Table of Contents
Overview ................................................................................................................................................................. 2
Executive Chairman’s Report ................................................................................................................................. 3
Development‐Ready Gold Mine ‐ Tulu Kapi ....................................................................................................... 3
Oxide Gold Project ‐ Jibal Qutman ..................................................................................................................... 4
Changes to Board of Directors ............................................................................................................................ 4
Outlook ............................................................................................................................................................... 5
Finance Director’s Report ....................................................................................................................................... 6
Equity Funding .................................................................................................................................................... 6
Partnering the Government in Ethiopia and ARTAR in Saudi Arabia ................................................................. 6
Tulu Kapi Development Funding ........................................................................................................................ 6
Chief Operating Officer’s Report ............................................................................................................................ 8
Project and Construction Management ............................................................................................................. 8
EPC Contractor .................................................................................................................................................... 8
Mining Contractor .............................................................................................................................................. 8
Community ......................................................................................................................................................... 9
Operations .......................................................................................................................................................... 9
Outlook ............................................................................................................................................................... 9
Organic Growth in Arabian-Nubian Shield ............................................................................................................ 10
Ethiopia ................................................................................................................................................................. 11
Tulu Kapi ‐ Background .....................................................................................................................................11
Tulu Kapi – Permits and Mining Agreement .....................................................................................................12
Tulu Kapi ‐ Geology ...........................................................................................................................................12
Tulu Kapi – Resources and Reserves ................................................................................................................13
Tulu Kapi ‐ Definitive Feasibility Study and Subsequent Optimisation ............................................................13
Tulu Kapi ‐ Development ..................................................................................................................................14
Tulu Kapi – Potential for Underground Mine ...................................................................................................15
Tulu Kapi – Regional Exploration Potential ......................................................................................................16
Saudi Arabia ......................................................................................................................................................... 17
Saudi Arabia ‐ Jibal Qutman .............................................................................................................................18
Saudi Arabia ‐ Hawiah .......................................................................................................................................20
Saudi Arabia ‐ Exploration Licence Applications ..............................................................................................22
Glossary and Abbreviations .................................................................................................................................. 23
Competent Person Statement .............................................................................................................................. 24
Directors, Secretary and Advisers ........................................................................................................................ 25
Consolidated Financial Statements ...................................................................................................................... 26
KEFI Minerals Plc ANNUAL REPORT 2016
Page 1
Overview
Focussed on gold and copper projects in the highly prospective Arabian‐Nubian Shield (“ANS”).
During 2016, KEFI concentrated Tulu Kapi, Ethiopia’s first modern mine and upgrading the exploration
portfolio.
Conventional project finance proposals stalled in late 2016 with the Ethiopian State of Emergency.
Nevertheless, operational activities continued uninterrupted and Ethiopia quickly lifted most restrictions.
KEFI now has three financing proposals associated with contractors experienced in African mining.
Targeting to commence the development of Tulu Kapi in 2017 and open‐pit gold production 2019.
Pipeline of ANS growth projects to complement the Tulu Kapi Gold Mine in Ethiopia, includes:
o Underground gold mine below the initial Tulu Kapi open pit;
o Satellite deposits around Tulu Kapi mine;
o Oxide gold mine at Jibal Qutman in Saudi Arabia;
o Large VHMS base metal target at Hawiah in Saudi Arabia; and
o Exploration prospects in ANS.
KEFI Minerals is the operator and has strong partners in both Ethiopia and Saudi Arabia.
Saudi Arabia is likely to deregulate the minerals exploration sector in 2017, which should benefit KEFI.
The robust economics of KEFI Minerals’ two development projects are clear from the following table:
Project Stage
Gold Production
Ounces per annum
All‐in Sustaining Costs (“AISC”)
Operating Margin
US$/oz
US$/oz
Net Operating Cash Flow
US$ million per annum
Operating Margin
Initial Life‐of‐Mine Production
Initial Capital Payback
Initial Capital
Notes:
%
Ounces
Years
US$ million
Tulu Kapi
Jibal Qutman
Funding
115,000
777
473
55
38%
PEA
30,000
600
650
19
52%
980,000
139,000
3
160
2
30
The above parameters are based on a gold price of US$1,250/oz.
o
o AISC is per the World Gold Council Standard. The AISC includes each project’s operating costs, Government royalties and
o
o
sustaining capital but excludes financing costs and income taxes.
Tulu Kapi’s gold production and net operating cash flow are for the first eight years of gold production.
Tulu Kapi’s initial capital cost is based on the 2017 DFS Update, total of US$161 million reduced for contractually deferred
payments and increased for non‐Tulu Kapi costs during construction.
The above metrics demonstrate that:
The AISC/oz place both projects in the bottom cost quartile of existing gold producers;
Strong operating margins above AISC provide substantial annual cash flows;
Both projects can comfortably debt‐fund the majority of the development capital required; and
Both projects rapidly repay the development capital.
Both of Tulu Kapi and Jibal Qutman are surrounded by significant potential for growth through exploration.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 2
Executive Chairman’s Report
Our assets provide a healthy platform to deliver
shareholder value by developing profitable mines in
Ethiopia and Saudi Arabia.
KEFI Minerals made substantial progress during
2016 towards becoming a gold producer in one of
the world’s great under‐developed minerals
provinces – the Arabian‐Nubian Shield (“ANS”).
Our Tulu Kapi Gold Project in Ethiopia remains the
primary focus of KEFI’s activities. We have continued
to work with the Government of Ethiopia, industry
experts and project contractors over the past year in
order to ensure that construction can commence as
soon as funding is in place.
Initial open‐pit gold production from Tulu Kapi is
projected at 115,000 ounces per annum at a low All‐
in Sustaining Cost (“AISC”) of less than US$800/oz.
Tulu Kapi’s Ore Reserves of 1.0 million ounces and
Mineral Resources of 1.7 million ounces have
significant upside potential.
At our Jibal Qutman Gold Project in Saudi Arabia,
the Mining Licence Application for the planned
heap‐leach operation has been lodged with the
Saudi Government for continuing discussion and
review.
Development‐Ready Gold Mine ‐ Tulu Kapi
This high‐value, low‐capex asset is now poised for
development when the funding package is finalised.
Location of KEFI's projects in ANS
Whilst our finance team has been preparing the funding package, our project development team has continued to work
with our selected contractors in order to further optimise Tulu Kapi’s detailed development and operating plans.
Feedback on the 2015 Definitive Feasibility Study (“2015 DFS”) from project contractors, financiers and partners was
incorporated into an improved plan in early 2016. All refinements to the 2015 DFS were, in May 2017, incorporated into
the 2017 DFS Update in preparation for financing. This reflects, among other things, the fixed price, lump‐sum processing
plant construction contract with Lycopodium and a warranted ore processing rate of 1.5‐1.7 million tonnes per annum.
