Last close As at 05/08/2026
GBP0.01
▲ 0.14 (12.78%)
Market capitalisation
GBP166m
Research: Metals & Mining
On 4 March, KEFI announced a firm placing of 750m new shares to raise £4.5m at a price of 0.6p/share plus a further 83.3m shares (subject to approval by shareholders at a general meeting on 26 March), also at 0.6p, in direct settlement of a number of the company’s liabilities. Finally, on 5 March, it announced the closure of a simultaneous retail offer via PrimaryBid to raise a further £0.5m via the issue of a further 82.7m shares. Assuming approval at the company’s general meeting, in aggregate, KEFI will be raising £5.5m (gross) via the issue of 916.0m shares, such that the final total, post-presumed 26 March approval, will be 5,881.1m.
KEFI Gold and Copper |
The penultimate piece of the puzzle |
Fund-raising |
Metals and mining |
7 March 2024 |
Share price performance
Business description
Next events
Analyst
KEFI Gold and Copper is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||
On 4 March, KEFI announced a firm placing of 750m new shares to raise £4.5m at a price of 0.6p/share plus a further 83.3m shares (subject to approval by shareholders at a general meeting on 26 March), also at 0.6p, in direct settlement of a number of the company’s liabilities. Finally, on 5 March, it announced the closure of a simultaneous retail offer via PrimaryBid to raise a further £0.5m via the issue of a further 82.7m shares. Assuming approval at the company’s general meeting, in aggregate, KEFI will be raising £5.5m (gross) via the issue of 916.0m shares, such that the final total, post-presumed 26 March approval, will be 5,881.1m.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
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 |
(3.5) |
(0.2) |
0.0 |
N/A |
N/A |
12/24e |
0.0 |
(11.4) |
(0.1) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.
Raising more should lower the overall financial risk
KEFI’s equity raise has been larger (by 634.7m shares/£3.6m) than we expected, leading to 12.1% more shares in issue (cf our prior expectations) – albeit conferring on KEFI greater financial resources and with proportionately less financial risk. Apart from the reported necessity to spend money on preparing the community and site for project launch, KEFI needs to clean up its balance sheet for project finance closing, from the viewpoint of shareholders and for the project financiers putting up the very large funding package between them, as arranged by KEFI.
Raise follows notable exploration success
KEFI’s fund-raising follows three recent notable exploration discoveries, including high-grade cross-cut intersections at Asfingia at Jibal Qutman (up to 66.6g/t), the Abu Salal volcanogenic massive sulphide complex 50km south of, and on strike to, Hawiah, and a maiden mineral resource estimate at Al Godeyer in FY23.
Valuation: Offering a 41.3% internal rate of return
In the wake of KEFI’s equity raising, we calculate that Tulu Kapi, Hawiah and Jibal Qutman are capable of generating average free cash flow of c £82.3m in FY27–32 (almost unchanged cf £82.6m previously), making average (maximum potential) dividends of 0.59p/share possible (cf 0.66p/share previously) and valuing KEFI at 2.21p/share (cf 2.47p/share previously) fully diluted. This suggests a post-money value for KEFI of £130.0m or US$165.2m. This current valuation reduces to 1.96p/share (cf 2.18p/share previously) if all convertible instruments are converted at our valuation of the shares in 3–4 years’ time. At current metals prices, however, it increases to 4.20p (4.14p previously) now and to 5.58p (5.50p previously) in FY27 (plus a further c 1.95p/share for Guji-Komto), which implies an internal rate of return for investors of 41.3% (43.7% previously) in sterling terms over the next 13 years. Our timing assumes Tulu Kapi starts commissioning in late 2025 and we believe this goal is still achievable as long as project launch is before end June. In the event of a six-month delay, our valuation (all other things being equal) reduces by 4.7% to 2.11p/share.
