenders.

The plan has always  been to infill-drill when required for monthly production grade-control one or two years ahead. Grade-control drilling of the Initial ore blocks to be mined is planned to be undertaken during project construction and then it will be sequenced as we mine.

To spend the many millions of $'s now on refining the ore reserve estimate and the mine plan would be a waste of money.

A. Yes, here is a PDF of the Addis Fortune  article titled "Authorities Open Doors for KEFI's $390m Gold Mine Amid Sweeping Regulatory Changes".

Q: So the community has to agree everything? This could take forever? Why can you not get the government to force resettlement?

A: This is indeed compulsory expropriation. The site community cannot block the development of the nation’s mineral resources for the good of the nation. But it must be done according to the standards which the company has referred to from day 1.

The community enthusiastically wants to get on with it. The benefits are all desired.

The key milestones for certainty of project development are the signing of umbrella agreements to date, the satisfaction of key conditions precedent to date and next final board and committee approvals. We then mobilise community preparations and funds flow follows the agreed procedures set out in definitive documentation signed soon after oard approvals.

One individual funding this by himself/herself could make up rules. But that is not the real world.

Q: As a long term shareholder, I want to personally thank you and all of the team at Kefi who have worked so hard to achieve the outcome of meeting all of the requirements precedent to final funding of the Tulu Kapi mine by the Syndicate.

I wonder if you could clarify the timescale for the final $20 million of the funding package? In addition I would be extremely grateful if you could confirm whether the binding financial signing cannot happen until the $20 million is finalised?

A: We now focus on final Board and committee approvals and then signing of detailed documents agreed with all, including government.

Upon final Board and committee approvals we will keep satisfying procedural conditions (insurances, document registration, bank account openings) and, importantly, mobilise into the field to formalise resettlement agreements with the hundreds of landholders. This will take a 2-3 months so that there is no accusation of railroading the community. Upon independent certification of community readiness, we finalise the last brick in the wall $20M and issue notices to proceed to contractors. We plan to avoid the stock market for the $20M, by focusing on regional investors as we have done for the other $370M. we just cannot finalise that last piece until we are a little further along, as set out above.

We understand the stock market is weak (not just for KEFI) and will continue to emphasise funding at the subsidiary and project level. We have built many deep relationships in these countries over our 15 years in the Arabian-Nubian Shield. Most of us have lived in these countries most of this time.

Q: Everyone knows that AIM is weak at present for junior miners. Are the other exchanges any stronger?

A: Yes , total equity raisings for junior miners on AIM in the past year totals less that the Tulu Kapi project finance package arranged by KEFI in Ethiopia.

TSX and ASX are both bigger with 3000 listed miners compared with AIM less than 10% of that.

Riyadh and Dubai are smaller than AIM as regards listed miners but better understand their own region.

We are looking into all of these, to provide the best support possible for KEFI’s long-term plans, to match the high quality of our strong retail investor base, as illustrated by the high share liquidity.

Q: Please comment on the going concern note in this year’s accounts.

A: Similar notes attach to all annual accounts since the IPO in 2006. We are a pre-production company and rely on equity funding pending the commencement of production cash flows. That has been our inherent structure since the IPO, rather than an aberration or passing phase.

The proximity of the Tulu Kapi project financing is something we look forward to rather than considering it a problem.

Q: Why report losses every year by writing off exploration, even though nearly all “exploration” is on development studies? Unsophisticated shareholders can be put off.

A: That has always been KEFI’s stated policy until a development commitment is made. Other companies may choose less conservative policies and we have always explained our policy.

Q: What I do not understand is how KEFI can have thousands of retail shareholders, one of the highest share turnovers of junior miners, and yet have strident detractors on bulletin boards.

A: We are in no position to know or comment on the motivations of anonymous posters or their comments. They may or may not be sincere beliefs. We have no idea and cannot engage as it is against stock exchange and company policy.

Q: Whilst it is good to see the senior executives being paid in shares, how much are they paid in total and, starting with the Chairman, how much cash has he received over the years?

A: Total remuneration is based on independent advice based on industry benchmarks given the individual’s role. 

The specifics for individuals is set out in every Annual Report, and the Executive Chairman has received cash of a little under GBP75,000 per annum since he founded the company in 2006.

Q: I am a shareholder in another mining company the shares of which have done better than KEFI. If the NPV is so high why don t the shares go higher?

A: The global index of junior gold miners has dropped from c. plus 240 to c. minus 10 since 2011. Exceptions always exist and we believe that the prospects for KEFI to also be a positive exception are excellent for the reasons set out in the Annual Report.

A: We have not been advised of these potential changes. However our bilateral establishment agreement with the government includes provisions that protect the company against negative changes in fiscal rules and entitle the company to positive changes. This was to protect project economics and to pick up any incentives subsequently issued to the industry.

Q: Now that KEFI is preparing to launch full development at Tulu Kapi, could you please summarise the experience of the KEFI team in developing mining and ore processing facilities?

A: The senior executive committee includes development specialist (the Head of Project Development Norman Green who founded African development contractor Green Team International) , Eddy Solbrandt (the Head of Organizational and Systems development who founded international consultancy GPR Dehler) , Rob Williams (Head of Corporate Development who has carried out development and operational roles in projects for the world’s largest miner BHP and companies led by the Chairman). And the Chairman who has, as Managing Director, guided the successful development of Australian projects in gold, zircon, alumina, magnesia and gas.

Q: Can it really be that hard and take so long to close financing, now that the government people are collaborating properly?

A: We obviously did not predict the range of challenges we would confront when we entered the country in 2014, before the much publicized conflicts had emerged. And without wanting to be seen to deflect the question, one should better ask why this is the first large-scale mining development in Ethiopia for over 30 years - in a highly prospective geological terrain.

Q. Why is it that KEFI is the only company at this stage? Where are all the other companies that have explored in Ethiopia?

A. Many regulatory policies have to be revised to accommodate our proposal, from allowing market-based interest rates to relieving the capital controls to allow debt and equity capital to receive interest and dividends without restrictions. They are just two of many regulatory aspects that have taken many years to address. And they are all critical to protect a c. $400 million syndicate of banks, contractors and investors - especially public shareholders who do not directly sit at the negotiating table.

Lastly, security needs to follow a belts and braces approach before deploying hundreds of people and hundreds of millions of dollars in a country which has recently experienced security issues.

Fortunately, it is obviously coming together at last. and we assure shareholders that discipline is being maintained on the sequence of implementation, to protect all stakeholders.

Q: Can you comment on some bulletin board participants claiming you are misleading shareholders?

A: Anonymous comments are beyond the scope of legitimate attention for the company. One should remember that we have some 5,000 shareholders and few people post on the chat rooms, for reasons that are not always evident or transparent. It is indeed not easy to comment on this without being targeted by more anonymous chatter.

A: JORC, as shown in each relevant RNS, quarterly report and annual report. JORC stands for Joint Ore Reserves Committee of Australia. The only other widely recognised international standard is Canada’s NI 43-101, which itself was drawn from JORC.

Responses to further questions received for KEFI's webinar held on 20 February 2023 are now available on the Investor Meet Company website (investormeetcompany.com - registration required) under the Q&A tab for that investor presentation. Note that audio clips of questions answered during the webinar are also available under the Q&A tab and the sound quality is better than the webinar.

Q: KEFI's RNS dated 23 January 2023 states that Ethiopian Ministry of Mines needs to complete endorsement of historical investment. This appears to be contradictory to KEFI announcements in July and August 2022 stating this issue had been resolved.

A. Those announcements noted that historical investment to the of end 2020 had been endorsed by the MoM. Subsequent investment to the end of 2022 is now awaiting endorsement.

Q. Why did KEFI not release a Tulu Kapi financing RNS prior to 31 December as promised? There seems to have been weeks of delay to communicate the same info.

A: 31 December was a deadline for actions by various parties, not for the RNS. The RNS was drafted in January after knowing the results of pressuring everyone for what was targeted for December. Then we had to await sign-off of the RNS by all parties named in the RNS.

Q: I do not agree that journalists who publish share tips can be taken offside.

A: Any journalist or professional shareholder (as defined in the regulations) is treated the same. Individual shareholders cannot be treated the same, as the authorities have no way of policing either their identity or their regulatory compliance.

A. The deployment and allocation of drilling rigs in Saudi Arabia changes regularly in line with the work schedule. We have:

- 2 rigs at Jibal Qutman focusing on geotechnical and metallurgical work for the DFS which will then turn to resource infill and extension work;

- 2 rigs at Hawiah/Al Godeyer on resource infill and extension work; and

- also recently had rigs on hydro-testing at both sites.

Mobilisation to our other new licences in Saudi Arabia has begun but not drilling.

Tulu Kapi has no current drilling but next year extensive in-fill drilling and some deeper resource extension drilling is planned.

A: Not unless they are one of our team or advisers, which would be in breach of policy and regulations and which is hard to believe.

Q. During the recent Edison interview with the Chairman, he made a remark about "getting the Warrants properly priced". If as stated in your presentation last week you are not looking/going to raise before THE completion, are you looking at scrapping existing Warrants and redoing them at a higher price or something else?

A: We have not gone back to listen word by word to either the question put to the chairman or the answer provided, but it is certainly the case that the Chairman would have acknowledged that the market needs to see the details of project finance, so that the company’s securities (shares and warrants) can be properly evaluated with full information.

Q: Why do Company officers not take calls from shareholders?
A: We have thousands of shareholders and we use the RNS system and webinars to communicate with shareholders. The info line has been set up to professionally manage q and a as well as sharing the same information.