KEFI bases the finance structure on the numbers and schedules in the 2017 DFS Update which includes only the planned
open pit. However, we will target a quicker construction schedule and 10% higher annual throughput compared with the
contractually warranted estimates used for debt‐structuring. KEFI’’s financial targets for the open‐pit project include:
Gold production of 120,000 ounces per annum for eight of the initially planned ten years;
At a flat average gold price of US$1,200‐1400/oz for all ten years of gold production (2019‐2028):
o All‐in Sustaining Costs of less than US$800/oz (ignoring financing charges);
o After‐tax, unleveraged IRR of 25%‐36%;
o After‐tax, unleveraged NPV (8% discount rate) of US$98‐184 million at start of construction;
o After‐tax, unleveraged NPV (8% discount rate) of US$272‐375 million at start of production in 2019;
o Annual net operating cash flows of US$56‐78 million p.a. for the first eight years of production, and
o Payback of 3 years.
As a result of KEFI’s overhaul of all aspects of the project due diligence and planning, the project has soundly‐based,
robust economics and significant growth potential beyond the existing open‐pit Ore Reserve estimate of 15.4 million
tonnes at 2.12g/t gold, containing 1.05 million ounces.
The projected open‐pit cash flows indicate that the net cash build‐up (after financing costs) in the first three production
years is US$65 million to US$265 million for a gold price range of US$1,100/oz to US$1,900/oz. Significant value is also
expected from the contemplated underground mine.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 3
Strong Support from Ethiopian Government for Tulu Kapi Development
The Tulu Kapi Gold Project ranks high as a national priority within Ethiopia’s Growth and Transformation Plan and we are
delighted to have the strong support of the community in addition to the support from the Government at all levels.
Responsible mine development is a high priority for KEFI and the Ethiopian Government. We welcome the Government’s
constructive attitude which encourages us to bring Tulu Kapi into production as rapidly as we prudently can whilst
ensuring compliance with all relevant governance and quality standards.
The restrictions imposed by the State of Emergency declared by the Ethiopian Government in October 2016 have now
mostly been lifted. KEFI Minerals’ operational activities have continued as normal during this time and appropriate
security precautions have been built into project planning.
After consultations with KEFI, the Government of Ethiopia has triggered the community resettlement programmes which
began with property surveys and host land preparations and also incorporate livelihood restoration programmes.
Notably in May 2017, the Government of Ethiopia further demonstrated its strong support by executing the detailed
formal documentation for its committed equity capital contribution of approximately US$20 million to Tulu Kapi’s
development. This investment will increase the Government’s share of the project from a 5% free‐carried interest to
circa 25%, depending on the final financing structure.
Further Potential at Tulu Kapi
In parallel with working towards open‐pit gold production, KEFI has already evaluated the potential for developing an
underground mine underneath the Tulu Kapi open pit. A preliminary economic assessment (“PEA”) completed in early
2016 indicated robust economics for an underground mine. Based on 2014 Mineral Resources, the addition of an
underground mine has the potential to increase total (open pit + underground) gold production to more than 150,000
ounces per annum over four years. The orebody remains open and further potential will be added.
The Government has encouraged KEFI to plan an ambitious exploration programme in the district around Tulu Kapi and
elsewhere in Ethiopia. Targets have been identified for both satellite gold deposits and stand‐alone development
projects. Tulu Kapi is intended to become a central ore processing centre for additional deposits to be developed in the
district.
Oxide Gold Project ‐ Jibal Qutman
In Saudi Arabia, the first priority for our G&M Joint Venture (“G&M”) is to develop an open‐pit, heap‐leach (“HL”) gold
operation, using a staged development approach predicated on a low‐capex start‐up to be expanded in modular stages
as additional mineralisation is delineated. The potential cash flow from HL oxide gold production is an opportunity to
fund:
construction of a carbon‐in‐leach (“CIL”) plant to process the deeper sulphide ore profitably; and
exploration in Saudi Arabia to create a strong Saudi mining company for the long term.
Following on‐site meetings with regulators in March 2017, the Mining Licence Application for the Jibal Qutman HL gold
development was lodged with the Saudi Government for continuing discussion and review.
At Hawiah, G&M has identified a huge target for precious and base metals based on the surface‐sampling of a six‐
kilometre long gossan (oxidised mineralisation exposed on the surface) and the results of the geophysical surveys of the
ground beneath the gossan.
Our Saudi venture is a strategic long‐term priority and the Company is confident of having established an early‐entrant
position in what will emerge as a world‐class minerals province. During the past year, G&M overhauled its portfolio of
licence applications by discarding some and adding others. The next key step is for G&M to review the new Saudi mining
industry regulations and policies which are expected to be published soon. We will then proceed with Jibal Qutman soon
after the planned Tulu Kapi development and also expand exploration activities as results warrant.
Changes to Board of Directors
As KEFI Minerals prepares to develop Tulu Kapi, two key additions were made to the Board of Directors during 2016:
Mr John Leach as Finance Director; and
Mr Mark Wellesley‐Wood, experienced African mining operator as a Non‐Executive Director.
In early 2017, Mr Mark Wellesley‐Wood took on the role of Deputy Chairman and Senior Independent Director.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 4
As part of these changes, Mr. Jeff Rayner stepped down from the Board but continues to advise the Company on
exploration and acquisition strategy. His acumen in identifying under‐valued gold and copper projects has been
instrumental in KEFI becoming an early entrant in emerging mining districts in the ANS.
Outlook
Our initiatives on both sides of the Red Sea reflect our conviction that the ANS has world‐class prospectivity overseen by
governments that have put a strategic priority on the mining sector. KEFI is very fortunate to have a +1,000 km2 portfolio
of exploration properties at various stages within the highly prospective ANS. And this portfolio will grow.
We have established a solid platform with world‐class partners in each jurisdiction and with industry‐leading contractors
have developed a counter‐cyclical opportunity to establish successful mining operations in the region.
Our approach has been to place our development strategy into the hands of a team of seasoned operators with a proven
record of start‐up successes in Africa. This team has transformed Tulu Kapi from an uneconomic project into one which is
now being evaluated by financiers as a robust, fully permitted project with significant upside potential for shareholders.
The calm and improving situation in Ethiopia, combined with the range of financing scenarios being considered by the
Company, make the Board confident that the Tulu Kapi Gold Project can proceed to development in 2017.
The Board is confident of our strategy and asset base. We have the appropriate mix of industry‐experienced technical
and financial expertise to prudently progress our projects into profitable gold mines. And we have an organisational
development plan which will see requisite human resources added with recruitment as we progress.
We appreciate the strong support of our shareholders, contractors, communities and other stakeholders. The Company
now has two cornerstone shareholders in Odey Asset Management and Lanstead Capital that support rapid growth
companies. Project contractors Ausdrill and Lycopodium are also shareholders as is the Board of Directors.
KEFI Minerals is positioned to become the operator of two gold development projects in the highly prospective ANS. We
have achieved this progress with a small team around whom we will build the full operating team in conjunction with the
project contractors, both of whom have over 20 years of mine building experience in Africa. We are well supported by a
number of high calibre, quality specialist advisers also selected for their pre‐eminence in start‐ups of this nature.
I look forward to seeing some of you at the Annual General Meeting on 29 June 2017 in London.
