KEFI Gold to exit Saudi Arabia through sale of JV stake
KEFI Gold and Copper PLC (AIM:KEFI, OTC:KFFLF) said it is to undertake a strategic review of its interests in Saudi Arabia, which eventually could lead to a sale of interests in the Kingdom. Currently carried out through GMCO, a joint venture with ARTAR, the initial step will see KEFI forego its right to contribute US$10 million and maintain its stake in the JV at 25%.
Instead, KEFI will accept dilution to 15% of GMCO with a potential sale of that residual shareholding now also being explored. GMCO is poised for a major expansion of its exploration programme in Saudi, for which it would KEFI expected to contribute its pro-rata share.
The cost of raising sufficient funds via share issues to pay for this would be too dilutive, management believes, given the present share price. Going forwards. KEFI said it would prioritise majority-owned projects, notably the Tulu Kapi gold project in Ethiopia and additional exploration opportunities in that region of Africa.
Harry Adams, executive chairman, added: "Both of KEFI's host countries, Saudi Arabia and Ethiopia, have recently pivoted towards an improved mining environment. "And the gold price is at all-time highs. In that context, KEFI considers it important that the two operating partnerships play to their strengths and capitalise on the market dynamics in each country.
"Today's announcement of the strategic review at GMCO reflects that the partners will, over the next six months, review various scenarios to determine the best way forward for the joint venture to build on its successful discoveries and feasibility studies.
“In the meantime, the KEFI board believes it is in the best interests of KEFI shareholders to remove the outstanding exploration liabilities with a consequential reduction in the company's stake in GMCO.
“KEFI has made it clear that the priority for its capital is to now optimise shareholder value via majority-owned projects."
Source: https://www.proactiveinvestors.co.uk/