Q: Can the 1.6p warrants be exercised before the expiry date and before they trade at 2.4p?
A: Yes, if the warrant holder wants to.

Q: Why does the company not answer my questions and interpretations as regards share trading patterns?
A: The company does not know who buys and sells the shares unless they trigger a reporting threshold such as the 3% ownership level.

Our setbacks have stymied progress in both Saudi Arabia and Ethiopia since applying for a mining licence in both countries in 2015. We need to establish a record of reliable progress, which seems possible now with a steadier and more supportive environment in both countries.

KEFI’s share market capitalisation represents about:

- 33% of the equity it has raised and spent since 2006. It is indeed disappointing but better than the average for grass-roots explorers over the same period; and

- 10% of its projected intrinsic valuation, estimated on the basis of NPV’s as our projects come into development and then production. This ignores upside from exploration of related projects.

Management is focused on delivering the intrinsic value for shareholders which hopefully justifies the patience and support. This indicates the potential and realistic reward as projects are de-risked.

1. The central bank has set policies that regulate debt-to-equity capital ratios by taking into account historical as well as future investment. So on this aspect, our past investment (of approximately US$85 million) needs to be taken into account as well as future equity contributions and debt capital, to ensure we comply and remain within the 70% debt-to-30% equity policy. Our overall plan is well within those policy limits.
2. One other point which can cause confusion is that, whilst KEFI has arranged within the TKGM project finance syndicate for everyone to set aside the equity and debt capital for the project’s future spending (budgeted at approximately US$240 million), these funds do not flow until all financing conditions precedent are satisfied based on independent certification.
3. The satisfaction of most of these conditions precedent is in the hands of various Government agencies and not with KEFI or TKGM. We have in the past few days reported to the Ministry of Mines the details of the large institutional lenders and investors and have also listed some of the conditions for the release of funds.
4. As reported over the past year, KEFI has also made arrangements to provide additional funds from within the financing syndicate due to possible cost-inflation. We need to finalise construction contracts before locking in the amounts and then setting aside of those funds.
5. Please bear in mind that mining project finance transactions are new to the country and its media and it is perfectly understandable that regulators need to be comprehensively briefed. We have only just submitted to the Ministry of Mines detailed explanations and they will need to assemble their questions for us to answer when we next meet. 

Q: What does the Tulu Kapi Umbrella Agreement comprise and when will the full funding package be in place?

A: Please refer to the RNS “Ethiopia Development Update” released 15 June 2022.

Q. Will shareholders be able to ask questions at the upcoming AGM?

A. Certainly. And other questions recently received, particularly regarding disclosure in the Company’s Annual Report, will be answered at the AGM and available online (details to be provided closer to the AGM). 

Q: Can you confirm that resettlement has taken place in the Substation, Plant and Mine areas?

A: Resettlement approvals from the company (and the requisite funds) have been handed to the local authorities and the households in the substation area. The move can take up to the statutory 90 days. As stated in the presentation the next will phases will be various parts of the plant site and then the mine site. But that will be staged over a 12 month period and cost over $20 million, so it is not shareholders’ interests to trigger that prematurely from a financing viewpoint.

Q: Is it correct that Chairman referred to shareholders as idiots in a recent interview?

A: Of course not.  We take the views of our shareholders views very seriously and always try to correct any misunderstanding we perceive or has been communicated to us.

Q: Is any directors’ remuneration not disclosed in the annual report?

A: No.

Q: Has KEFI ever liquidated any of its subsidiaries? And have any officers been paid anything via those subsidiaries?

A: Dormant subsidiaries have been wound up when they no longer served a purpose. No payments have been made via dormant companies, but the main point is that reported remuneration covers any payments by the KEFI Group as a whole.

Q: What other business interests does any Director or officer have that potentially conflict with or could potentially provide services to KEFI?

A: No conflicts have arisen, and if any ever did arise, that would have to be declared and dealt with in the normal manner, as set out in governance charter and also then reported in the annual report.

Q: Do you object to answering such pointed questions?

A: No, they should be dealt to protect the Company’s good name. And defamation (intentional or unintentional) of individuals is also something to prevent by being open with the facts. We deal with first-tier international organisations and Governments and expect the highest standard of conduct of ourselves, our stakeholders and our counterparties.

Q. What is the exact timetable for the resettlement of the local population at Tulu Kapi?:

A: One group of people at the electrical substation area is being moved as soon as authorities allow. Likewise the armed security force at site, moving to a new adjacent security barracks. The rest of the people are moved to their pre-finished new homes and farm lands within the first half of the 24 month construction timetable. There are about 10 stages of moves for the different site locations.

Q: Does the Kefi management intend to set up a webcam at Tulu Kapi?This would allow 1:1 tracking of progress; would build a lot of confidence among current and potential investors.

A: There will be no problem publishing photos and videos. We already have webcam facilities already at our sites, but not for external audiences.

Q: It is great that the company intends to issue photos and videos as things progress. why so little such publication to date?

A: This is due to our security protocols and that not much happens physically before full construction commences.

Q. When will Kefi/Saudi partners apply for SIDF 75% loan?

A: We already engage but the trigger for formal approvals is completion of DFS-level studies first at Jibal Qutman following the mining licence and at Hawiah late 2023.

Q. In 5 years time, what is the expectation on how many exploration/mining licences Kefi hold in Saudi Arabia, as a rough estimate?

A: We are today focused on licences for 2 large project areas and we have another 3 large project areas under application. These should have all been addressed well within 5 years. 

Q. Can you tell Shareholders more about the New Institutions on Board on this last placing and maybe any holding details or more information in regards to their participation?

A: They are mostly large institutions which are likely to end up investing more than they did on this placing. The regulations require them to declare when they go over 3% of KEFI so, unless they have split their holdings somehow that does not require disclosure, at least one will declare over 5%.

Q. Has the indigenous population been completely relocated from the mine site area?

A: No. We prepare for it but that would require over $20 milionl to be spent which should not be done prematurely.

Q. With just over 5 weeks away from a historic moment in history for KEFI and its Shareholders, can you Harry put some meat on the bone where possible what we will be seeing/expecting as regards to progress towards this fantastic milestone for the company and its Shareholders in regards to RNS`s steps or are you just going to tell the market we are "heading to sign"?

A: We announced last week from Capetown the decision of syndicate to sign umbrella agreement and we will announce when done. Before and after we will keep reporting progress to full launch.

Q. Harry are you still rating success of signoff as 10/10, also are you more confident of getting TK Finance signoff over the line since your meeting in South Africa with the Syndicate and why?

A: The syndicate has decided to proceed. And the progress is now in the hands of the government, especially the security systems side of things but also some administrative things. I find it difficult to imagine those things not being done.

Q. Should you not get the TK Finance signed off, would you consider this to be your biggest failure and therefore step down but on a positive, if you get TK over the line stay on until all three projects are in production, how do you see your future in Kefi as it been a difficult time in regards to quality family time and the Ethiopian War? 

A: I do not see the past geopolitical issues as the failing of any one employee of KEFI. The board has reviewed arrangements with all senior people to build a mid-tier producer over the next 5 years and my role will see me taking off some of the hats I wear today as the team grows. Of course shareholders may vote off the board any time they wish and one-third directors retire by rotation regularly.

Q: Please provide any details and holding % for the Institutional current holdings?

A: The placing was not offered to retail investors directly or indirectly, as it needed to install institutional shareholders as part of the corporate development plan (which includes the warrants integral to the placing). KEFI obviously needs both types of shareholders but right now needed to deepen institutional participation.

KEFI knows the institutions who participated and expects those holding over 3% to lodge their disclosures as their shares are registered following yesterday’s shareholder approvals. Also, the capital structure page of KEFI's website will be updated soon with the list of significant shareholders following the placing.

Q: Who from KEFI is attending the UK Investor Show on 21 May 2022? 

A: We are reshuffling attendance due to Covid impacts on travel plans. The Chairman will make the presentation by virtual attendance.

Responses to various questions received from shareholders since the recent placing are available here.

Q: Thanks for the detailed quarterly update. It seems so much to do. Can it be achieved in 3 months to end-June?

A: The only thing that needs several months is to demonstrate a record of undisturbed field work, as part of the security assessment. Other than that, KEFI and its syndicate naturally require the remaining Government clearances formally confirmed before finalising respective board approvals and signing binding documentation to deploy 100’s of people and $100’s million.

Q. Now That the parties have declared humanitarian truce in Tigray effective 24th March; says move paves way for resolution of conflict ending, does this now mean all parties in the TK project will also look to move the finance deal sooner to closure or is the ambition/expectation still a June sign off as per Kefi`s previous communications?

A. Nothing has changed and the ceasefire is as expected. All parties are heavily invested in getting the project launched and no-one is incentivised to do anything other than proceed ASAP. As the vast majority of the capital is provided at the project level by a number of parties, KEFI’s responsibility is to lead the syndicate and ensure all conditions precedent are satisfied and, to that end, all technical and most legal conditions have been cleared some time ago. The status was highlighted in the RNS of 3 March 2022, which, for the most part, rely on Government actions. This was updated in the Quarterly released on 1 April.

Q. Because everything is finely balanced in the TK project and like all moving cogs it would only take only one thing to fail and scupper the TK project, has the KEFI team got a backup plan should one of its Syndicate members pull out of the Finance deal before completion/Sign Off as the main aim is to surely complete and catch up lost time "Full Steam Ahead" now that the country is at peace once more?

