Last close As at 05/08/2026
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GBP166m
Research: Metals & Mining
This morning, KEFI Gold and Copper (KEFI) announced it is in talks with its Saudi joint venture partner, ARTAR, to exit its Saudi Arabian joint venture, G&M. The exit will remove KEFI’s obligation to pay US$10m to maintain its beneficial interest in G&M at 25% (cf 15% otherwise).
KEFI Gold and Copper |
Swapping assets for cash |
Exiting Saudi Arabia |
Metals and mining |
13 November 2024 |
Share price performance
Business description
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Analyst
KEFI Gold and Copper is a research client of Edison Investment Research Limited |
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This morning, KEFI Gold and Copper (KEFI) announced it is in talks with its Saudi joint venture partner, ARTAR, to exit its Saudi Arabian joint venture, G&M. The exit will remove KEFI’s obligation to pay US$10m to maintain its beneficial interest in G&M at 25% (cf 15% otherwise).
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/22 |
0.0 |
(3.3) |
(0.2) |
0.0 |
N/A |
N/A |
12/23 |
0.0 |
(4.6) |
(0.2) |
0.0 |
N/A |
N/A |
12/24e |
0.0 |
(17.0) |
(0.4) |
0.0 |
N/A |
N/A |
12/25e |
0.0 |
(4.5) |
(0.1) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.
G&M worth more than its book value
Removing KEFI’s obligation to pay US$10m to maintain its stake in G&M at 25% will be a welcome relief for the company. However, the impression that this values the remainder of the stake at US$15m is misleading, as the shareholders’ agreement regarding dilution for contributions/non-contributions between the founding shareholders is based on historical costs of investment, whereas the sale of a shareholding to a partner or a third party is on an open market basis. Our last valuation of KEFI in March 2024 was 2.21p per share. Adjusting for the interim passage of time, one year’s delay to Tulu Kapi, one year’s gold price inflation and slightly different financing terms, our updated valuation (all else being equal) would be 2.31p. Reducing KEFI’s interest in G&M to 15% lowers this to 2.15p. Selling its residual interest for US$15m would reduce it further to 2.02p per share. However, using a long-term copper price of US$10,000/t, we calculate a value for KEFI’s 15% stake in Hawiah (based on potential dividends discounted at 10% pa) of US$32.0m and one for Jibal Qutman of US$17.2m, for a total of US$49.2m, or 0.62p per KEFI share, while still leaving its interest in Tulu Kapi intact. A discount may be applied to this total to reflect the projects’ stages of development, although this remains to be seen and depends upon the partners’ confidence in the project. Our financial forecasts are based on KEFI maintaining a 15% interest in G&M but will be revised as soon as a deal is concluded.
Valuation: Potential 48.9% internal rate of return
We calculate that KEFI’s residual assets could generate average free cash flow of c £82.4m in FY27–32 (almost unchanged from £82.3m previously), making average (maximum potential) dividends of 0.59p per share in FY28–34 possible and valuing KEFI at 2.15p per share (cf 2.21p/share previously) fully diluted. At current metals prices, however, this valuation increases to 6.33p now and to 9.27p in FY28 (plus a potential further c 2.25p per share for Guji-Komto), implying an internal rate of return of 48.9% in sterling terms over the next 13 years. Our timing assumes Tulu Kapi starts commissioning in late 2026.
