Good morning, and welcome to the KEFI Gold and Copper plc investor update following the general meeting. Throughout this recorded meeting, investors will be in listen-only mode. Questions are encouraged and can be submitted any time by the Q&A tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Harry Anagnostaras-Adams, Founder and Executive Chair. Good morning to you, sir.
Good morning. Thank you for making the time to participate today. For those of you who are not familiar, we have just conducted and completed a general meeting. The resolutions were passed with approximately 91% vote by proxy, and there were some other people present here in Cyprus who were supporting it. This is a webinar taking questions after giving a short presentation. It's not a regulatory requirement. It's just something the company does in the interest of information and transparency. If you could flick the slide. The next one again, please. There's only gonna be a handful of these and then we'll go straight into the questions, and we'll stop at one hour. My colleague Eddy Solbrandt, sitting to my right, the COO, who will also answer some of the questions.
I have a commitment to go to at 1 o'clock our time here in Cyprus. This will be a 1-hour webinar. Thank you. Now, this slide seeks to convey a very simple message, and that is that we went into what we call frontier markets for mining in 2008. T oday, the industry is arriving by the planeload to join in, including some of the highest profile explorers, developers and operators in the world. You know, the old adage, it's not hard to be right, but it's hard to get the timing right. Well, most of the industry is now coming in. We've been there since 2008. Next slide, please. The priorities of the company right now are squarely focused on Ethiopia.
The project finance for Tulu Kapi is has passed its first approvals or the lead equity, lead debt, and lead equity risk note and other form of equity have all approved. In fact, our government partner is already spending a lot of money, more than approved. It's now moved on to the approval process for the second bank, the second equity risk note and the second government agency. We're in full swing, you might say, in terms of the approval process. These are all. I can't think of any organization that I just referred to that would be less than $5 billion. They range between $5 billion-$40 billion organizations. Their approval processes are those reflecting very large organizations, multinationals with their own very strict governance procedures.
They’re being very collegiate. Again, they all have their own very strict governance procedures in such large organizations. KEFI’s advantage as a small company is to be fleet of foot. We’re using the capital and support of huge corporations and government agencies who have, let’s say, a slower process to go through. You have to respect that. It’s their money. It’s their name, it’s their commitment, and that’s what we do. That’s the name of the game today in Ethiopia. It’s all focused on closing and launching. I’ll go into a bit more detail shortly. In Saudi, the projects that we’ve discovered there are not as advanced as Tulu Kapi, obviously. They’re still growing a lot.
The rate of expansion of the resources there is significant and influencing our decision-making in terms of optimizing the development cases to choose from. That's, that has to be let run a little bit longer than we originally thought. Because they're growing so much, they have to be let run a little bit further. The other thing that's happening in Saudi is the regional exploration. We're being encouraged through our own ambition, but also through, I suppose, competitive pressure with all these people arriving now in Saudi. It's also happening now to a lesser extent, but started happening in Ethiopia as well. People arriving to get on the ground. It's motivating us to spread wider and harder and deeper. You know, building up the teams further, that sort of thing.
This is the moment to go, so to speak. Go with Tulu Kapi, then follow through with the other two in Saudi Arabia. It's the moment to spread our wings on the ground, exploration-wise, with a pipeline of projects coming through behind those three advanced projects. Hard to convey really to people who suffered so much frustration and had to be so patient starting a small company like KEFI, a GBP 2 million IPO in 2006. Now the company in effect, having pulled together syndicates that are, between these three projects, lining up for over billion dollars on expenditure would be impossible, obviously, if we didn't pull together partnerships and project finance and contractors and equity investors in the region. We have it.
I well understand that many shareholders perhaps have never seen that sort of process before, let alone one in a frontier market which has never done it before. It must be perplexing at times, confusing and frustrating. Of course, the country's changed around us. You know, in Ethiopia, we arrived to a quiet country and all of a sudden there was a civil war in the middle of our ten-year journey there so far. You know, we've been surprised, we've been held up by surprises, but we're still there, and we've kept together our syndicates. For those of you who are terribly frustrated and disappointed, we apologize. For those of you who are frustrated and looking forward to the excitement of what we believe is coming, welcome to the journey.
It comes with incredible determination of very hardworking people. You can't do it any other way. Those of you who think that I'm in Cyprus to lie by the beach or by the swimming pool, you've got no idea. You know, it's important to note and to recognize that the tenacity and commitment of the team is what will build this company. I truly thank those people, those colleagues for that. A little measure of upside potential is the NPV and other measures of metric values and so on. They're just measures. They're no more important than measuring sticks, but they give you a guide. How we stand today, at today's gold price, which obviously is incredibly encouraging, so high and looking strong.