A. Given the time and effort given by all parties in the finance syndicate, we strongly believe this group will provide the necessary funds. Of course, the funding mix may be tweaked if circumstances change prior to closing.

Q: Please clarify management’s shareholding in KEFI. including details of top executive salary and shareholding and detail any free shares ever issued?

A: Management own approximately 12% of the company or about 350 million shares. All shares have been paid for. The Executive Chairman was paid nothing for the first 8 years after the IPO when it was a pure exploration company. Since then he has been paid an annual salary based on the average of peer company salaries per industry benchmarking in independent surveys. He has said publicly that he has invested more in KEFI shares than he has been paid by the company since its IPO in 2006. The details of all top executive shareholdings and remuneration are set out in annual reports and other regulatory updates.

Q: The most recent Q&A narrative on the Kefi website (16 Feb 2022) states “a detailed timetable will be sent out by RNS” , relating to the works/tasks progressively required in order to reach project close in/around May/June 2022. It would be extremely helpful for all stakeholders to get this RNS into the public domain sooner rather than later. 

A: Thank you for the question. the foreshadowed RNS was released on 3 March after fhe finance syndicate and Ministry confirmed they would do their part.

A: It was reported last night in the media that Federal Cabinet had approved to do so and needs parliament to ratify, which we expect will be quick.

Q: Does lifting of the SOE take the last hurdle out of the way and the TK financing can now be completed?

A: The short answer is that this development is consistent with the assumptions underlying our standing plans to launch between February and May.

The more expansive answer is that the lifting of the State of Emergency is entirely consistent with our expectation that the internal conflicts would peak in Q4-21, that the country would turn its corner for the better in Q1-22 and that the country will then pull out all stops to get back on its 20-year long path of consistent high-growth - which is now very much needed to repair the damage of the civil war.  As regards when to close Tulu Kapi project finance and launch the project:  “as fast as conditions on the ground allow such that safety and security is assured” and that simply depends on how quickly we are physically able to move freely around the district and do our work including that required by the banks’ own teams of inspectors.  The full team has been in-country throughout the troubles and is engaging with the relevant government and other parties to move as fast as responsible security management permits.

Q: KEFI’s assets are changing fast as are the environments it operates within. In light of that, can you provide shareholders the opportunity to meet the Board and senior management in London and ask questions about corporate strategy in light of recent developments?

A: We used to do this pre-COVID and it is a great idea. We will try and arrange this for February when the Board and senior management already plans to meet, as long as COVID restrictions do not change for the people we need to get to London.

We have been advancing rapidly in 2021 within Saudi Arabia. That jurisdiction is making huge strides for this sector. In Ethiopia we have been held back pending the country overcoming its internal issues. We understand that the recent bad news in Ethiopia has overshadowed the good news from Saudi Arabia and this is a great suggestion to invite shareholders to meet the Board and senior management and have an open forum discussion.

A tabular summary which shows KEFI shareholder m\eeting for and against voting results as a % of votes cast and of the total issued capital is available here.

A: The JV has a long-term strategy and budgets ahead 12 months within that. Reviewing progress at board meetings, the partners fund each half-year. If one party does not contribute, the other may take it up. When considering funding its share of G&M costs, KEFI takes into account the value potentially provided by its strategy to optimise project development finance by utilising low-cost debt. By way of illustration, we would look to use project debt for say 75% of funding and equity for 25% of which KEFI’s current equity contribution would be 8% (32% of 25%) of the cost to develop Hawiah. The Saudi Industrial  Development  Fund  provides  loans  for  up  to  75%  of the capital cost of mine development at attractive interest rates.

A. Hard to say until we have seen a resolution to the current Ethiopian political conflict and related. With hindsight, all that might be said is that no one would want to have borrowed for  capital expenditure and then not have a clear run at construction and start-up. Be that as it may, a mediation process has for the first time been approved by both sides to the political conflict. We believe it will be successful and, when that occurs, we can move forward with our clear roadmap to start-up.

A. The highway from Addis gets one to various turnoffs which all range from 1 to 2 hours from Tulu Kapi. Then there are a handful of routes on gravel roads, which take 1 to 2 hours each. The shortest route will eventually be that which is built as a new access road and it will then take about 30 minutes to reach Tulu Kapi from the highway.

Q: If the Kefi team has such long running relationships with all levels of the Ethiopian stakeholders, how could you get caught out by this at the very last minute, just ahead of the Finance group meeting up to review and supposedly approve the new mine Finance package?

A: Escalated physical traffic and investigations as part of launch preparations flushed out expectations by parties other than the community itself. It needs to be dealt with now and the financiers would expect us to deal with all of its aspects ahead of launch.

Q: Having read and listened to Harry outline that early initial work is progressing to get the TKGM site ready for the mine construction. From what we can see, it looks like activities are yet to begin, when is this actually going to start?

A: As regards physical construction-style activities on the ground: we have completed refurbishment of the exploration camp for accommodating initial construction workers; the new host lands about 50 kms from Tulu Kapi at a place called Aba Sena have been substantially cleared, road cut in and initial batch of starter homes delivered; electrical connection program over 50% expended in that fabricated equipment has been received in country; surveys for civil engineering partly completed; new access road to Tulu Kapi surveyed in but not started; old existing access roads and bridges into Tulu Kapi need their annual maintenance plus some further upgrading when the wet season has ended shortly.

Q: What changes can KEFI now make to get the Tulu Kapi Project Finance back on track and the deal done within a reasonable period (current conflict permitting, 6 months)?

A: KEFI and the finance syndicate know what is required to ensure the Project is ready and it will be independently checked before we launch. There is a detailed action plan not dissimilar to analogous projects we have all been involved with.

Q: Is Saudi Arabia’s Hawiah’s Project all still on track and are you able to push this through in order to avoid this getting delayed beyond the end of December?

A: All seems to be on track for this quarter’s milestones.

Q: Assuming that the published Hawiah numbers are roughly correct, have you already lined up the £17m that Kefi will need to cover as its contribution? If not, do you have a plan in place to have this £17m ready and approved by the end of this year, in line with the PFS & MRE documents being completed? 

A: The PEA published in 2020 estimated $222M for development. The latest guidance is that development is targeted for 2024-2025. Once we confirm that the Saudi Industrial development Fund or similar project financier lends 75%, KEFI would put up c. $19M equity to avoid dilution of its share. That is the choice to be made 3 years from now and finance costs optimised accordingly.

Q: Assuming that you will be able to line up the required $19m for the Hawiah mine in 2024-2025, are you clear on the next steps required to get both the mine and the finance package approved by both the Saudi authorities and ARTAR?

A: KEFI knows what is normal internationally and what has been the pattern in Saudi Arabia. The Saudi authorities have recently overhauled their regulations to become more transparent, predictable and internationally conventional.  So…yes.

Q: Assuming that you are clear on the steps required to get everything approved in Hawiah, do you have a plan and are you working towards having the required meetings, etc. with the Saudi teams during January/Q1 to get everything approved and the mine build process kicked off as early in the year as possible?

A: The process in Hawiah remains to complete the PFS and lodge the Mining Licence Application in 2022, complete the Definitive Feasibility Study and financing in 2023 and start construction on the back of Tulu Kapi coming into production at that time. There is a solid team on the ground doing all this.

Q: In recent updates, it was mentioned that there are 16+ other exploration licences within Saudi Arabia that are owned by the local joint venture company. Do you now have both a work plan and provisional budget in place that will lead to all of these sites being drilled, analysed and the results compiled into MRE and PFS documents within a 1-3 year period? If so, what is the high level plan to get all of this done?

A: We indeed have many applications but few licences get awarded at any one time. Today we have one licence. Upon the award of a licence, we progress early field work fast to progress it or chop it down to its core or potentially drop it. Surviving licences then have to justify further investment or be farmed out or dropped. This is the normal exploration cycle. To outline this per licence in the public domain is not the company’s best interests.

Q: Having listened to the status of the proposed Jibal Qutman gold mine, you really should have a plan agreed with ARTAR to get this situation resolved within a set timeline and be working together towards getting this done. Do you have an agreed plan and deadline agreed to get this completed and if so what is it?  

A: We have for a long time downplayed Jibal Qutman because it is stuck in a regulatory quagmire. We work to a plan agreed with our partner and are working with the authorities on it.

Q: Based on the recent dive in the share price, obviously the company doing a (discounted?) share placement based financing round would be hugely dilutive and incredibly unpopular with the existing shareholder base. Please can you confirm that the current loan as well as any associated credit facilities can be extended in terms of repayment until sometime during Q1/Q2 of next year?

A: We always have and continue to use these bridging facilities to optimise the timing/pricing of capital-raisings from the viewpoint of minimising dilution. We have lined up almost all Tulu Kapi +$350M project finance at the project level, which is because Directors are determined to minimise public shareholder dilution.

Q: What are you now going to do to get the Kefi share price back up to around the 2-3p level again asap?

A: Achieve a safe Tulu Kapi launch and the planned Hawiah milestones.

Q: Do you have adequate management depth in place to cope with the obviously challenging environment and what is looming with the Projects?

A: The executive committee members have all the requisite experience to oversee and new management are being introduced on the front line as we achieve each milestone.

Q: Can you confirm or deny that in July this year or anytime in 2021 you have been given a final warning either verbally or written stating the Tulu Kapi finance deal must now be completed by 31 October 2021? Or that the Ethiopian Government can seek or impose penalties and/or remove  Kefi Mineral Licence and If the deadline was to be crossed could Kefi be in breach of contract? 