Exhibit 1: Financial summary
£000s |
2020 |
2021 |
2022 |
2023e |
2024e |
||
December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
0 |
0 |
0 |
0 |
0 |
Cost of Sales |
(2,663) |
(2,257) |
(2,744) |
(2,994) |
(1,000) |
||
Gross Profit |
(2,663) |
(2,257) |
(2,744) |
(2,994) |
(1,000) |
||
EBITDA |
|
|
(2,663) |
(2,257) |
(2,744) |
(2,994) |
(1,000) |
Operating profit (before amort. and excepts.) |
|
(2,706) |
(2,274) |
(2,768) |
(3,024) |
(1,030) |
|
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
174 |
(47) |
(268) |
916 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
(2,532) |
(2,321) |
(3,036) |
(2,108) |
(1,030) |
||
Net Interest |
(100) |
(1,121) |
(527) |
(495) |
(10,410) |
||
Profit Before Tax (norm) |
|
|
(2,806) |
(3,395) |
(3,295) |
(3,519) |
(11,440) |
Profit Before Tax (FRS 3) |
|
|
(2,632) |
(3,442) |
(3,563) |
(2,603) |
(11,440) |
Tax |
0 |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(2,806) |
(3,395) |
(3,295) |
(3,519) |
(11,440) |
||
Profit After Tax (FRS 3) |
(2,632) |
(3,442) |
(3,563) |
(2,603) |
(11,440) |
||
Minority interests |
0 |
0 |
0 |
0 |
3,432 |
||
Net income (normalised) |
(3,894) |
(4,877) |
(6,087) |
(8,255) |
(8,008) |
||
Net income (FRS3) |
(2,632) |
(3,442) |
(3,563) |
(2,603) |
(8,008) |
||
Average Number of Shares Outstanding (m) |
1,663.2 |
2,178.9 |
3,537.3 |
4,452.1 |
5,728.5 |
||
EPS - normalised (p) |
|
|
(0.2) |
(0.2) |
(0.2) |
(0.2) |
(0.1) |
EPS - normalised and fully diluted (p) |
|
|
(0.2) |
(0.2) |
(0.1) |
(0.1) |
(0.1) |
EPS - (IFRS) (p) |
|
|
(0.2) |
(0.2) |
(0.1) |
(0.1) |
(0.1) |
Dividend per share (p) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
- |
- |
- |
- |
- |
||
EBITDA Margin (%) |
- |
- |
- |
- |
- |
||
Operating Margin (before GW and except.) (%) |
- |
- |
- |
- |
- |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
24,545 |
28,424 |
31,481 |
34,585 |
127,837 |
Intangible Assets |
24,510 |
28,361 |
31,356 |
34,490 |
38,490 |
||
Tangible Assets |
35 |
63 |
125 |
95 |
89,347 |
||
Investments |
0 |
0 |
0 |
0 |
0 |
||
Current Assets |
|
|
1,817 |
685 |
683 |
1,327 |
1,147 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
448 |
291 |
463 |
361 |
181 |
||
Cash |
1,315 |
394 |
220 |
0 |
0 |
||
Other |
54 |
0 |
0 |
966 |
966 |
||
Current Liabilities |
|
|
(3,125) |
(6,791) |
(5,182) |
(5,182) |
(3,181) |
Creditors |
(3,125) |
(5,556) |
(4,002) |
(4,002) |
(2,001) |
||
Short term borrowings |
0 |
(1,235) |
(1,180) |
(1,180) |
(1,180) |
||
Long Term Liabilities |
|
|
0 |
0 |
0 |
(4,285) |
(74,651) |
Long term borrowings |
0 |
0 |
0 |
(344) |
(70,710) |
||
Other long term liabilities |
0 |
0 |
0 |
(3,941) |
(3,941) |
||
Net Assets |
|
|
23,237 |
22,318 |
26,982 |
26,445 |
51,152 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(2,092) |
(329) |
(2,634) |
(2,880) |
(2,821) |
Net Interest |
(100) |
(1,121) |
(527) |
(495) |
(10,410) |
||
Tax |
0 |
0 |
0 |
0 |
0 |
||
Capex |
(4,389) |
(3,064) |
(5,245) |
(3,929) |
(93,282) |
||
Acquisitions/disposals |
0 |
54 |
0 |
0 |
0 |
||
Financing |
6,996 |
826 |
6,405 |
6,741 |
36,146 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
415 |
(3,634) |
(2,001) |
(564) |
(70,366) |
||
Opening net debt/(cash) |
|
|
814 |
(1,315) |
841 |
960 |
1,524 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Other |
1,714 |
1,478 |
1,882 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(1,315) |
841 |
960 |
1,524 |
71,890 |
Source: Company sources, Edison Investment Research.
|
|
Research: Industrials
Capita faced numerous cash drags in FY23, notably £20m in costs associated with a cyber incident, a £30m pension deficit contribution and a £20m increase in technology capex, which depressed the adjusted free cash outflow before disposals to £116m (£42.4m outflow in FY22). Despite these challenges, the implementation of a rigorous cost efficiency programme and the strategic divestment of non-core assets have the potential to fuel a turnaround. Some £160m of annualised cost savings are expected to be realised by mid-2025 (part reinvested for growth), aimed at bolstering a significant improvement in operating margins. As margins improve, shifting to faster-growing market segments with a more competitive cost base could catalyse a reduction in the valuation discount.