Just on an NPV basis, using the same approach that the industry does for all its comparative statistics, our share price is about 1/10 what it would be if it reflected the NPV of the Tulu Kapi asset. The value, if you like, of the Saudi assets is a lot smaller today, partly because Tulu Kapi is charging ahead, while it's not yet charging ahead in the same, at the same stage. A lso, because we don't think right now we can apply NPVs to it. It's not quite right to apply NPVs to pre-DFS projects. When they have passed through final feasibility study and final financing assessments, we'll apply DFS NPV-style numbers to them.
Right here and now, if you put those, the NPV apple together with the other measure that the industry uses on Saudi, let's call it an apple plus an orange for the moment, you're talking about 12 times today's share price. That's a very simplistic but nevertheless pertinent measure of the upside here as we de-risk and proceed. Next slide, please. These graphs done by Oriel Capital. The guy who runs Oriel Capital used to be the head of mines and metals at Macquarie Bank. Perhaps one of the larger, you know, commercial banking, broking, institutional investment platforms for the mining space globally. Y ou can see where the bottom right-hand slide is really just a grade comparison showing that we're pretty good grade at Tulu Kapi.
The other three slides are just measuring measurements against industry standard value benchmarks. You can see we rate very lowly. The stock market today puts a fraction on the company of what it will put on the company in our view in due course, just by following the industry pattern. Next slide, please. Very busy slide here, but I do ask you to, for those of you who are, you know, into really measuring and understanding, and not just sort of focusing on next week's events or whatever, but really trying to understand underneath it. The right-hand side columns are what we call bankers' views. The two columns to the left are owners' views. We've compared the metrics using those different sets of assumptions which are all explained there.
The bottom line is to show you in some detail how we've set up the structure. Essentially, we've set up the structure so that even if gold traded as low as $1,200 every day throughout the life of the project, the banks would get out and we'd honor our obligations to the lenders. $1,200 is considered a reasonable benchmark to do that because the gold price has only been down that low for, I've forgotten, but something like 10% or less of the last decade. If you look forward, the average cost in the industry is about $1,200. I think if you design the debt structure to be, you know, serviced and worked out whole at $1,200, you're on safe ground. That's our feet on the ground approach, if you like.
Our head in the clouds is to actually reflect what our business plan is, not what our bankers assume, but the plan actually is, and to run the numbers up with more realistic long-term gold price forecasts. You can see there's some fairly large numbers washing their way through to the bottom line in various measures there. I'll leave that to you to look at more carefully after the webinar. Next slide, please. Expected milestones ahead. We're in the middle of the first half of 2024. We've got a cascading series of approvals, which is halfway through. We've got a cascading series of detailed legal drafting between the dozen parties or so. I'd say we're about at 90% of the way through, taken as a complete package.
Preparation of community for resettlement. Well, they were completely surveyed in past times. They know exactly what's coming, so there's no surprises there. We need now to refresh the survey and that's a two-month job realistically, and that has to start. It hasn't started yet. We didn't want to start it. It's important morally for preservation of social license, respect, mutual respect with your community. You can't start that until you know that all the approvals are in the bag. Otherwise, you're lifting expectations and anxieties to the community to be removed from, you know, property and homes that their families have lived in for generations. One can't do that ahead. Those of you wondering perhaps why it wasn't done already, you can't morally.
Only when you actually know that the bank approvals, both of them, are in your back pocket should you start that. The other cascading series of things is the details of conditions precedent. The big-ticket items are done other than demonstrating that we can work in this community and get everything ready without being interfered with from a security viewpoint, and the government certainly undertaking to do everything that's required on that front. Everyone wants to see it to believe it and closing. Of course, upon closing, the funds start to get drawn down in the correct sequence and we start procuring and resettling and constructing. You know, we are in the business now of closing and optimizing where we're heading because we're getting into a different platform now.
There's any number of ideas that are floating around to you know go for it, and we've got a number of parties approaching us, have approached us to somehow participate. It's the typical thing that happens when someone sees a project or a country about to take off. There's no shortage of suitors and interested parties. You know, overnight success after 15 years, so to speak. Next slide, please. Saudi just you know not ready for triggering for finishing feasibility studies and triggering development in two projects that aren't sitting still. They keep growing. That process has to run a bit longer. The metallurgical side of the optimization is a bit elusive still. That needs to be settled down a bit further before we rule off feasibility studies.
It'll be, you know, between those two projects between the two of them they will dwarf Tulu Kapi. Between the two of them, they will measure up in value much higher relative to Tulu Kapi when we've signed off feasibility studies. The financing is a similar style almost exclusively done at the subsidiary level. The regional exploration in Saudi we've received 14 licenses in the last 18 months, and I think we'd received three or four in the previous 13 years. That's telling you how things are moving differently nowadays. Again, strategic choices, as I said, it's no shortage of third parties, you know, wanting to somehow engage, invest, whatever in our business there. Next slide, please. We are in the Arabian-Nubian Shield. We've highlighted two countries there.