A: As reported in the appropriate regulatory form:

- The mining licence was awarded 2015 for 20 years, renewable and is in good standing.

- The company was, prior to 2020, granted extensions due to the official states of emergency until the end of 2020.

- Before the end of 2020 and during 2021 the company duly informed the Ministry of the updated schedule and of its requirements for the project to proceed in the context of matters in the hands of Government in particular.

- In mid-May there were media reports of warning letters but that was the first we had heard of it.

- In late May the Ministry warned of “administrative consequences” if we had not prepared financing by end-June.

- Before end-June we submitted to the authorities the finance plan and set out all requirements for closing, which are mostly in the hands of Government.

- Last week the Ministry confirming that end-October is approved and we responded this week setting out all requirements for closing, emphasising that speed of the essence and that most matters are now in the hands of Government.

Please note that the Company is obliged to report material formal communications.

A: No. Local banks play no role in the project financing.

We understand that this temporary restriction (whilst some other regulations are sorted) is to choke transactions which involve, say, unencumbered real estate in Addis Ababa, being borrowed against for the funds to be used illicitly.

Q: There was an article in Ethiopia’s Fortune Magazine on the weekend which reported that the Tulu Kapi finance is closing but that the Chairman declined to name all the financiers. Why not name the financiers? And there were also several factual mistakes made in the article.

A: It is considered best to focus on the task at hand and avoid distractions with media or others simply not involved in the project.  All material information gets reported via the regulatory channels when appropriate to do so.

Q: What is happening on the ground in Hawiah?

A: We are expanding and upgrading the maiden resource estimate published nine months ago. Since the end of Ramadan, we switched from 2 rigs on day shift to 3 rigs drilling 24/7.

Q: How much has been spent historically at Tulu Kapi?

A: About $70 million, some funded by KEFI and some by our predecessors. All of it recognised as historical spending on the project for regulatory purposes in Ethiopia. KEFI’s accounts show a lot less because of the project acquisition and expensing accounting policies as set out in the Annual Report.

Q: How much of the indicative finance plan summarised in the Finance Director's Report of the Annual report is from local investors?

A: About $70 million, $45 million from local companies advancing birr-denominated subordinated loans to KEFI Minerals Ethiopia, $25 million from the Government and other for birr-denominated share subscriptions into TKGM.

Q: Please elaborate on the pressure on the company from the Ministry in Ethiopia, when did the Government issue a warning letter and what is the upshot?

A: We submitted the final development and production plan in early May, there was some media commentary attributed to a departmental officer in mid-May and more again in June. We received a warning letter to push us along at the end of May to which we have responded both formally and informally. The plan remains that which we submitted formally in early May (and which is summarised in the Annual Report) and we are proceeding as fast as possible.

Q: May we please immediately have your view on the article in Saturday’s Ethiopia Reporter which states “companies including... Tulu Kapi gold mine... are among the firms to which the Ministry will send a final warning letter in a few days”. Is the Ministry saying you are moving too slowly, which is rather odd given the clear roadmap you have circulated, not to mention the May window which allows Ethiopian entities to put up money and take a stake.

Is this nonsense, sabre rattling or a rogue government official? – please explain.

A: We note some media commentary in Ethiopia regarding a Mines Ministry briefing at which reference was made to the cancellation of licences of 27 mining and exploration companies and which included a verbal reference by a ministry official to an intention to issue warning letters to 3 other companies including Tulu Kapi Gold Mines.

Neither KEFI Gold and Copper PLC nor its subsidiaries KEFI Minerals (Ethiopia) Limited and Tulu Kapi Gold Mines S.C (“TKGM”) nor any of their associate companies have had such an intended letter flagged to them formally or informally.

We have an especially close working relationship with the Government, who are a shareholder in TKGM at both the Federal and Oromia Regional levels.

Only last week we had formal Meetings of TKGM Shareholders, Board of Directors and Project Task Force (comprising senior representatives of TKGM and all involved Government agencies) which agreed the tasks and timetable for development to commence.

It was agreed by all that, in this time of heightened anxiety around arguably the most important democratic elections in Ethiopia’s history (which are scheduled for the end of next month), it remains most important for our joint focus to remain on reinforcing collaborative efforts to complete our preparations for Project launch.

KEFI and TKGM are particularly grateful at the Government’s huge efforts for our jointly-owned Project and its undertakings to complete its requisite final preparations for development to commence. Notwithstanding the obvious distraction of election time, it was agreed to upscale security around the project, endorse our historical Project expenditure, confirm our exploration licences and confirm the construction schedule for the offsite infrastructure (roads and electricity connection). We should all acknowledge and appreciate the huge effort required from such busy Government agencies.

We are all extremely busy closing the financing and development preparations in accordance with recent guidance to shareholders. We consider it a privilege to have the opportunity to play a small part in the overwhelmingly positive transformation that is occurring in Ethiopia. And we are extremely proud that our joint KEFI-Government-owned Project remains scheduled to launch shortly and make a large contribution to regional development around Tulu Kapi and to contribute over US$250 million per annum to export revenues.

KEFI remains focused on completing preparations for full Project launch as soon as possible after the Company’s Annual General Meeting at the end of June.

Q. Harry stated that KEFI was spending circa a million pounds a month currently on all fronts, I remember a few months back it was stated that TKGM was going to reimburse kefi for a percentage of the costs incurred when the new money came in. Is this still the case or have plans changed?

A. It is correct that KEFI is refunded some pre-drawdown costs incurred on behalf of TKGM.

Q. Harry also told Tom Winnifrith that the banks will be signing before the end of this month, did he mean April or May?

A. As regards the bank approval process, we await formal committee approval.

Australian and Ethiopian life is almost normal other than travel restrictions.

We lock down people, sites and offices from time-to-time and have cumbersome travel arrangements. But we have stepped up delegation to KEFI personnel and work is can be progressed around the clock by our people being in different time zones.

Q: Will the company issue a quarterly report this month?
A: Yes, the company’s disclosure policy is to issue quarterly updates followed by “question and answer” webinars for shareholders and investment analysts. 

Q: When can the company report that financings have no outstanding conditions or caveats?
A: It is normal in all project financing transactions that this can only be done after all conditions precedents are met and financings are drawn down as, until then, there remains something to be done or confirmed.  
 
Q: Why did Standard Life and Odey sell KEFI shares some years ago?
A: Standard Life closed its junior mining fund and Odey liquidated many investments across its portfolio for reasons which were well publicised. Other institutions have replaced them on the KEFI register. 

Q: With hindsight , was it good for KEFI to have worked with  the Swiss Bond Arranger, Lanstead and ANS?
A: Management works hard for KEFI’s progress to continue despite a turbulent working environment in our frontier markets. The opportunities and upside is worth it in our judgement. The company has in recent years withstood three states of emergency in Ethiopia, a global pandemic and the Tigrayan insurrection. During that time, the financing consortium has continued to be refined by management in the best interests of the project and our shareholders. The consortium is stronger than ever and it works diligently towards start-up as reported in recent shareholder updates.

Q: I noticed from the November Presentation some new info on slide 12 (TKGM):

‘"he KEFI Group component would be expected to be sourced in a number of ways which comprise: Local Investors and Mining Financiers equity subscription to KEFI subsidiaries KEFI Ethiopia and KEFI Marketing plus raising by KEFI Minerals PLC in the form of the Placing in November 2020, Loan Facilities on Offer and a Rights Issue at the time of settlement by all consortium members. These commitment remain non-binding."

Do you have any details on the "Rights Issue"?

Premature to say. The only point being made now is that we wish to provide for shareholder participation when all parties and deals are signed up and approved.

Q. Why did KEFI not offer retail investors the opportunity to participate in the recent placing, as many other companies are now doing through PrimaryBid?

We have taken advice which recommends that PrimaryBid can only be considered as a supplement, not a substitute, for a placing. That is becausePrimaryBid needs to be announced upfront, without assuring an outcome. When that is not a concern from the viewpoint of protecting shareholders’ interests, then PrimaryBid is a good option to consider. 

On a separate but related note, when a placing is at or near market, it should theoretically be less of an issue for shareholders who want to buy shares, as they can indeed just buy shares in the market.

Q: Why don t you publish photos of everything happening on the ground with off-site infrastructure and the community? Shareholders want to see!

A: It is company policy not to publish current photos for security reasons, until we have advanced further along the process and have thousands of local people employed directly and indirectly. It is simply a safety first attitude.

Q. Good to see the initial Hawiah Resource shaping up to be larger than expected. As a long-term KEFI shareholder, does credit go to Jeff Rayner for pegging the Hawiah EL?

A. Yes, Jeff is one of those special geologists who is a mine finder. He recognised the potential of Hawiah during KEFI's early reconnaissance of Saudi Arabia and G&M is still benefiting from the team he put in place six years ago.

A. We agree that Afrexim Bank is a relevant bank for Ethiopia and KEFI. We know them as do our banks, who coincidentally were named in today's RNS because certain notable closing procedures have been triggered.

No. We expect ANS to proceed. They are sincere friends and deeply involved. These are unusual times and COVID-19 is wreaking havoc globally and we naturally need to protect the project with alternatives.

Q: Why do the placing so close to project equity is coming in?

The fact that project equity has not come in yet means that KEFI had to protect its working capital position.

Q: Why such a discount on the share price for the share placing?

It was a conventional institutional pricing at c.12.5% discount on the VWAP for the 3 days before the placing started its book-build.

Q: What does the placing do to the valuation upside for KEFI shares?

