Last close As at 05/08/2026
GBP0.01
▲ 0.14 (12.78%)
Market capitalisation
GBP166m
Research: Metals & Mining
Three recent developments have served to put KEFI’s Tulu Kapi into the spotlight. The first is Ethiopia’s recent central bank directive exempting certain strategic industries – including mining – from foreign exchange controls, satisfying the last major condition precedent for the issuance of final approval by the project finance lenders. The second is Allied Gold’s listing on the TSX, including its decision to raise US$250m (US$160m in equity), of which 80% is to be invested in developing the Kurmuk mine, also in Ethiopia, on the border with Sudan, west of Tulu Kapi. The third is the takeover of early-stage OreCorp by Silvercorp at a price equivalent to 24.5% of attributable NPV5% or US$46.14 per resource ounce.
KEFI Gold and Copper |
East Africa and Ethiopia attracting investment |
Update on approvals |
Metals and mining |
18 September 2023 |
Share price performance
Business description
Analyst
KEFI Gold and Copper is a research client of Edison Investment Research Limited |
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Three recent developments have served to put KEFI’s Tulu Kapi into the spotlight. The first is Ethiopia’s recent central bank directive exempting certain strategic industries – including mining – from foreign exchange controls, satisfying the last major condition precedent for the issuance of final approval by the project finance lenders. The second is Allied Gold’s listing on the TSX, including its decision to raise US$250m (US$160m in equity), of which 80% is to be invested in developing the Kurmuk mine, also in Ethiopia, on the border with Sudan, west of Tulu Kapi. The third is the takeover of early-stage OreCorp by Silvercorp at a price equivalent to 24.5% of attributable NPV5% or US$46.14 per resource ounce.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
0.0 |
(2.8) |
(0.2) |
0.0 |
N/A |
N/A |
12/21 |
0.0 |
(3.4) |
(0.2) |
0.0 |
N/A |
N/A |
12/22 |
0.0 |
(3.3) |
(0.2) |
0.0 |
N/A |
N/A |
12/23e |
0.0 |
(4.0) |
(0.1) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
While neither Allied Gold nor OreCorp appear at the stage of project finance banking, these transactions nevertheless put the spotlight on East Africa’s emergence as a new growth area for gold mining, in particular. This is very timely for KEFI, which anticipates Tulu Kapi’s full financial closure and project launch by the end of this year with first production in late 2025.
While not a perfect analogue for KEFI, OreCorp has an 84% interest in an earlier-stage gold project in Tanzania, which bears notable similarities to Tulu Kapi. A recent definitive feasibility study of the project indicated a 10.7-year project with average production of 234koz pa and peak production of 250koz pa at an all-in sustaining cost (AISC) of US$954/oz after initial capex of US$474m. This compares with Tulu Kapi’s 10-year mine life, steady-state production rate of 145koz pa and peak production of 187koz pa at an AISC of US$957/oz after US$390m in initial capex. Applying a 24.5% value to KEFI’s attributable interest in its three projects’ combined NPVs (albeit using 8% discount rates cf OreCorp’s 5%) of US$261m implies a share price for the company of 1.03p/share (excluding cash/debt). Applying a US$46.14/oz resource multiple to KEFI’s 2.22Moz (gold equivalent) attributable interest in its trio of projects (of which Tulu Kapi accounts for 55%) implies a share price of 1.69p.
In our last full update note on the company (see Counting down to production, published on 7 December 2022), we calculated that KEFI’s trio of projects were capable of generating free cash flow of c £84.0m a year from FY26 to FY31, driving peak earnings of 1.55p/share, funding average (maximum potential) dividends of 0.63p/share and valuing KEFI at 2.19p/share fully diluted. At spot prices, however, it increased to 5.88p in FY26 (equivalent to a relatively conservative US$1,379 per annual ounce of production). Updated timing suggests a delay of nine to 12 months to our original assumptions, while there are now 9.7% more shares issue that we had anticipated last December, which, all other things being equal, turns 2.19p/share into 1.81p/share or 1.99p/share on 1 January 2024.
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Research: TMT
M&C Saatchi’s (M&C) H123 results reflect the more challenging agency trading environment, with revenue and operating margin both dipping in the period. Management’s global efficiency programme, implemented in Q1, achieved £0.5m of costs savings in H123 and is expected to deliver annualised savings of £3.8m in FY23, with a target of £10m by end-FY24. The leadership structure has been simplified and M&C continues to invest in its focused specialisms to drive revenue growth. Management remains cautious on the trading outlook for H223, but with the cost savings helping margin momentum through the reminder of the year and through FY24.