Harry Anagnostaras‐Adams, Executive Chairman
KEFI Minerals plc Board of Directors meeting in Nicosia Cyprus Head Office. From left, Laki Catsamas (Financial Controller
and Acting Company Secretary), Harry Anagnostaras‐Adams (Executive Chairman), Wayne Nicoletto (Chief Operating
Officer), Mark Wellesley‐Wood (Deputy Chairman), John Leach (Finance Director), and Ian Plimer (Non‐Executive
Director). Non‐Executive Director Norman Ling is not in this photo.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 5
Finance Director’s Report
KEFI’s strategy is to maximize shareholder value through the development of a focused portfolio of mining operations
and projects at various stages, while at the same time managing the significant risks faced by companies in the
exploration and development stage.
Our risk management approach places a clear focus on discovering and exploiting mineral wealth through multiple
ventures within a focused framework, thus increasing the odds of success. We introduce partners and contractors in
certain circumstances to minimise risk and broaden the human and financial resources available.
KEFI minimises expenses while maintaining momentum towards becoming a gold producer. In order to help reduce cash
outflows, some employees, Directors and consultants agreed to take KEFI shares in lieu of a significant portion of their
salary or fees during 2016. Some Company officers also invested significant amounts into KEFI share placings.
Equity Funding
KEFI Minerals has to date financed its activities through periodic capital raisings and contributions by partners.
The Company completed several equity placings during 2016, raising a total of £5.6 million (before expenses).
In March 2017, shareholders approved a £5.62 million fundraising comprised of:
o £0.60 million placing of equity by Brandon Hill Capital;
o £0.40 million subscription by certain of the Directors, employees and Lycopodium; and
o £4.62 million subscription by Lanstead Capital.
Following the completion of the March 2017 fundraising and associated consolidation of the Company’s capital on a 17‐
for‐1 basis, KEFI had a total of 332.7 million Ordinary Shares on issue.
A key aspect of the March 2017 fundraising is that £3.93 million of the £4.62 million subscription by Lanstead is subject
to a Sharing Agreement which allows KEFI to benefit financially from positive share price performance, whilst limiting the
financial downside risk from a negative share price performance.
The number of Ordinary Shares issued to Lanstead under the Sharing Agreement is fixed at 82.4 million Ordinary Shares.
However, the amount from Lanstead due to KEFI under the Sharing Agreement is adjustable upwards or downwards at
each of the 18 monthly settlements that commenced in May 2017.
The Lanstead Sharing Agreement underpins the Company's expenditure for 2017 and is focused on an increasing share
price being beneficial to both Lanstead and KEFI shareholders.
The Notice of General Meeting includes a proposed shareholder resolution to provide the Directors with sufficient
authority to implement equity raisings to allow the preferred project funding proposal to proceed for Tulu Kapi.
Partnering the Government in Ethiopia and ARTAR in Saudi Arabia
In May 2017, KEFI Minerals (Ethiopia) Limited ("KME") and the Federal Democratic Republic of Ethiopia signed the
Shareholders' Agreement and other foundation documentation for the incorporation, ownership and operation of Tulu
Kapi Gold Mines Share Company Limited (“TKM”), which will result in TKM owning 100% of Tulu Kapi. The exploration
projects outside the Tulu Kapi Mining Lease area are not part of TKM and remain 100% owned by KEFI.
In the Kingdom of Saudi Arabia KEFI conducts all its activities through Gold and Minerals Co. Limited (“G&M”), our joint
venture company with Abdul Rahman Saad Al Rashid and Sons Limited (“ARTAR”). KEFI is operator with a 40% interest
and ARTAR has 60%. KEFI’s is fortunate to have such a strong Saudi group as a partner and G&M has assembled a large
and prospective portfolio of exploration licences and applications. Having made a discovery at Jibal Qutman, the joint
venture looks forward to development and expansion in the minerals sector which the Saudi Government has made a
national strategic priority.
Tulu Kapi Development Funding
The Tulu Kapi funding process is ongoing with several potential financiers who are comfortable investing in Ethiopia.
The foundations of risk management for funding Tulu Kapi include that all short term (up to five years) debt servicing
commitments are met even if the price of gold drops to and stays at c. US$900/oz whilst longer term (5‐10 years)
KEFI Minerals Plc ANNUAL REPORT 2016
Page 6
commitments are acceptable as long as they are covered by a flat price of c. US$1,000/oz. It is notable that the lowest
gold price in the past seven years is c. US$1,100/oz and the highest c. US$1,900/oz.
Since acquiring the project, KEFI has continually refined and reduced project capital requirements and rendered more
reliable production plans. Before adding financing charges and costs of other KEFI activities, the current estimate of total
KEFI Group requirement for Tulu Kapi development capital is c. US$160 million, which has been approximately halved
from the previous owner’s estimate.
KEFI’s progress on project financing was delayed during 2016 as a result of the tightening of the mining debt‐finance
sector generally and the declaration of the Ethiopian State of Emergency, which had the effect of depressing the interest
of financiers unfamiliar with Ethiopia. The Company responded by elevating its focus onto alternative financiers familiar
with Africa and especially Ethiopia and, in particular, to design financing proposals with African‐experienced gold project
contractors. We now have three financing proposals built around alternative project contracting syndicates, and we have
prioritised the funding structure designed around the preferred contractors selected in 2016 ‐ Ausdrill for mining and
Lycopodium for processing.
As a result of recent progress, along with potential financiers, the Government and contractors, KEFI has intensified
preparations for development to commence this year. The syndication brings with it the complexities of multiple
jurisdictions and some “paving the way” in Ethiopia for which this is the first internationally financed major mining
project finance transaction. Nevertheless, all syndicate members are working to the common objective of starting
production in 2019.
Statutory Accounts and Reporting
KEFI’s financial statements for 2016 are attached and report financial results based, inter alia, on the write‐off of most
historical pre‐development expenditure at Tulu Kapi and the write‐off of all exploration expenditure.
In May 2017, KEFI reported progress of closing out any potential exposure to a damages claim brought in 2014 by third
parties in Ethiopia relating to events which took place between 1998 and 2006. The claim has been reduced from
approximately US$12 million to approximately US$600,000 which KEFI is appealing to a higher court.
John Leach, Finance Director
Resettlement property survey teams planning their day.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 7
Chief Operating Officer’s Report
During 2016, we continued to work towards triggering the development of Tulu Kapi. This entailed working with selected
contractors and the Government of Ethiopia, as well as assisting potential financiers with their due diligence.
Project and Construction Management
KEFI’s project management team has extensive gold development experience, mainly in Western Australia and Africa.
This team managed the rounds of bidding for the Engineering, Procurement and Construction (“EPC”) contract and for
the Mining Contract. Our project management team has been based in Perth so as to work closely with Ausdrill and
Lycopodium head offices.
Upon commencement of development, KEFI’s project management team, myself included, and those of the principal
contractors will move to Tulu Kapi in remote western Ethiopia where we have an exploration camp and will build a larger
accommodation village.
EPC Contractor
In June 2016, KEFI appointed Lycopodium as the EPC Contractor with a scope of work including:
Detailed equipment specification and procurement;
Construction of the processing plant to occur under a fixed‐price, lump‐sum contract;
Start‐up management support (for up to two years of operation) including installation of plant operating policies
and procedures, personnel training and systems, with handover upon satisfaction of performance;
Performance guarantees:
o
o
to remain in place until the end the first year of production; and
to ensure successful start‐up before the final contractual retention sums are paid by KEFI.