The mid-range NPV for Tulu Kapi (assuming $1,600/oz gold price), as set out in the RNS of 11 May shows £138M for KEFI which is 7.6p per post-placing issued share. This ignores the Saudi assets and exploration potential. 

Q: Why have you not released a Q1-20 Quarterly Report?

The Quarterly Report will be released within a week and the shareholder webinar will follow.

Q: What was the purpose of the Company’s webinar on 6 March:

Quarterly webinars have been conducted for some years. They are not a regulatory requirement and aim to provide colour on what is already reported.

Q: Can the company get more active on social media and twitter in particular?

We encourage suggestions for improvement. Please note that we prohibit participation by personnel on social media and we do not generally post pictures of personnel and activities for security reasons. 

Q: Why don’t you give hard deadlines for each Project milestone or procedure?

We are trail blazing in new jurisdictions for mining and obviously do not control the Government who are doing many things for the first time.

Q: There was a lot of share speculation and trading recently. That applies extra responsibility on KEFI to report promptly, do you not agree?

Continuous disclosure obligations apply to anything that is material regardless of share trading volumes.

Please note that there is no regulatory obligation to have a Q&A information line as we have on the KEFI website, nor for quarterly reports. At the same time we kindly point out that it is not appropriate to answer every question received.

Q: How many shareholders does KEFI have and how do shareholders vote?

We currently have 1,080 registered shareholders, some of whom are nominees for many more underlying beneficial owners. 

Voting procedures are in accordance with the Articles of Association, administered by MSP Secretaries and reported around the Shareholder Meetings, the next of which is scheduled for June this year.

The voting at the last 8 Shareholder Meetings has been “Against” as to between 0.04% and 2.6% of votes. The remainder have been “For”, “At Chairman’s Discretion” or “Abstained”, typically in that order.

Q: How much in pounds sterling is KEFI final equity subscription into the project? Will it be raised by a further issue of KEFI shares?

As set out in the 2018 Annual Report and in other announcements the finance plan is for KEFI puts $10M or £7M more into TKGM sourced from cash, working capital facilities, mezzanine financing possibilities and refunds on project finance closings. We will utilise the best available combination of options to provide this money at the appropriate time.

Government Politics and Regulation

Q: What impact will the outcome of the Ethiopian elections have on the project and the loan commitments by African banks?

The outcome is not a matter of concern because the election result is widely anticipated.  The banks merely need to see law and order in the lead-up to and the immediate aftermath.

Q: What happens if there is a change of government after the Ethiopian elections? Are our agreements with the government robust enough to continue with a new PM, or will there be a new negotiation process to go through?

Agreements stand regardless of who is a PM or Minister etc. And the project will be no less important to the country and region than it is today. It will still be largest single export generator in a country which has a trade imbalance and a hard currency deficit

Project Debt

Q: Having had a choice and in an apparently improving lending environment, KEFI decided against a bond. Will KEFI have more control, will there be a strict timetable and will there be built-in penalties for delays in payment of the capex funding?

It was wise to replace the bond deal with a bank deal. The pandemic has reinforced that.  The terms of the project finance are conventional. Once one has satisfied closing conditions, the lenders must provide the requisite funds.

Q: Is the bank loan agreed and in place?

The terms are agreed and have been through their committees. Full finance close means final approvals by their boards, and those of TKGM and the contractors. In the meantime, we have preparations such as engineering, IFC compliance on social and environmental and establishing bank accounts in the international financial centres, which is also a first for Ethiopia.

Q: What happens between now and full financial close?

1. Project contract final pricing reconfirmations with all the fabricators.
2. Community resettlement preparations to hand over compensation to over 2,000 people on the mining licence area and many more affected by project in the surrounding district.
3. Banks final credit approvals and their reporting requirements.

Project Level Equity Funding

Q: Are you confident that the closing of local project equity will occur?

• Yes, that is $58M from the combination of our Government and private partner, ANS
• The Government has already closed and is spending its $20M
• The Government is helping wherever it can because TKGM has suffered from some extraneous factors largely affected by the Governmen

Q: Does ANS have the money and what fallbacks are there?

ANS is a special purpose investment company founded by the five directors for an investment by 15 institutions and corporates. ANS signed a subscription agreement and approved all our RNS’s. If any individual ANS investor fails to close in any particular moment when all its conditions precedent for processes, documents, etc are satisfied, then other local investors are expected to cover them. The Government now works closely with ANS to ensure the public private partnership works for this high priority project.

Q: Can we expect all these time-consuming procedures before every tranche with ANS?

The first step is always hardest.

A. Ethiopia has reported its first handful of cases and has instituted tight social distancing restrictions for an initial 15 days.

KEFI/TKGM has sent expatriate staff home unless on project-critical duties. They continue to work remotely.

Q: Can you confirm that you still expect ANS to pay their first installment shortly - when all paperwork completed, not waiting until after the election in September?

A: Yes.

Q: How many people does TKGM now employ and will some/all their wages come from the ANS payment in future?

A: TKGM employs about 30 personnel today and will grow to about 1,000 within 12 months. nearly all personnel are now and will remain local staff and the rest will be expatriate specialists in various disciplines. All TKGM-related costs, including also payments to contractors, banking and management services provided by KEFI are charged to TKGM and yes they will be paid for TKGM when project equity comes in.

Q:While I am extremely disappointed that my questions duly submitted to BRR were not asked and answered, I was also concerned about how unwell Harry sounded. Has he had a check-up lately? I hope he has some good mates around him in Ethiopia.

A: There were scores of questions and the webinar organiser put them to the Chairman. Answering all of them would have taken several times the one hour allocated. We will look at all of them and assemble a package of Q&A for the website, to cover as much as reasonably possible.

Thank you for asking about the Chairman’s health. He is fine.

Q: I’ve just listened to the Webinar/Quarterly Update, Saturday morning here in Oz. I’m personally okay with where we are at the moment and how you presented the update. It’s a stressful time, so thanks. 

The chat rooms are full of people chasing an unrealistic fast buck it seems, and in some respects I would be very pleased if the shareholder demographic now changed to lose opinionated/noisy short term ‘traders' and gain longer term ‘investors' with a mature outlook and understanding of the opportunity. I think we can expect a stomach churning few weeks as the stakeholder mix changes frankly.

I can see that a “co-terminus” full close across both debt & equity (Q3/4) would make a lot of sense, and provide some shared comfort across the main stakeholder parties.

Equally, I also think that if ANS were positioned to make the initial equity investment ($9.5M) prior to full close, then this would put us right back on course and set the scene for a hugely positive end to 2020, and a 2021 to get stuck into from the get go.

For me, it's about going forward and turning uncertainty into certainty.. progressively.   Markets hate the former and love the latter… so anything we/you can get nailed down before Q3 would help hugely with sentiment and price as 'full close' becomes a focusing reality.

Well, it a thumbs up from me to the team Harry. I just hope we can nail something down with ANS over March/April to calm the nerves. I think this would also help greatly as a precursor to any further capital raise/dilution.

A: All noted. We repeated your full question because it also begs the question (to the Investor Relations team) whether the company should do these webinars if participants would rather receive less details and only material news, which of course must be via an RNS. Obviously the regulators listen to such webinars to ensure no breach of reporting or other protocols, as do some partners, contractors and government employees.

As regards ANS putting in its first cash, all three TKGM partners working to ensure the launch of on-site programs start shortly so that full finance close occurs asap after the September election.  All project equity to come in on time as part of this launch plan.

Q: I have come across a news article from the Addis Fortune News website which details ANS's involvement in the Tulu Kapi project.

The article is fairly positive but the journalist has provided the below comment, which suggests that ANS don't have the capital to hand for the project and need to sell shares within their vehicle to be able to make payment:

"To raise capital, the executives of ANS Mining are planning to start selling shares, according to Hailemelekot Teklegeorgis, a founding member of ANS Mining, which hopes to sell one billion Birr worth of shares with a par value of one million Birr starting this coming September."

Are you able to confirm whether this share sale from ANS is a secondary issue once they have injected their capital into the project or whether this is a primary issue? As mentioned within this article, they are intending to sell shares until September which would make the receipt of funds to TK be delayed if they are selling as a primary issue.

A: Not an accurate comment and a bit garbled  We have been advised that ANS’ subscription is arranged. Arrangements are proceeding for the closing of the first subscription funds from ANS to TKGM of US$9.5 million (Ethiopian Birr equivalent) in accordance with standard local procedures. As announced, the total ANS commitment is US$38 million with the first US$9.5 million (Ethiopian Birr equivalent) being unconditional and subsequent amounts in accordance with the conditions previously outlined. 

There are several reasons why the Directors decided to hold this General Meeting in Australia. We have frequent meetings with shareholders in the UK but KEFI also has many shareholders in Australia and Cyprus who appreciate having the occasional meeting in those countries. More directors had already planned to be in Sydney than any other city on that day - so it is the least cost venue. Finally, voting by proxy is unaffected by the location of the meeting.

We have known one of the banks for two years and the other was introduced by our Ethiopian partners. We only recently received their joint terms sheet.  Both the bond deal and the bank deal require some serious spending for implementation and it is not in KEFI’s interests to spend on both when one was a clear winner.

Commissioning of the processing plant in mid-2021, first gold pour in H2 2021 and full gold production by the end of 2021.

We were told it was fixed 3 weeks ago then it resurrected itself last week.

In regards to all the reports, yes.

And closing is expected by the end of October as reported in KEFI's announcement dated 4 September 2019 and Interim Results released on 23 September 2019.