If you put the color coding onto the other countries in the same geology, you'd pick up the neighbors, Yemen, Oman, in on the western side or the eastern side rather. On the western side of the Red Sea, North Sudan, Eritrea, parts of Egypt and even up into the Mediterranean, into Cyprus, where I'm sitting. Parts of this geology, Oman is called, Cyprus-type geology. It's the blanket of this style of geology covers a fair bit of ground in that part of the world, but we've only focused so far on Saudi and Ethiopia. I'll pull up there. I've taken 20 minutes. We now have 40 minutes for, well, to go through the questions. If Alejandro could start working through them, please.
Yes, of course, Harry, and thank you very much for the presentation. As you know, we have received a number of questions pre-submitted, and we've got a number of questions that have come in live, so we'll do our best to get through as many of those as possible. Perhaps we'll start with the first one here, which reads as follows: You announced in February last year that you intend to seek a listing on the Saudi market. How is this progressing?
Well, we announced last year that we appointed advisors to consider a listing in the Saudi market. Having had taken detailed advice, met the Saudi Exchange, we've come to the view that they're just simply not ready for a pre-production company. We'd be blowing way too much time to break new ground on that particular front at this point. That's the bottom line. Ironically, Ethiopia appears to be much more ready, as strange as it may seem. They haven't even launched the exchange, but they're deliberately asking us to launch dual lists or launch listings in the Ethiopian Exchange when it opens later in the year. The Saudi Exchange isn't ready for a pre-production company. That's the short of it. It can be addressed when there is production. In Ethiopia, we can address it earlier.
The reason we look at these things, frankly, is because I suppose it's stating the obvious that we're raising capital as to hundreds of millions in these countries, which means there's much more capital chasing our industry and our company in these countries than there are where we've got our primary listing. It sounds strange, but it's the truth. That's why we're looking at these things. Next question, please.
Would you consider selling the Tulu Kapi project after funding is signed off to focus on Saudi with the resulting abundant funds for exploration costs?
We're an explorer developer operator. That's our philosophy. That's what we'll do. Having said that, we're a public company and we've always, you know, have a duty to optimize returns to shareholders. I don't think it would be a realistic to assume we'd simply sell out after developing the project. It wouldn't be compliant with social license and government expectations, but certainly you could sell down. That's not the priority today. The priority today is to get this show on the road. When it's, you know, well and truly on the way, its value will climb significantly, as I was presenting earlier. It'll be a great problem of success to be given choices for cashing in some of that value for shareholders. Thank you.
Perfect. Can you give investors some idea of the value of both the Tulu Kapi and Saudi assets taking into account the healthy gold price?
Yeah, I mean, I've already answered that, actually. It was in the announcements in the presentation. To maybe just add one or two points for the person who's not used to studying these sorts of numbers all the time. When a junior company migrates to the status of a producer, the market cap is typically something over NPV. Time doesn't permit to explain why, but it just is. It's empirical. I'm not being a theorist. I'm telling you what's empirically the fact. As a company migrates to a multi-mine entity with a number of mines running, preferably in multiple jurisdictions, so you can diversify some of the sovereign risks involved, it's much higher again. That's empirical fact also. Today, we're capped at a fraction of the NPV of Tulu Kapi.
When we bring on the Saudi projects, that will feed, if you like, that gap of value growth. There's plenty of upside here, whichever way you cut it, and it's growing as the assets work their way up their development pathway. What we have to do is deliver. If these countries stand still long enough to let us deliver, we'll deliver. That's what's happening now. They're very driven, committed to getting these industries going in both countries. We happen to be, you know, at the front of the queue or around the front of the queue in both countries. They just have to stand still long enough and keep supporting us and protecting and so on, and we'll deliver.
Perfect. Turning to the next question, we understand a consortium of investors went to their respective boards at the end of February. When will you have got the binding contracts in place?
The binding contracts are drafted nearly completely, all of them. The sequence is complete those approvals. Complete the drafting. All gather around, have a big meeting, confirm that everyone's ready. Then refresh the lump sum pricing, which might go down or might go up, given what's happening in the market on the plant. Refresh it so that the contractor can sign a contract with live prices in it. You can't do that until we're all ready to go. B, refresh the property survey of the community. You can't do that until everyone's ready to go. With the plant procurement, you have to order within 60 or so days. With the property resettling people, you have to compensate them within six months.
All the approvals, all the contracts drafted, refresh numbers, then sign. There's a sequence to this. KEFI could have ignored all this sequencing and done it in its own jolly merry way if we were using our money. We're using the money of banks, contractors, investors, and we have to do it in the right sequence. Next one, please.
Perfect. We are waiting on the second bank to confirm the debt financing. When are we expecting this to happen?