KEFI has recently approved the formal Front End Engineering and Design (“FEED”) proposal for US$68 million under the
proposed fixed‐price EPC contract. This is the largest component of the initial capital expenditure to develop Tulu Kapi.
The FEED proposal is to build a 1.5‐1.7 Mtpa (range of nameplate capacity dependent on ore type) processing plant and
compares favourably with the previous estimate in the 2015 DFS of a total cost of US$61 million for a 1.2 Mtpa
processing plant. The 2015 DFS also did not anticipate a fixed‐price, lump‐sum contract for construction with
performance guarantees which have been incorporated into the recently published 2017 DFS Update. KEFI targets 10%
higher‐than‐nameplate capacity from production year 2 onwards, which would bring forward processing of some of the
lower‐grade ore that is assumed to be stockpiled in the 2017 DFS Update.
Mining Contractor
KEFI has appointed African Mining Services (“AMS”), a wholly‐owned subsidiary of Ausdrill Limited as the mining
contractor. AMS has a strong track record in African operations and has become a significant (c. 5%) KEFI shareholder.
The principal terms and consequences of this appointment are set out below, all of which have been documented:
Scope covers certain pre‐mining earthworks as well as the life‐of‐open‐pit mining operation.
Contractual payment rate to be based on per cubic metre delivered.
Direct purchases by KEFI of certain key input costs such as explosives and fuel.
KEFI and AMS have agreed a detailed operating plan for mining the Tulu Kapi open pit. AMS has confirmed mining fleet
specifications and detailed contract specifications. The mining method and equipment specification are considered
straightforward and technically sound by the lenders’ independent technical expert. Under the mining contract
specifications, only c. 21% of the ore tonnage and 5% of the total material movement is categorised as “selective” ore
and waste mining, indicating standardised mining methods for most material. The selective mining aspects for the
KEFI Minerals Plc ANNUAL REPORT 2016
Page 8
peripheral ore zones have been carefully planned in detail with appropriate specialists to optimise mine dilution and
operating costs.
Community
Responsible mine development is the core requirement for KEFI and the Ethiopian Government. We welcome the
Government’s constructive attitude which encourages us to bring Tulu Kapi into production as rapidly as we prudently
can whilst ensuring compliance with all relevant quality standards.
The 2015 Tulu Kapi Mining Agreement between the Ethiopian Government and KEFI incorporated several key documents
including an Environmental and Social Impact Assessment (“ESIA”) and the Community Resettlement Action Plan (“RAP”).
The ESIA is fully integrated with the design contemplated in the 2015 DFS and compliant with International Finance
Corporation Performance Standards and Equator Principles.
Our social licence team is based at Tulu Kapi and our processes involve continual consultation with the community,
federal, regional and local authorities and other local institutions before and during implementation of the RAP.
KEFI and the Government continue to ensure transparent and compliant procedures for the resettlement of displaced
farmers at Tulu Kapi. KEFI is playing a supporting role to the Government’s efforts and is committed to assist where it can
to ensure Tulu Kapi remains an exemplary example of due process and social licence management.
Ethiopian Government experts and our advisers are ensuring that compensation and plans comply with Ethiopian law
and IFC (World Bank) principles.
Operations
KEFI’s project management team will be replaced during the start‐up phase with its Operations Team, which will include
new appointees some of whom have already been selected. The Company has set out organisational plans for the three
main sets of personnel: mining (Ausdrill), processing (initially Lycopodium) and KEFI general management, planning,
monitoring and control teams for safety, security, environmental, compliance, operations, administration and finance.
Outlook
All the post‐2015 DFS refinements have been incorporated into the 2017 DFS Update completed in May 2017. The 2017
DFS Update reflects the costings and schedules built into detailed draft contractual documentation with the project
contractors – a schedule of rates mining contract and a fixed‐price, lump‐sum process plant construction contract.
The KEFI team, the Tulu Kapi community and the Ethiopian Government are all looking forward to mine development
commencing as soon as practical.
KEFI’s collaborative approach with contractors, community and other stakeholders during the planning phase should put
us in good stead to work through the inevitable challenges as the project progresses.
It remains an exciting time to be developing a new gold mine and many quality people have expressed interest in joining
the KEFI team as the Company enters the development phase.
Wayne Nicoletto
Chief Operating Officer
Managing Director, KEFI Minerals Ethiopia
KEFI Minerals Plc ANNUAL REPORT 2016
Page 9
Organic Growth in Arabian-Nubian Shield
The highly prospective Arabian‐Nubian Shield is one of the largest under‐explored mineral provinces in the world. The
ANS has been the Company’s primary focus since 2008 when it commenced exploration activities in the Kingdom of
Saudi Arabia.
Precambrian rocks host many of the major gold and base metal deposits globally, for example in Australia, Canada and
South Africa. It is notable that the ANS is much larger than these other Precambrian terranes. Even though a number of
significant gold and base metal deposits are being mined in the ANS, very little modern exploration has been carried out
over much of the area.
While our focus and expenditure is on adding resources for our two development projects, KEFI continues to work
towards creating shareholder value by assessing other prospects in the under‐explored ANS, particularly on the pipeline
of Exploration Licence Applications (“ELAs”) in both countries.
We are continually adding to our knowledge of the ANS and systematically building our database for project generation
and optimisation. The intellectual property of the information and experience gained over this period reinforces the
value‐creating potential of the Company’s assets. We are indeed excited by the opportunity provided, in the Company’s
pole position in a very prospective region.
For example, the Hawiah Exploration Licence (“EL”) is the sort of prospect that makes us excited to be exploring the ANS
as it has all the hallmarks of a copper‐gold‐zinc VHMS deposit, which are typically quite valuable.
Our aim has always been to deliver shareholder value by developing into profitable mines the gold and base metal
deposits that the Company discovers or acquires in a cost‐effective manner.
KEFI Minerals’ Non‐Executive Director Ian Plimer and former Exploration Director Jeffrey Rayner
at Hawiah, Saudi Arabia.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 10
Ethiopia
Following completion of the DFS in 2015, Tulu Kapi has continued to be progressed towards development with the
appointment of contractors and subsequent work to further improve project economics.
Annual average gold production is currently estimated to be approximately 115,000 ounces per annum for the eight core
years of production from the open pit. All‐in Sustaining Cost is less than US$800/ounce, much lower than the industry
average.
All aspects of the Tulu Kapi (open pit) gold project have been reported in compliance with the JORC Code (2012) and
subjected to reviews by appropriate independent experts. These plans now also reflect the agreed construction and
operating terms with project contractors.
There is significant potential to expand Tulu Kapi’s Mineral Resource as it remains open along strike, down plunge and at
depth. The economic potential is also enhanced by the gold grades increasing with depth as well as the ore lenses
thickening, making underground mining very attractive.
A number of prospects have been identified within trucking distance of Tulu Kapi. Proposed exploration activity will be
significantly expanded with this focus, as these prospects have the scope and potential to add substantial value by
providing additional ore to the Tulu Kapi processing facility.
