Kefi Gold And Copper Share Discussion Threads

[divmad] 29/9/2020 08:50

Kefi is either the steal of the century on AIM or a big con, with funding a never to be realised but tantalising pot of gold at the end of an African rainbow.

[estseon] 29/9/2020 08:35

Hi Rio,

The total resource in the satellites will depend upon the cut-off grade, which, in turn, will depend upon the price of gold. HAA recently siad that they would re-appraise TK's reserves reflecting a higher PoG. I think that he mentioned $1400 in place of $1100 but I cannot be certain.

Jeff Rayner gave a presentation on the geology on both sides of the Red Sea on 14 November 2017 and in slide 31 said:

"Potential for 300-500Koz at
1.5g/t Au of oxides in shallow
open pits (40m depth) along the
+9km long Komto-Guji Belt
Initial heap leach operations
could produce an additional
50Koz p.a. with low stripping
ratios and high gold recoveries
Low operating and capital costs
as infrastructure provided by the
planned Tulu Kapi mine"

In a general presentation 5 months later, the Company stated on slide 15:

"KEFI can quickly add to Tulu Kapi open-pit gold production by developing:

• Shallow, low-cost gold resources within trucking distance of TK processing plant or as a stand-alone heap leach operations

• Potential for more than 250koz at 1.0-1.5g/t gold of oxides in a series of shallow
open-pits (40m depth) along the more than 9km of Komto-Guji Belt

• Heap leach operations could quickly be brought into development and produce an
additional 30-35koz per annum for Tulu Kapi at low stripping ratios and high gold
recoveries (>94% recovery from CN bottle rolls has been achieved on surface samples)

• Low opex and capex as most infrastructure would be provided by the Tulu Kapi site"

It appears from the map on the presentation that the company had only an in-house resource estimate for part of the Guji part of the 9km deposit.

I have run numbers on the April 2018 estimate and AISCs of $650 (can't remember where I got that figure from but it was probably from one of the interviews).


So, assuming a total resource of 250,000 ozs produced at the rate of about 33,000 ozs/yr at a cost of about $650 / oz (adjusted in my model for the higher royalty), that deposit should produce annual after-tax cash of about $30m at a PoG price of $2000 for 7.5 years. The NPV(8%) of that is about $165m discounted to the commencement of production.

Jeff has suggested that the resource could be twice that and that estimate was suggested before the surge in the PoG.

The appraisal of Hawiah is at a very early stage and the levels of production from that deposit and others on trend will build up over time but the beauty of the TK satellites within trucking distance of the TK mine is that little capex will be required, the deposits are near surface, the processing required is cheap and Kefi's attributable intest is double that of the interest in TK and 3 x that of Kefi's interest in Hawiah.

Some of the benefit will be diluted by charges by TKGM for processing but the ore will not require full treatment either milling or extraction using the expensive CIL plant. They have said that they need only crush the ore and can use heap leach extraction for a 94% recovery (or thereabouts).

The value of that deposit to us is that (with ANS out of the picture) the revenues will be diluted only by the government statutory carry of 5% and the cash flow will not be burdened by the cost of the TK mine capex.

Comparing the situation of the two mines in terms of ounces of gold, if servicing the capex takes 20% of the TK cash flow and our residual interest in TK is 50% (we await details), the production representing free cash flow from TK attributable to us is about 80% x 50% x 140,000 = 56,000.

Guji-Komto, as said, could be 95% x 33,000 = 31,000

Mine lives are similar and, therefore, NPV discounting is similar.

It is true that TK has the benefit of the underground mine but further capex will be required, commencement will be at least 3 years later (so, heavier discount) and the rate of production at c 50k ozs/yr will be moderate. AISCs will also be higher.

[topicel] 28/9/2020 22:39

I believe Estseon is referring to the immediate worth to our fair value with Guji-Komto and the like, not the overall long term 'value' to us.

In other words, the possibility of making it turn a profit quickly from little time, effort and cost is the fair value to the current share price that matters. If that is indeed able to be PEA'd then it would concentrate minds on investing nearer term than Hawiah.

I'll defer to Estseon though if I've misconstrued his meaning.

In simple language, a little more jam tomorrow rather than in a year or two could be in the offing if/when we get the finance done and the satellite rights confirmed. They would be almost 'oven ready', lol.