Well, just to give you an example, and then I'll move to your question properly. We waited. We had to wait till October to finally get the formal approval of all our foreign exchange exemptions. We thought we had them in the first half of the year, but the fine print didn't match, and it took us till October to get it formalized with all the correct fine print. We then immediately called a syndicate meeting in November, and the first bank gave its final approval, credit committee approval in December. Rapid fire for giant banks, but that took two months. We announced that in January when we were allowed to do so, and they gave their member country ratifications.
Their board represents their member country shareholders. They ratified in February. No changes, just ratification. That triggered bank number two. Bank number two is in the committee, and they've been working hard to now, you know, trigger their thing. It could be the initial one could be now. You know, like, I mean, this month. That's what they were working towards. The final one next month. You know, I don't run the bank, and they'll have to do what they do in their own proper process. It's on, you know. It's imminent, if I can put it that way, according to a bank's timetable, not according to what I would wish for tomorrow, so to speak. Hopefully that's a fulsome answer. Thank you.
Perfect. The recent placing was a shock as we were told repeatedly that a placing was not expected before financial closure. I understand there must have been delays, but I was surprised the company sought GBP 4.5 million. Why did the company not just raise GBP 1 million and then raise later at a considerably higher share price post the financial closure?
Yeah. Well, very frustrating to me and us, I can assure you. You know, but you know, if there was no mismatch between the fine print of the foreign exchange exemption and what had been expected and agreed last May, this stage would have occurred last year, and we'd be up and away. What we intended to do with the capital side was not to raise any capital until we had closed the whole thing. The reality is that the fine print didn't match. We had to stand our ground and make sure it matched. I can assure you it would not be in shareholders' interest to invest hundreds of millions of dollars and not be able to get your capital out of the country or your dividends out of the country or your debt repayments out of the country.
We had to just bite our tongue and stand our ground or what have you. That's the disappointment. It's not because management, you know, preferred to wait. It's because we had to make sure that we were protecting the company and the syndicate properly. If a million was enough, we would have raised a million. A m illion wasn't enough. We had to clean up the balance sheet for closing, and that's. I'm sorry, but we had to do. Number one duty is solvency protection. Number two is make sure this thing closes and give it up, we get on with it, and that's the simple truth. Next question, please.
In the 13th of March RNS, you said the priority is to implement the remaining mainly administrative tasks which are expected to be successfully and swiftly completed, and then you'll provide regular updates. Can you explain why we are now over a month since this RNS and have no updates, or binding agreements from the second bank having confirmed the debt or any other administrative matter being completed?
Yeah. I was a bit perplexed receiving, you know, 'cause you sent me this question. It had been received ahead of this webinar, and I was just a bit perplexed. I looked at how many announcements we've made over the last few years, and we make an average of three or four a month. We have four webinars a year. We've made 13 announcements, I think, since October. I, you know, I'm just a bit perplexed how many RNSs would be too many. Certainly anything material that is announceable, we have to announce, and I don't think we hold back news or, you know, I don't think there's any evidence that the company doesn't make many announcements.
Perfect. Next question here, maybe one for Eddy Solbrandt. Eddy Solbrandt states in the presentation mid-November that the banks had asked for another couple of weeks. Why are we still waiting at the end of March for the second bank to give the green light to the TKGM financing?
I think Harry has answered that a little bit earlier. Just to repeat, the first bank went to a final credit committee mid-December. The second bank, we would like to believe, would be close behind. As Harry explained, these banks have their own committees, internal processes, and they've taken longer. They've had more questions. Ultimately, it's a good sign. They're being very diligent, and we're expecting positive results from them soon. Why, particularly? I can't answer. Next question.
Thank you very much, Eddy. Do the Ethiopian national and local governments deserve the building and benefits of the Tulu Kapi mine? If they're currently running at full speed ahead, I wouldn't want to see them moving at a slow pace.
That's not for us to decide who deserves what. What I can say, though, is this project will benefit the local community enormously. We're creating thousands of jobs, direct and then indirectly in the community. Not only for, you know, this generation of people, but as we dig deeper and expand the mine, it's a generational change of life, lifestyle, and prosperity that we're bringing to the community. I think that's really the important thing here. Next question.
Thank you very much. What hope can you give long-term shareholders whose original purchases are now significantly down? Every time the share price seems to start recovering and climbing, they're hit with a discounted placing. It then takes six months or so to clear the resulting overhang.
Well, I mean, the truism is that it's very difficult to swim against the tide. I think we put in our last annual report some statistics, if I remember, were that the KEFI was listed in 2006. Its share price peaked in 2011, as did that of the sector. When we looked at the index for junior gold miners, which is defined as companies over $100 million to be classified in that index. Companies like KEFI, which are micro-cap companies, would be below that index or, you know, in a different index, but that's the only index we have to look at. From its peak in 2011, it was into a negative number now. Last time we looked at it.