Tulu Kapi ‐ Background
is
Tulu Kapi
located approximately
360km due west of Ethiopia’s capital,
Addis Ababa. A main road to Addis
Ababa is within 12km of Tulu Kapi and
was sealed with asphalt during 2014‐15.
The altitude of the project area
is
between 1,600m and 1,765m above sea
level. The climate is temperate with
annual rainfall averaging about 150cm.
The surface topography around Tulu
Kapi is hilly with deeply dissected river
valleys. Subsistence farmers primarily
grow coffee and fruit in the river valleys.
The Tulu Kapi gold deposit was
discovered and mined on a small scale
by an Italian consortium in the 1930’s.
Nyota Minerals Limited acquired the
project in 2009 and then undertook
extensive exploration and drilling which
culminated in an initial DFS in December 2012.
Location of Tulu Kapi in Ethiopia.
In December 2013, KEFI Minerals acquired 75% of Tulu Kapi for £4.5 million. This acquisition cost equates to only US$10
per reserve ounce and provided information collected from historical expenditure of more than US$50 million.
In September 2014, KEFI acquired Nyota Minerals’ remaining 25% interest in Tulu Kapi for £1.5 million The Ethiopian
government became entitled to a 5% free‐carry interest in Tulu Kapi upon granting of the Mining Licence in April 2015.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 11
Tulu Kapi – Permits and Mining Agreement
The Tulu Kapi Mining Agreement (“MA”) between the Ethiopian Government and KEFI was formalised in April 2015. The
terms of the MA include:
Renewable 20‐year Mining Licence covering an area of 7km2, with full permits for the development and
operation of the Tulu Kapi gold project.
Fiscal arrangements:
o 5% Government free‐carried interest;
o Royalty of 7%;
o
o Historical and future capital expenditure is tax deductible over four years; and
o
Stabilisation of fiscal arrangement to protect KEFI in case of future legislative changes.
Income tax rate for mining of 25%;
Government undertaking to facilitate international financing arrangements.
Attachments to the MA include the Environmental and Social Impact Assessment, the Development and Production
Work Programme and the Community Resettlement Action Plan.
Geologists working in Tulu Kapi core shed.
Tulu Kapi ‐ Geology
The Tulu Kapi region has typical Precambrian type geology which is characterised by prominent hills of intrusive rocks
and deeply incised valleys containing metasediments and metavolcanic rocks.
Gold at the Tulu Kapi deposit is hosted in quartz‐albite alteration zones as stacked sub‐horizontal lenses in a syenite
pluton into which a swarm of dolerite dykes and sills have been intruded. Gold mineralisation extends over a 1,500m by
500m zone and is open at depth (+550m).
The mineralisation is characterised by a simple mineralogy comprising gold, silver, pyrite and minor sphalerite and
galena. The gold is free milling with metallurgical recoveries averaging 93% for oxide and sulphide ore in the planned
open pit.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 12
At depth beneath the main body of mineralised syenite there is a zone adjacent to the Bedele shear that is characterised
by significantly higher gold grades, with occasional coarse visible gold, more base metal sulphides and a shallower
apparent dip than the main body above it.
KEFI geologists have steadily increased their understanding of the Tulu Kapi orebody and utilising this knowledge as part
of the systematic search for nearby gold deposits.
Tulu Kapi – Resources and Reserves
The Tulu Kapi Mineral Resources total 20.2 million tonnes at 2.65g/t gold, containing 1.72 million ounces. As summarised
in the table below, c. 94% of the Mineral Resources are in the Indicated category.
Resource
Category
Indicated
Inferred
Sub‐Total
Indicated
Inferred
Sub‐Total
Indicated
Inferred
Total
Area
Tonnes
(millions)
Above
1,400m RL
Below
1,400m RL
Overall
17.7
1.3
19.0
1.1
0.1
1.2
18.8
1.4
20.2
Gold
(g/t)
2.49
2.05
2.46
5.63
6.25
5.69
2.67
2.40
2.65
Contained Gold
(million ounces)
1.42
0.08
1.50
0.20
0.02
0.22
1.62
0.10
1.72
Note: Resources were estimated using cut‐off grades of 0.45g/t gold above 1,400m RL and 2.50g/t gold below
1,400m RL. For further information, see KEFI announcement dated 4 February 2015.
The Mineral Resources were split above and below the 1,400m RL to reasonably reflect the portions of the resource that
may be mined via open pit and underground mining methods, respectively.
The Tulu Kapi Ore Reserves were based on the Indicated Resource above 1,400m RL and total 15.4 million tonnes at
2.12g/t gold, containing 1.05 million ounces. As detailed in the table below, the high‐grade portion of the Ore Reserve
contains nearly all the contained ounces and totals 12.0 million tonnes at 2.52g/t gold, containing 0.98 million ounces.
This split shows that 78% of the ore tonnes and 93% of the contained gold is contained in the higher‐grade zones of the
Ore Reserve which are processed preferentially in the first eight production years. Lower‐grade ore is stockpiled for
processing subsequently.
Reserve
Category
Cut‐off
(g/t gold)
Tonnes
(millions)
Probable ‐ High grade
0.90
Probable ‐ Low grade
0.50 ‐ 0.90
Total
12.0
3.3
15.4
Note: Mineral Resources are inclusive of Ore Reserves.
Gold
(g/t)
2.52
0.73
2.12
Contained Gold
(million ounces)
0.98
0.08
1.05
The above Mineral Resources and Ore Reserves were estimated using the guidelines of the JORC Code (2012).
Tulu Kapi ‐ Definitive Feasibility Study and Subsequent Optimisation
The DFS completed in December 2012 by Nyota Minerals evaluated construction of a 2.0Mtpa CIL processing plant and
estimated initial capital expenditure of US$289 million, including an allocation for working capital. KEFI is pursuing an
alternative approach for Tulu Kapi that has significantly reduced the anticipated aggregate capital and operating
expenditure, which provides less start‐up risk and a higher overall return.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 13
Following KEFI completing the 2015 Definitive Feasibility Study (“2015 DFS”) in June 2015, the cost estimates and mine
plan were refined further and summarised in the 2017 DFS Update of May 2017. These refinements are the product of:
collaboration between the KEFI project management team, its specialist advisers and the project contractors ‐
Ausdrill/African Mining Services and Lycopodium; and
reviews by the Independent Technical Consultants for the project financiers.
It is planned to preferentially process higher‐grade ore (mined above cut‐off grade of 0.9g/t gold) and to stockpile ore
mined at grade 0.5‐0.9g/t gold.
KEFI targets to run the plant at slightly higher (c. 10%) than nameplate processing rate from year 2 and further reduce
the build‐up of ore stockpiles.
This work has delivered even more robust gold project than in KEFI’s 2015 DFS as shown in the table below.
Waste:ore ratio
Processing rate warranted
Total ore processed
Average head grade
Gold recoveries
2015 DFS
13‐year LOM
(owner mining)
7.4:1.0
1.2Mtpa
15.4Mt
2.1g/t gold
91.5%
Annual steady‐state gold production
Total LOM gold production
95,000 ounces
961,000 ounces
Initial construction capital
All‐in Sustaining Costs
Average net operating cash flow
Payback
Notes:
US$176M
US$724/oz
US$50M p.a.