Nothing has changed from the Sources and Application of Funds tabulated on page 9 of KEFI's 2018 Annual Report which was simply summarised in the TKGM summary on page 2 of the 2019 Interim Results (released 23 September 2019).

Q. Does Sanderson still hold security?

A. As set out in the announcement, Sanderson has undertaken to release security.

Q. Will the new working capital lender hold security?

A. The new working capital lender is unsecured.

Q. Will ANS Mining hold security?

A. ANS Mining will hold the security.

Q. Why did you part-replace Sanderson with the new lender?

A. To use the security cover for best effect, to allow greater flexibility with deals in Ethiopia and to spread our funding sources,

Q.One of KEFI’s shareholders and supporters suggested in a public podcast that you could have done a better deal with another particular lender. Can you comment?

A. We did compare alternative offerings and picked the deal that worked best for KEFI. We do not comment publicly beyond that.

Q. Why do you not just make a placing and avoid these working capital lenders?

A. It’s a choice based on the Board’s assessment of likely milestones in the short term and the lowest cost of capital in that light.

Q. How do you feel seeing the share price reaction?

A. Disappointed for the shareholders who sold.

The political and security situation in Ethiopia has changed since KEFI, Ausdrill and Lycopodium jointly sponsored an independent assessment a few years ago. The changes since then are at national, regional, district and local community levels. The independent assessor addresses all levels and has started at the national level and works through to the local via a one week visit. This is not a desk-top exercise and any company has to apply a safety first policy and, whilst we understand the situation and have in place the requisite plans, the consortium understandably needs an update to the independent assessment. This would not have been required just now except that, as reported in our recent announcements, incidents in June sparked immediate remedial actions. The country is attracting foreign investment and industry is indeed mobilising into Ethiopia but all will follow a safety-first protocol and that is especially important for a first-mover. We highlight that this is a project sited in a remote region of the country and the administrative and security apparatus needs to be installed for us specifically, and up-front, unlike a project sited in a major metropolis.

Economy unless a long-haul flight, in which case business.

Yes, but rather than be publicly accountable for the review processes of each consortium member, it is safest to say that as long as that process is behind us by some time in September, the timetable will not suffer. That should give plenty of time given what we see on the ground and we expect quicker.

The start date has moved a few times in the past flowing from various Government actions.

KEFI made representations to the Prime Ministry and some aspects of the development have started based on the positive instructions issued by the Prime Minister at the end of February. We have reasonable grounds for confidence that full development program can be underway shortly.

As we stand, the various work streams target commissioning from late 2020, first gold April 2021 and full production in mid-2021 which has been the case for some time. Preservation of this schedule has required many refinements as well as collaboration between KEFI and the principal project contractors.

A: Since ‎KEFI and ANS first reached agreement six months ago, we have been awaiting Government consents to be finalised as well as other project financiers. In light of all parties' desire to proceed, ANS and KEFI agreed for ANS project investment first Instalment of $11.4M  to proceed when central bank approved the core project finance terms and with the protection of ANS referred to in the question. KEFI considers that this a fair quid pro quo for an increased first Instalment from ANS and that KEFI shareholders are well served vis a vis them putting in the $11.4M. 

A: The base-case development schedule remains 24 months to production, with incentives for being quicker and penalties for being slower. It remains focused on targets to be commissioning the mine and processing plant H2-2020. This has taken much finessing of schedules for water management, resettlement management and all the other aspects. And the schedule starts when the Regional Government starts the resettlement processes, in respect of which we are encouraged by what we see on the ground and have reported to shareholders.

Phase 1 of resettlement, detailed engineering and ordering of long-lead time items are to be undertaken during the first six months (Q2/Q3-2019) of the development schedule, which is to be funded by an instalment of project-equity from ANS scheduled for end of March 2019.

The full package of funding would ideally close on the last day of the 2019 wet season. This package provides the funding for the remaining items in the development schedule and enable major works to commence at the beginning of the 2019 dry season. An advantage of waiting to put the bonds in place until major works are able to commence is that more gold should be produced prior to debt repayments commencing than hitherto contemplated.

Regarding questions about the wet season, one planning challenge was the collection of sufficient water in dams to feed the process plant. That aspect has now been refined with water bores now planned to provide processing water when necessary. Another planning challenge has best to undertake activities in and around the wet season so that physical activities are not overly impeded - those schedules have also been refined for all concerned. Western Ethiopia is not monsoonal or cyclone-prone. Construction can keep going, but best to be set up and running before the wet season hits.

A: Further information is available on ACT Capital's website at www.act-capital.ch

Q. Late last year you arranged a loan facility, part of which you stated was to be used for working capital in 2019 (RNS 30 Oct 18).  Shareholders were shocked yesterday to discover you have placed again, which you also state is to be used for working capital. Please explain if the placing has any bearing on the loan facility ie do you still intend to use it etc etc?

A. In November 2018 the Board sought and the shareholders approved limited authorities to make a placing, use a working capital facility and pay service providers in shares. The timing and sizing of these choices needs to be managed to fit best to the arrangements between consortium members. Some of the factors taken into account are commercial in confidence and would not be in shareholders’ interests to discuss publicly. For the sake of illustration, even if all these facilities were assumed to be fully implemented, the diluted NPV/share is clearly many times current share prices.

Q. Would you please explain this in more detail, most people I have spoken to do not understand it:

“Amongst the advantages of these funding arrangements are that they will allow the scheduled activities in the first six months of the Project development schedule to target the reduction in the period between debt-drawdown and first gold production and, consequently, to increase the period between first gold production and first debt-repayment.”

A, By completing certain jobs with equity funds, we drag forward the start of the 24-month development schedule. By drawing debt after equity funds, we push back the end of the grace period before debt-repayment begins.

Q. What was the broad breakdown of groups taking up the placing? Mainly retail, Directors, II’s?

A. Participation by officers would have been disclosed. SVS took the majority of the placing for its retail client funds as part of a plan to deepen our retail penetration over time as the sector and the project improves its prospects. The rest was existing institutional.

Q. On the same day as the placing announcement a large trade of 17m at 1.77p appeared (just under 3%), is this linked in anyway? Do you know anything about the trade?

A. It has not been reported to us.

A. No.

Q: Reference the Loan RNS issued yesterday, $9M was supposedly due to be paid to us in August 2018, as previously announced.

A: The $9M (birr-equivalent) was not for release to KEFI in August. And the commitment to ANS from its shareholders has been made by its institutional investors, for $30-38M. Of that total, $9M (birr-equivalent) is to be released to project company TKGM in December in accordance with terms as published.

Q: In the recent BRR webcast, you also gave some guidance in terms of not requiring cash until the $9M is received, or that was certainly how I interpreted it. Yesterday’s loan facility suggests different, which is what I am trying to understand.  In the webcast you said, ‘the cash and working capital arrangements we have will see us past Xmas, the next cab off the rank is the ANS injection…’.  The events of yesterday suggest this was completely inaccurate.

A: The Loan Facility announced this week is for working capital in 2019, so as to put KEFI (parent company) on a solid footing as it triggers development and other planned activities, also with required flexibility regardless of the timing of project company equity and its conversion from Birr into hard currency, which has recently caused delays in Ethiopia. The Loan Facility is there as a facility to be used as and when required.

Q: From yesterday’s RNS, you mention ‘decisions taken by TKGM’ being the reason for starting ‘certain high impact tasks for community resettlement’, therefore does this not mean that access to the $9M is now valid, as it is no longer money sitting in the bank?  T

A: The Loan Facility is to provide flexibility as from January 2019 at the parent company (after shareholder approval and drawdown as required) as well the ANS investment release of equity to TKGM in December per the published plans.

 Q: You also mention additional expenditure on further exploration.  Is it prudent to start this when clearly the company has no cash and is having to finance it when in such desperate state?  Why not wait until after closure, when in theory a much better deal could be had, the company hopefully being a much higher market cap?  I was also under the impression that this exploration was already covered/financed anyway?

A: There will be no material spending on exploration until after closing the TK development funding. Only low-cost planning in the meantime. The Loan Facility provides flexibility to manage working capital during 2019. The TK funding package is a c. $300M funding package. The parent company needs some working capital flexibility before and after the various interconnected drawdowns.

Q. It is a disappointment that we will suffer yet more dilution despite your recent assurances.

A. We need solid underpinning of working capital at the parent company level to finish the c.$300M financing. The announced Facility as from year-end need not be drawn if cheaper funds are available and any shares issued are at floor price which is premium to market now.  We certainly try to minimise dilution, the biggest aspect of that effort is the raising of development equity and debt at project level.

Q. You state that the need for further funds principally arises as a result of “decisions taken recently” by the TKGM consortium:

1. You make no mention of any contribution by the minority interest in the consortium: is Kefi’s cash need a reflection of its proportionate contribution to the total funds needed for the acceleration of aspects of the TK project?
2. In the same sentence, you refer to the exploration of “the now-enlarged area…”. Why does the TKGM consortium take decisions over operations on land not included in the licence granted to the project company and which will be a cost wholly borne by Kefi/KME?  

A. They do not.

Q. If the decision in relation to commencement of exploration operations was not taken by the TKGM board, why is the exploration being commenced before the licences have been granted and, more importantly, before the arranged funding is in place?

A. No real money spent on exploration anywhere until after full funding of TK, just some that we mostly get covered by JV recharges. The reference to some preparatory work for exploration relates to time and tiny-cost/high-impact tasks that allow drilling to start ASAP after TK construction starts.