Now, maybe it's not so bad today 'cause the gold price is running, but it's not a good number. We've been in the midst of a very underperforming investment sector. Why does one invest in a micro-cap in a sector that's underperforming? The question for you. Presumably, it's because the leverage on the upside is judged to offset the risk of the investment. We sincerely believe that is the case. We have gone down with the sector. We've created a hell of a lot of intrinsic value. If we hadn't lost probably five years with these wobbles in these countries, to put it mildly, perhaps we would be on the way by now. I would have thought we'd be in production at Tulu Kapi long ago if the country hadn't had a civil war in 2022.
2021, 2022. I've lost track now. Anyhow, the fact of the matter is the leverage on the upside is huge. We talked about it earlier, and that's the only reason that one gets involved in early-stage businesses, in a pre-production company in frontier markets. You know, it doesn't get much more challenging than that. Exploring frontier markets, civil war, you know, you name it's been thrown at us. Here we are with 12 times upside. It's the only reason we're doing this work, because of the upside for all of us. Most of the senior people have taken a large proportion, if not most, of their remuneration in shares. We couldn't get any better aligned than that.
Time will tell whether we're all sensible and if we made the money that warrants the effort, the patience, and the hard work. You know, we think it will, but it's certainly been elusive so far, we agree with you. Next question, please.
Got the next question here. The many recent presentations state KEFI has beneficial interest of 2 million ounces of gold equivalent in its three projects. At current prices, that is $4.3 billion worth of gold. Why can you not persuade larger investment institutions of the crazy opportunity of investing in KEFI at the current market cap of $30 million? Why do none invest? Are we private investors being naive in backing the company and management when more experienced investors stay clear?
I wouldn't self-flagellate over that one because big institutions are not allowed to invest until a company has a certain scale, and they have different rules among them. The minimum scale for a very large institution to invest is measured in market cap and in liquidity. It would be extremely unusual and actually contradictory to most governance policies of large institutions for a company of under GBP 100 million market cap to even be considered. It's simply not allowed to consider deploying capital into such small companies.
The natural thing here is that a savvy private investor who puts in the time and effort to try to pick the winners, when the ratings move up with success, and as you go through closing and construction and so on, the big institutions will jump on board. Those who prefer the higher risk, higher return territory will go back to spotting the next one. The answer is simply they can't. Thanks.
Perfect. Next question here. What are the next steps in returning the exploration licenses for the areas around Tulu Kapi?
Oh, I'll just answer that. Look, that matter is currently with the Ministry of Mines, and we really can't comment on that just now. Next question, please.
Perfect. Thank you very much, Eddy. In Saudi, where will the 25% funding, the Tulu Kapi part of the JV come from? Does this mean more dilution, and when is this due by?
I mean, just, I'm not quite sure I follow, but the, I mean, the overall picture is that we, 100% of the capital for any of these projects will be broken down into project finance, say 70%-75%. We will put up our share of the equity. We'll put up 25% of the 25% equity, which is about 6%. That's the gist of it. Now, there are other opportunities to take it down further, but that's a remarkably small percentage considering what we're achieving. In the meantime, our partner is carrying us. That's a remarkable achievement considering what we're doing. We can bring in more financiers. We can increase the debt gearing. We can do any number of different things.
We can bring in someone who wants to buy in a bigger percentage of a particular project. You know, there's any number of things. I think we've demonstrated where we're really using every tool in the toolkit to minimize dilution for shareholders. The problem is we've got such a large job on our hands. The working capital to get the company to this point in time has been challenging for an illiquid stock. It's a tiny drop in the bucket of the capital that's being deployed in all these things. That's what we'll continue doing. We'll continue to use every tool in the kit sort of thing. Thank you.
Perfect. Thanks very much, Harry. Another question here. What is the lowest investment value and how can I invest?
Well, I don't know. I jump at chance then.
I really don't understand the question, but it depends what you mean by lowest investment value. It depends on your horizon. You can look at a monthly, quarterly low. That would be the lowest value. You could look at the monthly or quarterly or annual high. That would be the highest value. How do you invest? Get a broker.
Perfect. Thank you very much. The work in finding metals by KEFI Exploration team is incredible, and the future potential of the company is absolutely fantastic. Why can we not get this to TKGM financing over the line and start realizing that value?
Well, we've kind of answered that, I think, haven't we?
Yeah. I think we've done that one to death.
Yeah.
Next one please.
Perfect. How would you rate your stewardship of Tulu Kapi in regards to company value and also shareholder value?
Mining is a long game, as Harry said earlier. You're in it for the long haul. The average time from exploration through to production is around about 15 years. Given that we've had historical events, world-changing events on pretty much both sides of the Red Sea in the last 15 years, I think our record is exceptionally good. You can't predict wars. You can't predict unrest. You can't predict changes in regime. You can speculate, but you can't predict. As we're moving through with this or these assets that we have, we have to bend, flex and change the circumstances as and when they arise. It's frustrating for a lot of us because we're also shareholders. Because of that, I think we've done a very, very good job in stewardship, and we'll continue to do so. Next question.