3.5 years
2017 DFS Update
10‐year LOM
(contract mining)
7.4:1.0
1.5‐1.7Mtpa
15.4Mt
2.1g/t gold
93.3%
115,000 ounces
980,000 ounces
US$145M
US$777/oz
US$55M p.a.
3 years
The above metrics assume a gold price of US$1,250/oz.
Life of Mine (“LOM”) is the time to mine the planned open pit only.
Gold production and net operating cash flow are for the first eight years of gold production.
The Initial construction capital under the 2017 DFS Update is reduced from US$161 million to US$145 million due to contractually
deferred payments. Planned funding requirements of US$160 million include non‐Tulu Kapi costs and finance charges incurred
during construction.
Tulu Kapi ‐ Development
Tulu Kapi will be a conventional open‐pit mining operation with a CIL processing plant. The mine will be connected to
Ethiopia’s electricity grid via a new 47km long, 132 kV dedicated power line relatively close to the country’s major hydro
power‐generation source. An emergency diesel power plant will also be installed to provide emergency backup power to
critical process equipment in the event of a grid power failure.
Following the international tenders, KEFI appointed Ausdrill (via subsidiary African Mining Services) as mining contractor
and Lycopodium as process plant construction contractor.
Tulu Kapi is permitted for development and operation. The work currently being undertaken should ensure construction
can proceed quickly and efficiently once funding is in place. Minor licences and permits are expected to be dealt with
expeditiously as development progresses. The Government has established a Prime Ministerial Steering Committee to
fast‐track Tulu Kapi. KEFI Minerals works closely with the members of that committee, who head the various ministries
and government organisations involved with the project.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 14
Tulu Kapi – Potential for Underground Mine
The Tulu Kapi orebody is amenable to underground mining as ground conditions are good, Ore Reserve gold grades
increase and ore lenses thicken with depth. Gold mineralisation remains open along strike, down plunge and at depth.
Notably, the most northerly hole drilled into the deepest portion of the deposit intersected 90m at 3g/t gold and
demonstrates that the deposit remains open down plunge.
A preliminary economic assessment (“PEA”) of Tulu Kapi’s underground mining potential was completed in March 2016.
Based on the 2014 Mineral Resources, the current underground mining inventory of 1.3 million tonnes at 5.2g/t gold
potentially adds gold production of c. 50,000 ounces p.a. for four years.
The PEA considered the gold mineralisation below the base of planned open pit at a cut‐off grade of greater than 2.5g/t
gold, which is c. 1,450m RL (i.e. 50m higher than the 1400m RL division for the 2015 Mineral Resource Statement). It also
considered economic lenses above 1,450m RL but outside of the planned open pit.
The key outcomes of the PEA were that:
Underground mine development is economically justified based on the 2014 Mineral Resources;
Combined gold production from the open pit and underground mine approximates 150,000 ounces p.a.;
The underground mine adds an estimated US$28 million to the project’s after‐tax NPV (8%) at a gold price of
US$1,250/oz; and
Subject to the results of a full DFS, underground mine development is targeted to commence in the first half of
open‐pit operations.
As the deposit remains open, KEFI has identified exploration potential for tripling the current 330,000oz underground
Mineral Resource to c. 1 million ounces.
Inaugural Directors of Tulu Kapi Gold Mines Share Company Limited , newly created to assume the role of KEFI Minerals
(Ethiopia) Limited: Harry Anagnostaras‐Adams (Chairman) Wayne Nicoletto (Managing Director) and Dr Kebede Belete
(Director and Manager Government Relations), Muluken Kassa (Director and Finance Manager) plus Derartu Legesse
(Office Manager) and Meseret Ayalew Kassaye (Financial Accountant)
KEFI Minerals Plc ANNUAL REPORT 2016
Page 15
Tulu Kapi – Regional Exploration Potential
Regional exploration is at an early stage but significant potential
has already been identified for further gold orebodies to be
discovered near Tulu Kapi.
During 2016, KEFI worked on improving geological and structural
understanding of the district. Drilling is planned to commence once
Tulu Kapi is in development.
Geochemical and geophysical surveys have identified strong gold
anomalies along three major shear zones parallel to the shear zone
containing the Tulu Kapi gold deposit.
One of these shear zones lies only a few kilometres to the west of
Tulu Kapi where shallow gold mineralisation has been identified
over +9km along the Guji‐Komto Belt. Trenching and drilling results
already indicate the potential for oxide gold mineralisation totalling
300‐500,000 ounces at c.1.5g/t gold in a series of shallow open pits
(c.40m depth).
Once proven up by further drilling, this gold mineralisation may be
treated by either trucking to the Tulu Kapi processing plant or as
stand‐alone heap‐leach operations. Preliminary work indicates
initial heap‐leach operations could produce c.50,000 ounces of gold
p.a. with low stripping ratios and high gold recoveries. This
approach is likely to result in low operating and capital costs as
most infrastructure would be provided by the planned Tulu Kapi
mine.
Guji‐Komto Belt: best trench and drill hole gold results
KEFI Minerals Plc ANNUAL REPORT 2016
Page 16
Saudi Arabia
Our priorities in cost effectively discovering economic gold and copper in Saudi Arabia remain:
1.
Jibal Qutman – increase oxide gold resources on the granted Exploration Licence (“EL”) and surrounding
Exploration Licence Applications (“ELAs”);
2. Hawiah – determine if a copper‐gold‐zinc VHMS deposit lies beneath the 6km‐long, gold‐bearing surface gossan;
KEFI has a 40% beneficial interest in a large portfolio of ELAs and two granted ELs in Saudi Arabia via G&M, our joint
venture company with ARTAR.
Location of G&M ELs and ELAs in Saudi Arabia, including the main gold and VHMS copper deposits in the ANS.
KEFI remains well placed to advance and develop our projects with the assistance of our partner ARTAR, a leading local
industrial group owned by Sheikh Al Rashid and his family.
The Kingdom of Saudi Arabia is a country with a long history of gold and copper mining that dates back over 3,000 years.
As part of a broader strategy to diversify the country’s revenues away from oil, Saudi Arabia is looking to expand and
develop its mineral sector.
During 2016, the Saudi Government created the Energy, Industry and Mineral Resources Ministry. This new ministry is
now preparing new mining policies in consultation with local mining industry participants. KEFI and ARTAR regard this as
a positive sign and look forward to the new mining policy being released. KEFI has upgraded its portfolio of licence
applications in preparation for the deregulation of the sector which should expedite mining development in the country.
Key commercial advantages for KEFI in Saudi Arabia are:
A country under‐explored for minerals with only a few companies exploring for gold and copper;
The Precambrian ANS rocks are very prospective for gold and copper;
Exploration, development and operating costs are low by industry standards, benefitting from low energy and
labour costs;
Saudi Industrial Development Fund provides loans for up to 75% of the capital cost of mine development at
attractive interest rates;
A modern mining code; and
A strong local joint venture.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 17
The Directors of KEFI are increasingly confident that, given the Company’s approach of strong local ownership from the
outset for its operations in Saudi Arabia, it is well placed to establish a secure long term position in the country. KEFI is
fully committed to consolidate G&M’s presence in Saudi Arabia as the exploration results achieved since commencing
exploration demonstrate the substantial opportunity to discover and develop mines in the country.