Exhibit 1: Financial summary
£000s |
2020 |
2021 |
2022 |
2023 |
2024e |
2025e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||
Revenue |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
Cost of Sales |
(2,663) |
(2,257) |
(2,744) |
(3,527) |
(6,548) |
(1,000) |
||
Gross Profit |
(2,663) |
(2,257) |
(2,744) |
(3,527) |
(6,548) |
(1,000) |
||
EBITDA |
|
|
(2,663) |
(2,257) |
(2,744) |
(3,527) |
(6,548) |
(1,000) |
Operating profit (before amort. and excepts.) |
|
|
(2,706) |
(2,274) |
(2,768) |
(3,556) |
(6,566) |
(1,018) |
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
174 |
(47) |
(268) |
1,623 |
893 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
(2,532) |
(2,321) |
(3,036) |
(1,933) |
(5,673) |
(1,018) |
||
Net Interest |
(100) |
(1,121) |
(527) |
(1,000) |
(10,404) |
(3,444) |
||
Profit Before Tax (norm) |
|
|
(2,806) |
(3,395) |
(3,295) |
(4,556) |
(16,970) |
(4,462) |
Profit Before Tax (FRS 3) |
|
|
(2,632) |
(3,442) |
(3,563) |
(2,933) |
(16,077) |
(4,462) |
Tax |
0 |
0 |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(2,806) |
(3,395) |
(3,295) |
(4,556) |
(16,970) |
(4,462) |
||
Profit After Tax (FRS 3) |
(2,632) |
(3,442) |
(3,563) |
(2,933) |
(16,077) |
(4,462) |
||
Minority interests |
0 |
0 |
0 |
0 |
0 |
892 |
||
Net income (normalised) |
(3,894) |
(4,877) |
(6,087) |
(9,519) |
(21,448) |
(3,569) |
||
Net income (FRS3) |
(2,632) |
(3,442) |
(3,563) |
(2,933) |
(16,077) |
(3,569) |
||
Average Number of Shares Outstanding (m) |
1,663.2 |
2,178.9 |
3,537.3 |
4,508.2 |
5,876.8 |
6,059.1 |
||
EPS - normalised (p) |
|
|
(0.2) |
(0.2) |
(0.2) |
(0.2) |
(0.4) |
(0.1) |
EPS - normalised and fully diluted (p) |
|
|
(0.2) |
(0.2) |
(0.1) |
(0.2) |
(0.3) |
(0.0) |
EPS - (IFRS) (p) |
|
|
(0.2) |
(0.2) |
(0.1) |
(0.1) |
(0.3) |
(0.1) |
Dividend per share (p) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
24,545 |
28,424 |
31,481 |
34,816 |
38,798 |
131,699 |
Intangible Assets |
24,510 |
28,361 |
31,356 |
34,716 |
38,716 |
42,716 |
||
Tangible Assets |
35 |
63 |
125 |
100 |
82 |
88,983 |
||
Investments |
0 |
0 |
0 |
0 |
0 |
0 |
||
Current Assets |
|
|
1,817 |
685 |
683 |
720 |
6,425 |
1,475 |
Stocks |
0 |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
448 |
291 |
463 |
528 |
1,155 |
578 |
||
Cash |
1,315 |
394 |
220 |
192 |
4,373 |
0 |
||
Other |
54 |
0 |
0 |
0 |
897 |
897 |
||
Current Liabilities |
|
|
(3,125) |
(6,791) |
(5,182) |
(9,420) |
(13,560) |
(9,046) |
Creditors |
(3,125) |
(5,556) |
(4,002) |
(7,307) |
(9,029) |
(4,515) |
||
Short term borrowings |
0 |
(1,235) |
(1,180) |
(2,113) |
(4,531) |
(4,531) |
||
Long Term Liabilities |
|
|
0 |
0 |
0 |
0 |
(4,478) |
(101,404) |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
(96,926) |
||
Other long term liabilities |
0 |
0 |
0 |
0 |
(4,478) |
(4,478) |
||
Net Assets |
|
|
23,237 |
22,318 |
26,982 |
26,116 |
27,185 |
22,723 |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
(2,092) |
(329) |
(2,634) |
(861) |
(5,457) |
(4,937) |
Net Interest |
(100) |
(1,121) |
(527) |
(1,000) |
(10,404) |
(3,444) |
||
Tax |
0 |
0 |
0 |
0 |
0 |
0 |
||
Capex |
(4,389) |
(3,064) |
(5,245) |
(3,257) |
(4,000) |
(92,919) |
||
Acquisitions/disposals |
0 |
54 |
0 |
0 |
0 |
0 |
||
Financing |
6,996 |
826 |
6,405 |
2,550 |
21,624 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
415 |
(3,634) |
(2,001) |
(2,568) |
1,763 |
(101,299) |
||
Opening net debt/(cash) |
|
|
814 |
(1,315) |
841 |
960 |
1,921 |
158 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
1,714 |
1,478 |
1,882 |
1,607 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(1,315) |
841 |
960 |
1,921 |
158 |
101,457 |
Source: Company sources, Edison Investment Research
|
|
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