Q. There may be sound commercial reasons why shareholders should be hit yet again but, if they are not explained, shareholders see only a never-ending sequence of broken pledges over dilution and these broken pledges make it impossible to calculate any form of fair value for the company’s shares.

A. I am sure you realise that I never say there will be no dilution because I cannot do that. Diluted share value is consistently multiples of current share market no matter which analysts uses which measure by just looking at TK NPV.

Q: In the Q3 Quarterly Update you refer to a working capital facility. When can you draw on it?

A: The development funding plan has always included provision for a stockpile finance facility which can be drawn as and when build a stockpile. It is intended to assist with taking some of the fluctuations out of working capital.

Q: The timetable shows drawdown of equity and debt at different times. Why?

A: This is intended to get the ball rolling and keep to commissioning of production in 2020, and give more time for some Government and debt formalities. It also allows us to start the debt-service schedule later, incur less debt-service cost and provide longer for production ramp-up before first debt-service payments are due.

Q: Quarterly Reports are not typical on AIM. Nor are webinars for Q and A’s. Why do them?

A: Quarterly Reports are mandatory on ASX and TSX but not on AIM. They are merely a wrap-up of already published information, for good order.

Also, please note that Q and A’s on the website and via Webinars are also not mandatory. We have consistently received thanks for the openness and prefer to provide widest reach with communications to all shareholders at the same time.

Q: More than 100% of the company’s shares on issue have turned over in the past 4 months. Are you sure that all significant share purchases have been properly reported?

A: We do not think that most individual shares have turned over, but that certain shares have turned over a few times. Reporting shareholdings over 3% is a regulatory requirement and is the responsibility of the buyer, i.e. KEFI has no way of policing compliance when these individual transactions occur. Having said that, we are not aware of any non-reporting.

Q: Are you worried about someone buying a position that should be disclosed but not doing so? Could this even extend to a build-up of a control position without disclosure and them not complying with the need to make an offer for all shares, as set out in the takeovers code?

A: There are protective measures in the KEFI Articles of Association for the Board, at its considered discretion, to remove the voting rights of any party that does not comply with the principles of the takeovers code, including that they must comply with the rules of transparency of share dealings.

Q: Has the ANS signed a heads of agreement or a final binding agreement?

A: The heads was signed in August and the final binding agreement on Friday last week.

Q: Can the first instalment of the ANS subscription be used to fund or refund KEFI’s G&A?

A: Generally yes, because KEFI’s costs are mostly for project financing or project preparations.

Q: When do funds flow from the ANS deal?

A: Q4-18 upon the stated conditions being met.

Q: How reliable is ANS’s own investor base?

A: The founders of ANS committed the first $3M of $30M up front. All of the rest has turned out to be with financial institutions which are solid and subject to similar rules of conduct on deals as institutions elsewhere. If ANS had had to go to private groups or to the retail clients of the local institutions, as it had originally assumed, it would have had to ask for deposits in escrow.

We decided to replace RFC Ambrian with SP Angel.

Q. Could you clarify whether Kefi can resume exploration activity in Ethiopia at least once the equity funds start to come through in September or whether it is the case that resumption will have to await issue of the funding bonds?

A. Exploration can resume when construction commences at Tulu Kapi.

Q. With reference to the RNS of 23rd October 2017, is “commencement of development” to be understood as being when the relocation starts or might the government formally grant the licences when the equity contribution from the syndicate is confirmed?

A. The government will formally grant the licences following commencement of Tulu Kapi construction.

Q: Did major shareholders sell shares at above 2.5p during the days leading up to the placing and bought into the placing at 2.5p?

A: Major shareholders were wall-crossed as part of the placing process and could not have traded during that time. Insiders were in a closed period until the annual results were released. And if such restrictions were not applicable, any such trades would have been reported.

Q: Why did the Ethiopian equity deal get announced a few days prior to the placing rather than well before, or even after?

A: It was announced when it is was done regardless of coincidences.

Q: Why did you not suspend the shares during a placing to avoid any risk of trading in an uninformed market?

A: AIM does not allow suspension just because a placing is being done.

Yes. The funding principals and sums raised have not changed. 

The set of advisers and fiduciaries have been simplified after consulting the principals, who remain the same, as does the planned funding.

The net economic picture has improved after all matters reported in Q4 2017 Operational Update have been taken into account.

Disappointing and perhaps also some misunderstanding due to minimalist and formal terminology in relation to the bond. Finalising the documentation is a major milestone. In the world of bond issues, a major hurdle is a negotiated deal being agreed and documented (albeit in our case we now need govt clearance, which is being processed). And after that comes the bond listing process which takes about a quarter. It is not the same process as a bank financing. No-one can guarantee an outcome until drawdown, but we are on track and all target gold production commissioning end-19.

Whilst the next quarter is required for bond listing processes, it is also required for preparing the community and contractors ie as soon as government clearances are received.

No-one would want to actually drawdown $140M until we are at the right stage with community and contractors. All aspects are intertwined and reshuffled to be defend commissioning at end of 2019 and ensure a long production period before debt service commences.

It is not really for the company to try and interpret the market. we just report what needs to be reported and open our doors to analysts so they can form their views. Our strategy is to continue to successfully ensure that we bring in nearly all capital (debt and equity) only after closing of the whole deal is approved by all and the government.

Q. Has the Infrastructure Finance Bond SPV been set up and have you a timetable on the Bond issue?

A. We are all working for closing this year and key individual milestones will be reported formally.

Q. Will the Bond offer be open to public and KEFI shareholders?

A. Any qualified parties can bid in the bond offer and the arranger will manage it.

Q. Do you have any comment on the HotStockRockets article 2nd Sept which was fairly categorical about there being zero dilution (“You will remember that Kefi still has a small $24 million funding gap which it will close via offtake agreements and other deals that do not dilute PLC shareholders.”) as opposed to the ADU Presentation (and previous) that stated “Closing the residual funding requirement of c. $24M is expected to at least partly involve an equity issue by KEFI.” I note there has been no retraction by HSR,but also no comment from the KEFI BOD – strange for something so important to shareholders and to the market as a whole.

A. KEFI cannot issue announcements analysing third-party commentaries. We have made it clear that our priorities are to minimise dilution.

Q. The Beaufort Securities note of 18 January contained figures that differed from those previously released by Kefi.

Beaufort expects a total funding requirement figure of $145m and assumes an increased cost overrun facility of $20m. Are these figures sourced from and endorsed by Kefi?

Beaufort is now suggesting that construction will not commence until this time next year. Is this the current, amended, schedule or are Kefi and its contractors still working to the time schedule previously indicated, which was that construction would be substantially completed by Q1 2018 with production starting in mid-2018? In the news release on 20 December 2016, you stated that you were confident that development would commence this year.

In that news release of 20/12/16, you also state that you are confident “…of being able to announce a co-lender to coincide with the scheduled end of the Ethiopian State of Emergency…”. Can it be inferred that the co-lender is ready to commit subject to the condition precedent that the SoE is lifted, and would be in a position to commit if the SoE is lifted ahead of schedule, or is due diligence expected to take another couple of months?

A. Analysts form their own views after gathering information from a variety of sources. As detailed by Charles in his Beaufort Securities note, he visited Tulu Kapi and met with various people in Ethiopia during November.

KEFI never endorses the details in analyst research and also respects their right to form views which may differ from the Company. Analysts sometimes take a more conservative view on costs or timing than the Company and they are then happy to upgrade their valuations if the Company meets its targets.

Per our guidance, we still target construction to commence this year fully funded with production by the end of next year.

Q: I have seen an Ethiopian press release recently with a comment from a member of the DBE providing the below quotes regarding a change of stance on debt levels for international projects:-

"Esayas Bahire, president of DBE, told The Reporter that the gold development project was viable. However, he said the loan process had stuck due to a change in loan policy. “When the company applied for a loan the debt equity ratio was 70-30 percent. But it was changed to 50-50 percent. So KEFI’s loan request is pending,” Esayas said.

Previously, companies were expected to raise 30 percent of the required project financing and would secure 70 percent funding from local banks. But the government now requires foreign investors to come up with 50 percent of the project financing. “Apart from that we do not have doubt on the viability of the project,” the president said."

With the cap ex requirement announced this week at 150 to 160m USD, the above criteria suggests that the debt can only up to 75 or 80m USD where as the presentation on Thursday stated that the debt component will be between 81 and 91m USD.

Are you able to comment any further?

A: The DBE is supportive as its President indicates in his comments and the Ethiopian central bank has advised that the new policy can take into account the equity investment into the project since its inception and that therefore our proposals are compliant.

Would it be possible to comment on concerns circulating in the PI community that another market placing will be undertaken prior to arrangement of the funding package as detailed in prior RNS releases?

A circular today from Tom Winnifrith (market commentator) suggested that Harry Anagnostaras-Adams had flatly rejected that another placing would be necessary and that the company is fully funded until Tulu Kapi project funding is arranged. Are you able to confirm?

A. Please note that Harry is in the midst of an international non-deal roadshow which is interspersed with his normal work schedule. This is KEFI's first ever institutional roadshow. Of course that is the first since inviting Odey and Standard Life to fund the acquisition of Tulu Kapi some three years ago, which was not really a roadshow at that time, as they both knew the Chairman from EMED Mining where they were large shareholders. I am aware that in this non-deal roadshow we have had over 60 requests for meetings, which illustrates increased interest in the gold sector and in KEFI.