Exploration Manager Fabio Granitzio assisting authorities on a site inspection.
Saudi Arabia ‐ Jibal Qutman
Since the Jibal Qutman EL was granted in July 2012, KEFI Minerals rapidly advanced this project from grassroots
exploration to assessing the best way to bring to account the gold mineralisation discovered to date.
The Jibal Qutman EL is located in the central southern region of the Arabian Shield and covers an area of 99km2. The EL
covers an important part of the prospective Nabitah‐Tathlith Fault Zone, a 300km‐long structure with over 40 gold
occurrences and ancient gold mines.
Drilling undertaken by G&M has identified gold resources in six areas ‐ Main Zone, West Zone, South Zone, 3K Hill, 4K Hill
and Red Hill. Given the established regional prospectivity for shallow oxide gold deposits, ELAs have been submitted for
four additional areas near Jibal Qutman.
G&M envisages initially developing a small heap‐leach operation to self‐fund G&M’s exploration activities in Saudi
Arabia.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 18
Mineral Resource Estimates for Jibal Qutman
The current Mineral Resource estimate for Jibal Qutman totals 28.4 million tonnes at 0.80g/t gold, containing 733,045
ounces. As summarised in the table below, the majority of the Mineral Resource is in the Indicated category.
Category
Indicated
Inferred
Sub‐Total
Indicated
Inferred
Sub‐Total
Indicated
Inferred
Grand Total
Tonnes
(millions)
8.3
2.8
11.1
9.7
7.6
17.3
18.0
10.4
28.4
Gold
(g/t)
0.86
0.64
0.80
0.86
0.72
0.80
0.86
0.70
0.80
Contained Gold
('000 ounces)
229
58
287
269
176
446
498
235
733
Oxide
Sulfide
Oxide
+
Sulfide
Note: For further information, see KEFI Minerals announcement dated 6 May 2015.
The oxide gold mineralisation contained in the above Mineral Resource is estimated to total 11.1 million tonnes at
0.80g/t gold, containing 287,000 ounces.
Preliminary Economic Assessment for Jibal Qutman
Metallurgical test work has confirmed that Jibal Qutman oxide mineralisation is amenable to heap leach (“HL”)
processing. Accordingly, the Company is focusing on initially producing gold via an open cut, HL operation. The HL
approach has the advantages of speeding up the potential development timetable and lowering capital requirements.
Key outcomes from a Preliminary Economic Assessment for Jibal Qutman completed in May 2015 were:
1.5Mtpa HL operation;
Gold production 139,000 ounces over an initial mine life of 4.5 years;
Oxide open‐pit optimisation studies show a potential mineable resource of 6.6 million tonnes at 0.95g/t gold,
for 201,600 contained ounces;
Waste:ore ratio of 2.2:1.0;
Average gold recovery of 73%;
Cash operating cost of US$597/ounce; and
Capital expenditure of US$30 million.
Combined with the potential for development loans for up to 75% of capex requirements, it may be possible for KEFI to
fund its share of the equity portion for under US$3 million in equity or other forms of finance.
Following on‐site meetings with regulators, the Mining Licence Application for the Jibal Qutman HL gold development
was lodged with the Saudi Government in March 2017.
Jibal Qutman Outlook
Jibal Qutman’s business objectives over the coming year are to:
Follow‐up the Mining Licence Application with the regulatory authorities;
Explore the surrounding ELAs after their grant, which have high prospectivity for additional near‐surface oxide
gold resources; and
Prepare applications for construction and operating licences.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 19
This strategy envisages Jibal Qutman becoming G&M’s foundation for a strong, sustainable mining company in Saudi
Arabia.
Drilling South Zone at Jibal Qutman.
Saudi Arabia ‐ Hawiah
Following the grant of the 95km2 Hawiah EL in December 2014, KEFI commenced exploration of an unusually large 6km‐
long gossan for gold at the surface and a volcanic‐hosted massive sulphide (“VHMS”) copper‐gold‐zinc sulphide orebody
at depth.
The Hawiah EL was one of KEFI’s higher priority ELAs as the geological setting is analogous to large VHMS deposits in the
ANS that also have well‐preserved, mature oxidised zones enriched in gold at surface.
Initial surface exploration has confirmed that the gossans are enriched in gold and the mineralisation has good continuity
along strike, as well as containing abundant secondary copper showings. Our initial geophysical survey indicates it is
underlain by a large metal‐bearing body. Further exploration activities at the prospect are pending the outcome of
negotiations with local stakeholders to ensure robust long‐term access to this and other prospective ground in the
region.
The Hawiah prospect is located within the Wadi Bidah Mineral District (“WBMD”) in the southwest of the Arabian Shield.
The WBMD is a 120km long belt which hosts over 24 VHMS occurrences and historic workings for copper and gold.
Hawiah Geology and Exploration
The planned exploration programme at Hawiah aims to:
Define a near‐surface, economic gold resource in the gossan via trenching and RC drilling; and
Simultaneously search for a major copper‐gold‐zinc sulphide ore body along strike and/or at depth.
The Hawiah EL covers a predominantly bimodal mafic and felsic volcaniclastic succession in a broad anticline, with an
unusually large expression of surface mineralisation outcropping on the eastern limb. Hawiah’s silicified and gossanous
horizon was mapped and trenched by France’s Bureau De Recherches Geologiques et Minieres (“BRGM”) in the 1980s,
which identified its gold‐bearing potential.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 20
In February 2015, KEFI completed a first‐pass, wide‐spaced trenching programme over the 6km‐long gossanous horizon.
KEFI’s trenches repeated all of the BRGM’s trenches, as well as extending the known (4km) exposure to the south and to
the north.
Almost all of KEFI’s trenches contained anomalous gold, including 6m at 2.2g/t gold, 2m at 8.7g/t gold, 6m at 1.9g/t gold,
3m at 5.8g/t gold, 2m at 7.5g/t gold and 8m at 3.0g/t gold.
The BRGM and KEFI results both confirm that gold grades occur with good continuity along the strike length of this 6km‐
long gossanous horizon.
In order to test the deeper VHMS potential, KEFI is using geophysics and geochemistry to define drill targets.
Self‐potential (“SP”) geophysical surveys were completed over the 6 km‐long gossanous horizon during 2015 and 2016.
Two strong anomalies were identified:
An intense north‐south trending SP anomaly with a continuous maxima of 350 millivolts, located between 125m
and 300m below surface with an 800m strike length. The intensity of this anomaly is consistent with the
presence of a massive sulphide source, or to a high and contiguous concentration of disseminated sulphides at
depth; and
A parallel SP anomaly with a similar but less continuous intensity located 600m to the east.
The targets generated by the SP survey are planned to be followed‐up with a more detailed induced polarisation (“IP”)
geophysical survey. The IP survey is designed to test for electrical conductors (i.e. massive sulphides) down to vertical
depth of 600m below surface. The IP anomalies will provide targets with vertical depths that are planned to be tested by
diamond drilling.
