Last close As at 05/08/2026
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▲ 0.14 (12.78%)
Market capitalisation
GBP166m
Research: Metals & Mining
KEFI Minerals
KEFI Minerals |
Steady as she goes |
Share placing |
Metals & mining |
27 July 2016 |
Share price performance
Business description
Next event
Analyst
KEFI Minerals is a research client of Edison Investment Research Limited |
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KEFI has raised £3.8m (gross) in equity, via the issue of 761.9m shares yesterday at a price of 0.5p per share. Notably, Odey Asset Management subscribed above its pro rata shareholding to increase its interest in KEFI to 29.5%. Odey is also reported to have offered to underwrite the placing, although this was rendered superfluous by the level of demand from other investors. Ausdrill (a contractor and existing shareholder) subscribed to maintain its shareholding at 7.31%. KEFI’s share price closed at 0.565p on Monday 25 July (the day before the placing was announced), on which basis its theoretical ex-placing price should be 0.552p.
Year |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/14 |
0.0 |
(2.6) |
(0.4) |
0.0 |
N/A |
N/A |
12/15 |
0.0 |
(2.0) |
(0.2) |
0.0 |
N/A |
N/A |
12/16e |
0.0 |
(2.0) |
(0.1) |
0.0 |
N/A |
N/A |
12/17e |
0.0 |
(6.6) |
(0.2) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.
On target for 2017 commissioning
KEFI anticipates executing syndicated financing documentation at the end of Q316, paving the way for construction later in the year, commissioning towards end-FY17 and commercial production in H118 (Edison forecast). KEFI’s latest thinking on funding is that it will fund the US$175m required to bring Tulu Kapi into production with senior secured debt (US$85m), contractors (US$50m), the Ethiopian government (US$20m) and KEFI (US$20m in either mezzanine or equity form). In the aftermath of yesterday’s US$5m raising, this equity/mezzanine tranche reduces to US$15m (which was the assumption in our last note, dated 7 June).
Valuation: 1.71-2.45p/share depending on financing
At the time of our last note in June, we valued KEFI at 2.64p/share, rising to c 4.35p/share in FY22 (based on our long-term gold price assumptions and a 10% discount rate), assuming no additional equity/mezzanine funding. Assuming additional equity and/or mezzanine finance (in the form of a convertible with a conversion price of 0.6p per share – ie around the equity price at the time), the resulting dilution (assuming full conversion) reduced our valuation from 2.64p to 1.84p/share. In the aftermath of yesterday’s equity raising, our headline valuation moderates from 2.64p per share to 2.45p/sh – a 0.51p/sh decline on account of the associated dilution being substantially offset by a 0.30p/sh rise on account of the decline in the value of sterling, post-Brexit. In the event of an additional US$15m in mezzanine finance at the current share price, this valuation moderates further, to 1.71p/sh (vs 1.84p/sh), albeit attended by proportionally less financial risk in the form of a decreased peak net debt funding requirement of £59.3m (US$77.8m) in FY18, compared to £71.0m (US$93.0m) in the event of no additional mezzanine financing. Note that 2.45p/sh and 1.71p.sh rise to 3.94p/sh and 2.73p/sh in FY21, respectively. If KEFI is successfully able to leverage its cash flow from Tulu Kapi into other development assets in the region, however, this valuation rises further, to 5.85p, which would put it on a contemporary P/E ratio of 9.9x in FY21e.
Exhibit 1: Financial summary
£'000s |
2013 |
2014 |
2015 |
2016e |
2017e |
||
December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
0 |
0 |
0 |
0 |
0 |
Cost of Sales |
(927) |
(2,071) |
(1,634) |
(1,971) |
(1,971) |
||
Gross Profit |
(927) |
(2,071) |
(1,634) |
(1,971) |
(1,971) |
||
EBITDA |
|
|
(927) |
(2,071) |
(1,634) |
(1,971) |
(1,971) |
Operating Profit (before amort. and except.) |
(927) |
(2,189) |
(1,724) |
(2,052) |
(6,473) |
||
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
(442) |
(379) |
(428) |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
(1,369) |
(2,568) |
(2,152) |
(2,052) |
(6,473) |
||
Net Interest |
4 |
(413) |
(319) |
8 |
(80) |
||
Profit Before Tax (norm) |
|
|
(923) |
(2,602) |
(2,043) |
(2,044) |
(6,554) |
Profit Before Tax (FRS 3) |
|
|
(1,365) |
(2,981) |
(2,471) |
(2,044) |
(6,554) |
Tax |
0 |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(923) |
(2,602) |
(2,043) |
(2,044) |
(6,554) |
||
Profit After Tax (FRS 3) |
(1,365) |
(2,981) |
(2,471) |
(2,044) |
(6,554) |
||
Average Number of Shares Outstanding (m) |
493.4 |
952.4 |
1,577.7 |
3,127.4 |
3,882.9 |
||
EPS - normalised (p) |
|
|
(0.4) |
(0.4) |
(0.2) |
(0.1) |
(0.2) |
EPS - normalised and fully diluted (p) |
|
(0.4) |
(0.4) |
(0.2) |
(0.1) |
(0.2) |
|
EPS - (IFRS) (p) |
|
|
(0.3) |
(0.3) |
(0.2) |
(0.1) |
(0.2) |
Dividend per share (p) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
7,152 |
9,299 |
11,926 |
15,612 |
74,496 |
Intangible Assets |
6,900 |
9,139 |
11,845 |
11,110 |
10,375 |
||
Tangible Assets |
252 |
160 |
81 |
4,502 |
64,121 |
||
Investments |
0 |
0 |
0 |
0 |
0 |
||
Current Assets |
|
|
4,014 |
1,061 |
1,012 |
450 |
2,309 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
655 |
335 |
358 |
358 |
2,217 |
||
Cash |
3,279 |
640 |
562 |
0 |
0 |
||
Other |
80 |
86 |
92 |
92 |
92 |
||
Current Liabilities |
|
|
(3,363) |
(3,202) |
(1,995) |
(2,000) |
(2,300) |
Creditors |
(3,363) |
(3,202) |
(1,995) |
(2,000) |
(2,300) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
0 |
0 |
0 |
(730) |
(53,221) |
Long term borrowings |
0 |
0 |
0 |
(730) |
(53,221) |
||
Other long term liabilities |
0 |
0 |
0 |
0 |
0 |
||
Net Assets |
|
|
7,803 |
7,158 |
10,943 |
13,332 |
21,284 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(1,424) |
(2,006) |
(2,729) |
(1,966) |
(3,530) |
Net Interest |
4 |
(413) |
(319) |
8 |
(80) |
||
Tax |
0 |
0 |
0 |
0 |
0 |
||
Capex |
(877) |
(3,133) |
(3,507) |
(4,502) |
(64,121) |
||
Acquisitions/disposals |
(1,083) |
(750) |
0 |
0 |
0 |
||
Financing |
4,735 |
3,663 |
6,480 |
5,168 |
15,240 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
1,355 |
(2,639) |
(75) |
(1,292) |
(52,491) |
||
Opening net debt/(cash) |
|
|
(1,924) |
(3,279) |
(640) |
(562) |
730 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
(3) |
0 |
(0) |
||
Closing net debt/(cash) |
|
|
(3,279) |
(640) |
(562) |
730 |
53,221 |
Source: Company sources, Edison Investment Research
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