Perfect. Thank you very much. If the Saudis are looking to invest in mining abroad, would it not be possible for them to provide the funding for Tulu Kapi mine?
If the question is there enough money in Saudi to fund Ethiopia? Yes. If the question is, do Saudis have a habit of investing in Ethiopian mining? No. Have some of them, you know, I've been in Saudi two weeks out of the last four or five weeks, so we know our way around. I've been going there 15 years. If the question is, have they developed a culture and mechanisms for investing in Ethiopian mining? No. Have they invested in Ethiopia? To some extent. You know, we're breaking new ground, you know. This is the first mine development in Ethiopia since the 1980s. It just takes time to mobilize conservative high net worth officers or banks into new jurisdictions. It's a hot topic, but it just takes time.
Now we've got ourselves covered, I believe, in Tulu Kapi. It doesn't mean to say we're not creating more choices for the future for other ideas as well. We're addressing it. You can't expect, you know, rapid fire decisions around $100s of millions as one might do for a trade on the stock market. It's a different sort of timescale. Thanks.
Perfect. Can you give investors some clarity on the meaning of conditional approval? Does KEFI have to wait until the approval is unconditional for release of funds? Can mining construction commence with conditional approval?
Do you want to do that, Eddy, or should I? Have a go.
Look, all lending is conditional, if you think about it. Whether you get a mortgage or a car loan, yeah, there are certain conditions that have to be fulfilled before you get a loan. You know, got to be able to pay. You've got to have a steady job or assets, et cetera. There are also conditions precedent, I should say, afterwards, you have to keep on paying down your debt. It gets more and more complex as the projects grow, and certainly in mining, we've got a lot of conditions that need to be satisfied for the banks to be able to draw down, but also for shareholders.
These relate to corporate governance issues, environment, social issues, labor, anti-slavery policies, safety, security. There are a whole string of them, and they're not just imposed by individual banks. There are governing bodies around the world, the UN and IFC and others, that dictate what they are. Banks want to make sure they are lending to credible organizations that not only have the capacity to repay, but also work to the highest standards. Before they approve money to be released, they want to make sure that we are continuing to work to those standards. Next question.
Perfect. Next question here. A recent interview states that KEFI intends to use the Saudi Industrial Development Fund to access low-interest loans to fund KEFI's proportion of exploration costs in Saudi. Why hasn't the company utilized this source before and maintained a higher percentage stake in GMCO?
We wouldn't borrow money to fund exploration even if it was available. That, what you referred to is not available for exploration, but even if it was, it would not be wise to borrow money for exploration. Exploration, by definition, is the work you do when you don't know what you're gonna find. Borrowing money to fund that sort of work would not be a wise thing to do.
Maybe just following on from that, we have another question here. It's been announced in Saudi Arabia that grants are available for companies with exploration licenses of approximately GBP 1.5 million per license. KEFI has 14 licenses, I believe. Is it possible to tap into this grant funding for each of those 14 licenses?
Yeah. What, the numbers you quoted weren't quite right. If it was pound, it'd be quoted in SAR, probably Saudi Arabian riyals. W e're going through all the fine print and all that. We'll avail ourselves of the opportunity if we can. We're going through it all for sure. They're trying to incentivize exploration. One way they did that for us was to grant 14 licenses, when in the previous 13 years they'd only granted three or four. T hat incentivized us. Now they're offering money. We'll see, you know. Policy statements by governments is one thing. Checking the fine print and getting the money is another thing.
Thanks very much. When is the community resettlement scheduled to commence, and when is this milestone at risk with funding delays?
Well, it's important to understand the process here. Firstly, resettlement is not our obligation or our responsibility. It is the responsibility of the government. The whole resettlement procedure is governed by proclamation, that is by acts of parliament in Ethiopia, and supported by regulations that give clarity as to how those proclamations are to be implemented to quite a degree of detail. It is a highly prescriptive process. It's designed to ensure fairness. Before that process can begin, a number of things need to be in place, and the most critical of those is that new house lands have been identified, surveyed, and the government knows that person A is going to l and block B in the future.
That's a complex process, and that's all of the government's work. Now, once that work has been completed, then they go out and survey, resurvey, and as Harry said earlier, the existing landholder's land has been surveyed in the past. It will have to be resurveyed. We are a part of the survey, but don't run the survey because we have a right to ensure that those surveys and the inventories of each property are correct and accurate. Now, once that process has been in place, then we can start, or the government can start the resettlement process. The funding delays haven't really impacted that. It's squarely at the feet of government to do this.