Harry mentioned to me some weeks ago that Tom Winnifrith had passed on the query as to whether ‎we were doing a placing and Harry answered, which I repeat, that this is a non-deal roadshow and that cash and receivables should take KEFI to Q2-17, before which full development funding should be done and dusted.

We decided not provide a quarterly report for the April to June 2016 period as the AGM statement by KEFI's Chairman was released on 30 June. This statement provided a good update on KEFI's progress during Q2 2016

Please note that KEFI's quarterly report is not a regulatory requirement but voluntary disclosure to generally keep shareholders up to date with the Company's progress.
(posted 26 July 2016)

Our current priority is obviously to finance Tulu Kapi and to trigger development of Tulu Kapi. Once this Plan A is implemented, we would naturally consider alternative strategic options from a position of strength. The creation of two public-listed entities out of KEFI has not been seriously considered at this stage of development and at this stage of the cycle.

KEFI's acitivities in Ethiopia and Saudi Arabia are currently conducted swiftly and very cost-effectively by the same exploration and development teams.

Should the Board come to consider it value-adding to decouple our activities within the Arabian Nubian Shield, we would naturally consult our 60% Saudi partners, bankers, brokers and of course shareholders.

Q. Sum up your company for us in a sentence or two.

A. KEFI Minerals is an AIM-listed mining exploration and development company operating in the Arabian-Nubian Shield – principally focused on gold and copper deposits in Ethiopia and Saudi Arabia, with an attributable 1.93Moz Au and significant resource growth potential based on our extensive exploration portfolio. At our key asset, Tulu Kapi in Ethiopia, we’re on track to commence production in 2017.

Q. Tell us a little about you and your team’s background and any career highlights so far.

A. KEFI has a strong team with complementary skillsets. Executive Chairman Harry Anagnostaras-Adams has a background is in business management and finance, with a primary focus on start-ups in resources sector. Since moving from Australia to Europe in 2005 with a team, he launched EMED Mining (now Atalaya), KEFI Minerals and some private ventures which now includes the Cyprus copper venture in which Atalaya retains a 10% free-carried interest. EMED/Atalaya is focused on restarting the old Rio Tinto Copper Mine in Spain and has overhauled plans to international standards, completed an arduous clean-up of inherited litigation and other disputes, re-assembled full project ownership and agreeing the basis for permitting by the Andalucian authorities. Production has just started. In 2014, Harry switched from Non-Executive to Executive Chairman at KEFI, to support the acquisition, and complete overhaul of, Tulu Kapi Gold Project– transforming the project from an unviable venture to one which now has robust economics and is fully permitted, with the development financing syndicate taking shape. KEFI recently announced the securing of first class project contractors African Mining Services and Sedgman, and the Government of Ethiopia as project partner. Preferred banks and product-linked financiers have been selected and formalities commenced.

Jeff Rayner, our Exploration Director, is a geologist with over 27 years’ experience and he’s supported by a team with significant regional experience. Our group operations are headed up by Wayne Nicoletto, who’s also MD for KEFI Minerals Ethiopia, who brings 30 years’ experience as a metallurgist, general manager and country head, primarily heading up the building and operating gold mines in Africa and Mongolia. . John Leach has just stepped down as Finance Director of Atalaya and will now manage the completion of finance syndication process at KEFI. Four of the seven group company directors having been with the business since its foundation. The more recent additions include Ethiopian expert Dr Kebede Belete and His Excellency Mr Norman Ling, former British Ambassador to Ethiopia, Djibouti and the African Union.
It’s also important to note our Saudi partner, ARTAR of the internationally renowned Al Rashid family, with whom we have a joint venture company through which we operate in the country. ARTAR is a significant local entity with strong government connections, which brings tremendous strength to our activities in the country.

Q. What is the focus of your management team in 2016/17? What are the key milestones you are looking to reach over the next year that you think will add value to the business?

A. Our primary goal is progressing our Tulu Kapi gold project on schedule to commence production at the open pit at the end of 2017. In the immediate future, we’re focusing on formalization of the finance syndicate and receiving regulatory approval thereof, which we expect to achieve in Q2 2016. Other key milestones for Tulu Kapi in 2016 include completing the preliminary economic assessment of the underground mine as well as the commencement of mine district exploration for satellite deposits.
In parallel, at our most advanced project in Saudi Arabia, at Jibal Qutman, we’re currently translating the Mining Licence Application in Arabic for submission and processing. This year we expect to expand the Mineral Resources estimate at Jibal Qutman and progress feasibility studies for construction and operating licence applications. We’ll also be exploring the district around Jibal Qutman for satellite deposits. At our other key project in Saudi, our more recently-granted Exploration Licence at Hawiah, we’ll commence drill-testing of gold and base metals targets. We also hope to be awarded additional exploration licences in the country.

Q. What do you see as the key risks and challenges facing your company at the moment and how are you overcoming these?

A. For any gold miner, the perils of the gold price is a cause for constant vigilance and risk-mitigation. We’ve taken important steps to refine the finance plan to protect the Tulu Kapi project and all its undertakings against fluctuations in gold price. Similarly, in difficult capital markets for junior markets, we’ve been extremely prudent in our approach to financing, assessing multiple options very carefully from the viewpoint of the project syndicate as a whole before announcing and locking in any one party. We’re now finalizing the remaining details of the financing plan to include cost overrun facilities, limited hedging and pre-production finance charges with a view to striking an appropriate balance between risk-mitigation and equity dilution.

Q. Investors like to see that management have “skin in the game”. Tell us briefly about your management team’s investment in the business.

A. The key members of the management team and all of the board hold shares in KEFI, which was recently increased with additional investment made during our recent fundraising. Harry’s family’s holding is about 5%. Significantly, our key shareholder, Odey Asset Management, increased their holding at the end of 2015 from 14% to 26%, which is a tremendous vote of confidence.

Q. In a sentence, what do you think makes your company such a compelling investment?

A. Our stock is extremely good value: the Development & Finance Plan for Tulu Kapi that has been adopted by our preferred syndicate of financiers and contractors gives the asset an NPV at the start of production in 2017 of £123m compared with a current market capitalization for the entire company of less than £10m. This doesn’t take into consideration our pipeline of other significant projects, which makes the stock yet more compelling.

The table at this link outlines how KEFI has improved the key Tulu Kapi economic parameters since acquisition in December 2013.

Q. Well done on the placing earlier in the week at the level you got it away at. Can you confirm now when the drilling for Hawiah will commence and whether we will have an announcement of the bank debt and streaming deals prior to Xmas for Tulu Kapi?

A. Field teams now being released from Jibal Qutman for the time being. Up to Exploration Manager to schedule Hawiah logistics, community protocols and so on. Having selected contractors in September and confirmed govt recently, we now focus on the banks and streamer. Front runners are clear and selections will be made when best suits KEFI.

Q. It was mentioned in the announcement that drawdown would be in the new year but do you expect terms to be agreed this side of Xmas?

A. Terms already agreed in principle.

Q. Finally, can you confirm if any of the monies raised this week is to begin the community resettlement for Tulu Kapi?

A. ‎Community preparations are in full swing but move will be triggered on first drawdown.

Q: Are you happy with the Edison Research note published 20 August 2015?

A: Edison did not try and value the resources or reserves in the ground or the exploration scenarios and probabilities. They merely project a dividend stream and value that. This is as if to say (my words) “if the dividend stream is worth multiples of today’s share price, then you get all the upside as further cream”.

Q: I guess its saying kefi is valued at 3.9p after issuing an additional 860m shares($10m @0.75p/share), excluding any streamer deal. Or 2.82p worth of dividends?

A: We understand it values the assumed dividend stream only and ignores other values or upsides.

Q: I appreciate any management involvement in this note would have to be cautious/prudent, but 860m shares at 0.75p ?!!! Surely,it’s a reasonable assumption that we can do better than $10m and 0.75p after the finance is finalised?

A: The valuer appears to be assuming a quantum of shares to be issued at a small discount to today’s share price. He is, I suppose, not inclined to speculate on what the share price may or may not be when the financings are done.

Q: Also,they have slaughtered Jibal Qutman by valuing it based on resource and peers in the sector, who've all been trashed and probably have no hope of ever making it to production, with their low valuation per resource oz. They could've at least used Kefi's scoping study numbers?

A: Edison did not try and value the resources in the ground or the exploration scenarios. They merely project a dividend stream and value that. This is as if to say (my words) “if the dividend stream is worth multiples of today’s share price , then you get all the upside as further cream”.

Q. Will you be announcing the start of the Hawiah drilling and the results of the SP survey of the northern part of Hawiah?
A. Yes

Q. Is Hawiah 1 still the target?
A. Yes

Q. And will you release the results of the initial programme of about 18 holes before proceeding with the next phase of exploration?
A. Yes

Q. Are you able to give an indication of how long that initial programme will take through to receipt of lab results?
A. Some months, depends largely on ground conditions and lab turnaround.

Q. Are you able to confirm that Kefi has funding to carry all KSA operations through till after release of the initial drilling programme results?
A. Drilling will take some months and will follow some scheduled drilling at Jibal Qutman, pursuant to priorities.

Our business model is quite clear: equity funding is what takes us through to triggering development and , at that stage, maximise within reason the use of contractors’ funding, debt-style finance and project-level equity to get us through to production cash flows. We work very hard to always be transparent. It is mandatory to be transparent as to how the board strives to act in the best interests of shareholders as a whole. That allows every individual shareholder to decide what suits his own different circumstances and different appetite for risk/return. Some investors like to get involved early during grassroots exploration, others during production only, and others at stages in between.