Kefi Minerals (LON:KEFI, 0.88p) – Speculative Buy
On Thursday, Kefi Minerals announced one of company’s directors’s, Mr. Jeffrey Rayner, has purchased 1 million ordinary shares of 1p each at 0.845p per share on 29th June 2015. Further, 370,000 Shares were purchased by him at 0.84p per share on 30th June 2015 and over 1.2 million shares at 0.845p per share on 1st July 2015. Henceforth, with the purchase of over 2.6 million shares in the past few days, Mr Rayner now holds 14,676,083 shares, representing approximately 0.84% of the company’s issued share capital. He also holds 20,333,000 incentive options which have exercise prices ranging from 1.32p to 4p per ordinary share.
Our view: Purchase of more company shares by its director is an encouraging sign and instils confidence that Kefi is headed in the right direction. The company has done exceedingly well in the past few months if the recent quarterly results are anything to go by. Its flagship Tulu Kapi project made material progress towards production and remains on track to start mine construction by the end of this year and gold production by 2017. The support from the Ethiopian government has been encouraging and the completion of the DFS and an advanced stage project financing bodes well for the company. In a short span of two years, Kefi Minerals has managed to enhance its Mineral Resources and Ore Reserves from 200,000 oz and nil respectively to approximately 2 million ounces and 1 million ounces. The company’s two major prospects – Tulu Kapi and Jibal Qutman – are expected to commence production over the next two years. Kefi is the operator of these two advanced gold development projects within the highly prospective Arabian-Nubian Shield and expects them to be cash generative in the near term. With the current market capitalisation approximately £14m compared with an NPV of US$156m at a discount rate of 8% for the Tulu Kapi project, the company seems to be significantly undervalued. We expect a considerable upside in the share prices going forward and therefore reiterate a Speculative Buy on the stock.
Beaufort Securities acts as corporate broker to Kefi Minerals plc
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