Topicel

[riotinted_specs] 28/9/2020 19:22

As always am very thankful for your knowledge about Kefi. I must admit I know very little about Guji-Komto and was pleasantly surprised to here that it has the potential to be bigger than Hawiah. Are you able to put some meat on the bones?

[estseon] 28/9/2020 10:07

One of the issues to be resolved is the precise quantum of Kefi's share. It will not be less than 45% but it could be up to 1/3rd higher. We will not know until the deal is done and the company finally reports.

The reserved mining licences should be released to Kefi upon full funding so that is another bit of good news to come, hopefully. It is possibly too much to expect to receive a PEA for one of the satellites, say Guji-Komto where exploration was quite advanced, but that could add considerably to Kefi's fair value - potentially more than Hawiah as last estimated. That might sound strange but there will be a much higher interest in the mine and very little capex required Mining costs will be low also because it is a shallow, highly oxidised deposit. They just need to dig it out, crush it and heap leach it. Previously estimated recovery of the metal was 93%.

So the news stream could be: equity funding, debt funding, award of licences, comment on satellites (fingers crossed), commencement of relocation of families, Happy New Year, JQ mining licence award, commencement of TK construction....

[belfastboyo] 25/9/2020 17:18

Agreed....at 4.5p/share market cap would still only be c£84m...as I see it this would only reflect Kefi TKGM share at $1,700 AU/USD NPV...which I consider To be a highly conservative valuation as it A) excludes any future long term value attribution from Jibal Q & Hawiah AND B) if one assumes $2k AU/USD (and likely higher silver and copper prices) then the valuation leverages up considerably...C) zero value attribution to extensive Saudi and Ethiopia exploration land licenses/pending licenses etc for future dev.

[robjm66] 25/9/2020 15:06

Think target price a bit low and TW not factoring the change of sentiment on a deal being done but I expect him to raise the target on good news.

[topicel] 25/9/2020 08:54

Well it will all be in fits and starts with, as has been mentioned to me, some fairly extreme volatility at times, but slowly the PMs are starting to recover and, ultimately - assuming we are financed properly this time - that is our main share price driver going forward towards production.

I would not be surprised if Trump wants to look good with his base and the great unwashed in the States and will arrange for significant funding too, closer to what the Democrats want. Say a nice round $2 trillion package for the unemployed there with more personally signed checks in October?

"Election, what election, I really feel for the folks suffering from China Virus..."

When/if that happens the gold will be back above $2,000 in an instant. Junior explorers who are tying up financing and about to become early stage producers - in relative terms - will be a great place to be too.

So come on Harry, time this sweetly for once!

Topicel

[robjm66] 25/9/2020 08:20

hxxps://www. proactiveinvestors .com.au/companies/news/929935/megado-gold-has-a-full-treasury-as-they-prepare-to-list-in-the-asx-and-start-drilling-in-ethiopia-929935.html

[theaviator] 24/9/2020 23:41

Nice one David. Wish you the best with them

[davidspringbank] 24/9/2020 20:29

I bought another 250,000, this morning, at £0.0201, taking my total to 1,250,000.

[divmad] 24/9/2020 19:13

Considering the absolute mauling that other AIM gold plays have had today, the share price action here today can only be described as remarkably resilient .

[mab] 24/9/2020 11:43

Just had 11 weeks up in kefi so a bit of profit taking on the back of weak share and gold markets not too much a cause for concern. just a pity harry couldn't have got the financing rns away a few weeks earlier and got a nice tailwind from rising equity/gold markets.

[christopher logsdon] 24/9/2020 11:12

But tempted very tempted

[christopher logsdon] 24/9/2020 11:12

Have already had a massive top up don't wanna put all my eggs in the basket

[christopher logsdon] 24/9/2020 11:12

Strange why there's so many sellers today

[scotty1] 24/9/2020 11:01

TW update from HSR now on SP,still think his target price is conservative but as said before his targets are meant to be for very short term gain.He finish's of his piece with

"As such the current valuation is crackers. At up to 2.5p, still a strong buy with a target of 4.5p"

[robjm66] 24/9/2020 11:00

Could be right Theaviator not taking a lot of buying or selling to move the price in either direction at least its not boring.

[theaviator] 24/9/2020 10:51

Anyone see SPI energy yesterday? Lol Wish I'd had a few of those.

[theaviator] 24/9/2020 10:50

Actually think they were just Spreadex muppets Rob but we shall see...