KEFI Gold Opts To Dilute Shares In Light Of Oromia Admin Demands

Company awarded Konso concession despite lack of progress in Tulu Kapi

KEFI Gold and Copper has diluted its shares in a bid to raise funds to address outstanding payables. Sources told The Reporter the Oromia regional administration has issued a final warning to the mining company, instructing it to fulfill capital requirements and resume activities at its site in Wollega.

KEFI has initiated the issuance of 1.9 billion additional shares on the London Stock Exchange through the dilution of seven billion existing ordinary shares, and the company’s directors are urging shareholders to vote in favor of the move during their upcoming general assembly slated to take place on January 2, 2025.

KEFI has issued 1.9 billion firm placing, conditional placing, conditional subscription, conditional remuneration, and retail shares. A statement released this week indicates the company has requested admission for the shares at the London Stock Exchange.

KEFI is looking to raise 10.1 million pounds in capital net proceeds from the issuance, while its market value stands at 43 million pounds, according to the latest reports.

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The firm looks to use 4.6 million pounds of the total cash proceeds to settle outstanding liabilities.

“Participants in the Firm Placing, the Conditional Placing and the Conditional Remuneration Issue have elected to convert certain outstanding liabilities payable by the Company into new Ordinary Shares. A total of 828 million Ordinary Shares, will be issued to extinguish approximately £4.6 million of the Company’s outstanding liabilities. With the participation in the Retail Offer, the Company will raise approximately £6.0 million in cash (before expenses) as a result of the Capital Raise,” reads the statement issued this week.

The funds will also be used to complete the launch of its Tulu Kapi Project in western Oromia, according to the statement. It also indicates hopes for the issuance of “a number of exploration license applications in Ethiopia.”

The firm will resort to seek funding from “alternative sources” if shareholders opt not to approve the issuance of shares, according to the statement.

“However, there is no guarantee that such an increased amount of additional funding could be obtained in the requisite time frame or at all. If the Resolutions are not approved at the General Meeting, and no alternative funding can be raised, the Company’s ability to operate as a going concern may be put at risk,” stated Harry Anagnostaras-Adams, KEFI’s executive chairman, in a circular addressed to shareholders on December 9, 2024.

The company expects to launch major works on its Tulu Kapi Project in early 2025, depending on the “satisfaction of the outstanding conditions precedent that are typical for a transaction of this nature,” according to the document.

Despite having secured a concession for a major gold mining operation in Wollega a decade ago, KEFI has been unable to execute the project due to security concerns and a lack of finances.

Sources told The Reporter the Oromia regional administration has written a final warning notice to the company’s executives, instructing them to fulfill capital requirements and resume activities.

The notice is a follow up to another warning issued by the Ministry of Mines back in November 2021.

“The Ministry reviewed [KEFI’s] letter that outlined causes of the non-performance of Tulu Kapi Gold Mine and noted your strong assurance that you will secure the required financing by January 2022. Although the Ministry does not accept the occurrence of the said events or that they excuse performance even if they did, we have agreed to give your company one last opportunity to cure the non-performance on or before 31 January 2022 by procuring the necessary finances and performing the obligations that have become overdue,” reads the notice signed by former Minister of Mines Takele Uma.

A KEFI report dated June 30, 2024, indicates the firm’s parent company incurred losses of close to 6.1 million pounds over the fiscal year, in addition to a 3.4 million pound loss the year before.

“As of that date, the Group’s liabilities exceeded its current assets. As stated in this note events or conditions, along with other matters as set forth in this note, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern,” reads the report.

It also indicates KEFI owes its Saudi-based partner Abdul Rahman Saad Al-Rashid and Sons Company Limited (ARTAR) over five million pounds.

KEFI Gold and Copper Plc acquired the Tulu Kapi Gold Project from Nyota Minerals Limited in 2014. The project is owned by Tulu Kapi Gold Mines Share Company Limited (TKGM). KEFI owns 95 percent of TKGM while the Ethiopian government owns the remaining five percent with the option to earn an additional USD 20 million in shares through the installation of power infrastructure and a road at the mining site.

The company claims to have spent approximately USD 50 million on its Tulu Kapi endeavor so far.

Before selling it to KEFI in 2014, Nyota conducted explorations at Tulu Kapi, including a 16,000 meter shaft drilled in late 2012. But KEFI says the drill missed the cut-off.

KEFI is also eyeing additional concessions in Ethiopia. It has lodged requests for concessions for lithium, tantalum, and rare earth metals in Guji, Oromia, as well as in Konso, which is located in the recently-established Southern Ethiopia region.

The license application for the 39 square kilometer Guji site is pending, according to the Ministry of Mines online portal. However, KEFI was granted a concession to mine on 22 square kilometers in Konso just two weeks ago. The license is set to expire in 2027.

“KEFI is pleased to report that the Company’s wholly-owned Ethiopian holding company KEFI Minerals has been awarded the Konso Critical Metals Area (‘Konso Project’) exploration license by the Ethiopian Ministry of Mines,” reads the company statement released on Friday.

The Konso site, located near Arba Minch, was previously explored by the state-run Ethiopian Geological Survey and Brazilian mining giant Vale prior to the company’s exit in 2012. The site holds nickel, cobalt, platinum, tantalum, and lithium deposits.

KEFI’s statement likens the Konso site to the Kenticha, which has “historically produced tantalum/lithium with internationally marketable specific product characteristics and which has significant remaining resources, but whose continued development progress has been stalled due to ongoing negotiations over development and exploration rights.”

A few weeks ago, Ali Hussein, the general manager of the Kenticha Mining Plc joint venture, was taken into police custody on suspicions of fraud and embezzlement related to the lucrative mining site.

Anagnostaras-Adams is upbeat about the company’s prospects in Konso.

“We intend to progress exploration and, in due course, to establish focused regional alliances to pursue the cherry-picked critical metals opportunities wherever warranted,” reads his statement.

However, KEFI’s track record in Tulu Kapi has raised eyebrows among observers and officials.

“KEFI is acquiring different licenses without progressing on its existing license. Its aim is to continue raising funds abroad by painting a picture in investors’ minds, as if the company is operating several with licenses at the same time. The company also often uses security threats as an excuse for its non-performance, while the major problem is its lack of finance,” said an official who spoke to The Reporter on condition of anonymity.