Yeah, I'll just add also, it's, you know, it's sort of when is the right moment? I was saying earlier, we do not want to make the mistake that our predecessors made on this project. When I turned up in the country, there were 400 employees out there. A school had been built, and all sorts of things had been done, and those people had to be retrenched, and it created a hell of a storm. The project simply wasn't ready. Why they charged ahead and did all that stuff, I don't know. Anyhow, we gave our word. We wouldn't start that process formally. They will know it's coming, but we wouldn't start that process until, you know, at least both banks had signed off and the others were all lining up.
That's a moral conviction which we'll stand by, and it's all scheduled in this process. You don't have to complete all the, you know, deals with every individual what do you call it? Landholder.
Landholder.
You have to have done enough to make sure you can get going, and you have to have done the survey so you know you can close the whole thing up. It's all scheduled in, and you don't start resettlement until you start development. You don't hand over money until after closing. It's synchronized carefully. Not too early, not too late, sort of idea. Hopefully that makes sense.
Perfect. Thank you very much. I've had two questions come in live on a similar theme. Perhaps I'll read out Rob's question. Once Tulu Kapi is up and running successfully, are there plans to start distributing a dividend?
My missus would certainly love a dividend sooner rather than later. Yeah, I think, you know, if you look at that table I had in that slideshow earlier, just look at it for two minutes and look on the bottom where it shows cash flows available to the debt, to the equity risk note, and then to the shareholders. You'll see some pretty impressive numbers there. I'm certainly of the view that one of the problems with this industry, the reason it behaves so poorly in the stock market, is that too few people really treat shareholders well when they succeed. That's my sincere belief, that too many, you know, entrepreneurs just reinvest it, more exploration, more development, and the shareholders never see a dividend.
We're determined to not make that mistake, 'cause I think that's why the sector behaves poorly in the stock market. There hasn't been enough good fiduciary conduct, in my view. Now, it's a high-risk game to go and explore, and certainly in frontier markets, even riskier. It's sort of risk squared almost. W hen you make it, you know, you've got to distribute dividends in our view. I mean, we're nowhere near it yet, so I'm not making, you know, guarantees for next year or anything. P hilosophically, no question we will be making dividend distributions.
Perfect. Thank you very much, Harry. The next question here: When could the milestone delivery in 2024 start to be impacted by bank approvals? You've got a follow-on to that, which says: Can you outline, say, three or four milestones with worst case dates for the next three to six months?
Well, with bank approvals, we've kind of gone over this. Bank approvals really haven't impacted delivery milestones. They're integral to our processes, but they're not necessarily drivers of our schedule. If I had to look at three or four very high-level milestones, and it's not easy because, you know, our project schedule at the moment runs about 800 lines of activity. If you had to pluck a few out of the air, I think the host land surveys completed would be a huge milestone. That paves the way for a lot of things. Final binding documentation signed by all parties, that's a huge milestone. I think for me personally, early earthworks commenced, that would be another big milestone. That really shows we're on the road and we're moving ahead rapidly.
The only other comment, perhaps it's self-evident, but you know, when you're stuck defending a project, defending your personnel in the middle of the troubles that this country had in Ethiopia, it's intense work, extremely challenging work to defend and to stand still.
Mm-hmm.
To maintain bank and investor loyalty. That was really hard stuff.
Mm-hmm.
Motivationally, it's really difficult 'cause there's no joy in it. It's just survival. Now that everyone's working to proceed, I mean, it's incredibly joyful, if I can put it that way. Everyone.
Yeah.
Everyone can taste it, you know? It's a different gig altogether. Whether it's an 800-line schedule or a bloody three-line schedule, you know, now it's fun, you know, and everyone jumps out of bed and gets on with it because we're actually doing it. It's a completely different story. The fact that all these companies are now pegging all around us in Saudi Arabia and coming to conferences and strutting around offering us deals and so on, I mean, it's a wonderful relief compared to what it was a few years ago, I've got to tell you. It is a frankly. It's a lot of fun, a piece of cake compared to where we were. Now we have to pull it off. We have to do it all.
You know, many a slip between cup and lip and all that sort of stuff. I can assure you that this is a piece of cake really, compared to what it was like before these two countries turned the corner.
That's great. Thanks, Harry. Just turning to the next question here. As the business develops, what knowledge transfer and management transfer is envisaged?
It's a very good question. Our view has always been that we will have locals running this business as soon as possible. That's on both sides. To be very clear, right now we have more locals in our businesses than we do expatriates. One of the key things that we're integrating into all of our role descriptions in Ethiopia is the accountability for managers to develop, mentor and coach Ethiopian staff, local staff, to be able to take their jobs. There's a corollary to that. The government also needs to, and we're playing a role in that as well, to build institutions to be able to build capability for mining in that environment.
We've got all of that cemented, and all of that will start to crystallize in a lot more detail than I've just said, when we commence our operation readiness planning, which is around about, 6-8 months or so after construction begins. Next question.
Is the financing approvals for the lead bank conditional on conditions on the ground, i.e., ongoing security? If so, has this condition now been satisfied or is it still undergoing observation?
The test is not whether someone turns up and sees where everything's comfortable and, you know, quiet today. The test is observing our preparations for launch right up until the day of launch and having independent certification that we have prepared the community, we have prepared the sites for construction, the government agencies are equipped and delivering what they need to do. The test is not one that can be satisfied until, you know, a week or three before signing to go. That's because everyone wants to see everything done with no evidence of that, there's someone standing in our way or interfering in an unhealthy manner. At the moment, we've demonstrated extremely comforting discipline. I can say that because these banks have been with us since before that war.
These investors have been with us since before that war, and they're with us today, which tells you that they've been through the worst a country can throw at a project, and they're still with us today. T hey have to see that we've prepared the whole site and the whole community without any mishaps, and then they sign off on the security. It's not like going to an exam today or something like that.
It's a process, not an event.
It's a process, not an event, yeah.
Perfect. Another question here: Do you see further delays due to the conflict in the Oromo region?
No. Well, I can't, we can't tell you everything that we know. W h at we can say to you is that there has been a lot of pressure from us toward the government to install permanent protection. The problem has been, if I can call it that this area is not a problem area all the time. It flashes problematic once a month or something. In the meantime, the security forces get redeployed to where there is a problem somewhere else. Without you know talking out of school on what the government is doing, they are reinventing the structure of the security forces in order to facilitate that our permanent protection blanket is not redeployed anywhere else, no matter what happens. That's the word we gave to the syndicate.
I'm giving you very fulsome answers here, to be honest. I'm being sensitive. The fact of the matter is that this is a green zone that flashes red occasionally. It's not a red zone. Like in Mali, there are areas always red. DRC, Kinshasa, Nigeria, there are regions that are always red. This is a green that flashes red. We're demanding permanent red zone security. The government's sort of reshaped its security forces to accommodate us. It's doing everything it needs to do, and it'll be fine. The problem has been not that the area is a bad area, it's that the area is too good to leave very well-trained, high-performance military people standing around twiddling their thumbs during the green patches, if I can put it that way. We've had to invent another solution, which you'll see it shortly.
I think to add to that, we shouldn't discount the fact the government is committed to finding a political and peaceful solution. From what we understand, the all land in that area is also committed. It's a case of waiting for those two parties to go to the third round of peace talks. They've had two previously. To look for that. That's a longer-term strategy, but it's also a win.
It's important. I know we've come up to the hour, but I just actually make a comment on that because it's so important. The country is not a country with endemic problems of a terrorism group or religious conflict. It just isn't. What we're seeing is the flow-on effects of the introduction of democracy to what was a centrally ruled with an iron fist country.
Mm.
The conflicting parties are actually political opponents designing and negotiating federation. They're not trying to break away into another country. They're not trying to conquer some other ethnic group. They're not trying to conquer another religion. They're actually you know, in the United States, we saw people dressed as cowboys and Indians on the sixth of January last year invade Capitol Hill. Roll that back when democracy was first introduced over two centuries ago in the United States, and imagine what you might have seen. That's what we're seeing. It'll go away. These people wanna get on with life. In the meantime, we have to have security, which is what I've talked about earlier.
I think we're out of time.
Yeah, I think we're out of time.
Yep, perfect. I think you've been very generous with your time. You've obviously gone over the hour. You've answered many questions. Maybe just before redirecting investors for their feedback, Harry, if I could just ask you for a few closing comments, that'd be great.
Well, you know, it must be so frustrating to a person investing in the stock market who's at a great distance, doesn't understand what's going on day to day, I can only assure you that our attitude to transparency, which gets us into hot water all the time. If we said nothing, we put out one announcement a month or once every two months instead of three or four a month, we'd probably get into less hot water. What we're trying to do is to communicate so that people understand the risks. We are natural optimists. If we weren't natural optimists, why the hell would we do what we do? A natural optimist, by definition, gets it wrong occasionally. I openly admit it, hand on heart. If I was a natural pessimist, why would I do what I do?
The people around me who work so hard, breaking new ground, regulatory changes and all this stuff. If you are a natural pessimist, don't go into early-stage mining ventures. If you are a natural optimist and you've got the capital to play with these risks, welcome. The timing. You have the privilege to go in and out of a stock whenever you feel like it. We don't. We're in, boots and all, money and all, family and all. We can't trade shares. We're quite restricted. I've allocated 10 years to this project, and she better bloody pay off. You can't get more commitment than that, in all sincerity. I do appreciate the frustration from your distance, but I also thank you for your persistence as well. The fact that you're on this webinar demonstrates you have some interest, and I do thank you for that. Watch this space.
Perfect. Harry, thank you very much for updating investors today. Could I please ask investors not to close this session. As you know, we automatically redirect you to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of KEFI Gold and Copper plc, we'd like to thank you for attending today's presentation, and good morning to you all.