Following resolution of some community requests, further exploration activities are planned to commence at Hawiah in
the second half of 2017. G&M continues to ensure that the correct steps are taken with local stakeholders to ensure our
licence to operate is robust both on the Hawiah EL and for other ELAs in the WBMD.
Hawiah Regional Prospectivity
The WBMD is a 120km‐long, north‐south trending belt which hosts 36 prospects of three main types:
VHMS deposits;
Volcano‐sedimentary deposits associated with disseminated to sub‐massive sulphides; and
Shear zone & quartz vein hosted deposits.
KEFI has seven other ELAs pending within the WBMD covering other existing targets and highly prospective ground.
The BRGM assessed the gold potential of gossans in the entire WBMD in the 1980s. The BRGM estimated a total of
400,000 ounces of gold to be contained in the gossans that were assessed in the WBMD, with the average grades of
some deposits ranging from 5g/t gold to 7g/t gold. The BRGM also carried out some geophysical surveys over the gossans
and carried out limited drilling to test the anomalies generated. Some massive copper‐zinc sulphides were intersected,
but the drill core was not systematically assayed for base metal content, nor followed up by further drilling.
VHMS deposits are major sources of copper‐lead‐zinc‐gold‐silver ore bodies. Examples of large VHMS deposits in the ANS
include:
Eritrea ‐ Bisha (Nevsun) and Asmara (Sunridge) deposits;
Sudan ‐ Hassaii (Ariab) deposits; and
Saudi Arabia ‐ Jabal Sayid (Barrick and Ma’aden) and Al Masane (Arabian American) deposits.
The Hawiah EL and surrounding under‐explored WBMD are considered to be very prospective for gold and VHMS
deposits.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 21
Saudi Arabia ‐ Exploration Licence Applications
ELs are renewable for up to three years and bestow the exclusive right to explore and to obtain a 30‐year exploitation
(mining) lease within the area. ELAs are initially applied for and granted to ARTAR and granted ELAs will be transferred
into G&M in due course.
Since first applying for exploration title in 2009, five ELs have been granted:
2011 ‐ Selib North EL;
2012 ‐ Hikyrin EL, Hikyrin South EL and Jibal Qutman EL; and
2014 ‐ Hawiah EL.
Following rapid assessment, the Selib North, Hikyrin and Hikyrin South ELs have been relinquished.
As detailed in previous Annual Reports, the granting of ELs in Saudi Arabia involves extensive community and regulatory
consultation. The involvement of more than a dozen government departments and committees at the application stage
helps to facilitate the potential development phase.
G&M currently holds a large portfolio of ELAs that are at various stages of being processed by the DMMR, cover an area
of more than 1,000km2.
These ELAs are expected to provide a long‐term stream of exploration projects containing ancient gold and copper
occurrences to be evaluated using modern exploration methods. Surface sample results and some historical drilling from
these ELAs suggests that they are highly prospective for gold and, or copper mineralisation.
Some of our applications are at advanced stages and we are also discussing with the authorities the appropriateness of
prioritising applications in the vicinity of Jibal Qutman. The regional programme warrants long‐term dedication.
Exploration Manager Fabio Granitzio and geologist Luca Purpura mapping a new area.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 22
Glossary and Abbreviations
AIC
AISC
All‐in Costs
All‐in Sustaining Costs
Arabian‐Nubian Shield or ANS
The Arabian‐Nubian Shield is a large area of Precambrian rocks in various
countries surrounding the Red Sea
ARTAR
BRGM
c.
CIL
DFS
DMMR
EL
ELA
Epithermal
ESIA
G&M
g/t
Gossan
HL
IP
JORC
Abdul Rahman Saad Al Rashid & Sons Company Limited
Bureau de Recherches Géologiques et Minières – the Geological Survey of
France
Circa
Carbon in Leach
Definitive Feasibility Study
Deputy Ministry for Mineral Resources – Kingdom of Saudi Arabia
Exploration Licence
Exploration Licence Application
Hydrothermal mineral deposit formed within about 1 km of the Earth's surface
and in the temperature range of 50 to 200 degrees Celsius, occurring mainly as
veins
Environmental and Social Impact Assessment
Gold and Minerals Co. Limited
Grams per tonne
An iron‐bearing weathered product overlying a sulphide deposit
Heap leach
Induced polarisation ‐ a ground‐based geophysical survey technique measuring
the intensity of an induced electric current, used to identify disseminated
sulphide deposits
Joint Ore Reserves Committee
JORC Code 2012
Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves
LOM
Life of mine
Massive sulphide
Rock comprised of more than 40% sulphide minerals
MA
ML
Mt
Mtpa
oz
Mining Agreement
Mining Licence
Million tonnes
Million tonnes per annum
Troy ounce of gold
KEFI Minerals Plc ANNUAL REPORT 2016
Page 23
PEA
PFS
Precambrian
RC drilling
RL
SP
VHMS deposits
Preliminary Economic Assessment
Pre‐Feasibility Study
Era of geological time before the Cambrian, from approximately 4,600 to 542
million years ago
Reverse Circulation drilling. Percussion drilling method. Reverse circulation is
achieved by blowing air down the rods, the differential pressure creating air lift
of the water and cuttings up the "inner tube", which is inside each rod.
Relative Level
Self potential ‐ a ground‐based geophysical survey technique measuring the
potential difference between any two points on the ground produced by the
small, naturally produced currents that occur beneath the Earth's surface
Volcanic‐hosted massive sulphides; refers to massive sulphide deposits formed
in a volcanic environment with varying base metals (copper, lead and zinc)
often with significant additional gold and silver
WBMD
Wadi Bidah Mineral District
Competent Person Statement
KEFI Minerals reports in accordance with the 2012 Edition of the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (the "JORC Code 2012").
The information in this annual report that relates to exploration results, Mineral Resources and Ore Reserves is based on
information compiled by Mr Jeffrey Rayner. He is the former Exploration Director of KEFI Minerals and a Member of the
Australian Institute of Geoscientists (“AIG”). Mr Rayner is a geologist with sufficient relevant experience for Group
reporting to qualify as a Competent Person as defined in the JORC Code 2012. Mr Rayner consents to the inclusion in this
report of the matters based on this information in the form and context in which it appears.
The Mineral Resources and Ore Reserves in this report have been previously released as follows:
Date of Release
Project
Subject
Competent Persons
22 April 2015
Tulu Kapi
Probable Ore Reserves
4 February 2015
Tulu Kapi
Mineral Resource
Frank Blanchfield
Sergio Di Giovanni
Simon Cleghorn
Lynn Olssen
6 May 2015
Jibal Qutman
Mineral Resource
Jeffrey Rayner
KEFI confirms that it is not aware of any new information or data that materially affects the information in the above
releases and that all material assumptions and technical parameters, underpinning the estimates continue to apply and
have not materially changed. KEFI confirms that the form and context in which the Competent Person’s findings are
presented have not been materially modified from the original market announcements.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 24
Directors, Secretary and Advisers
Legal Advisors
Fieldfisher LLP London
Riverbank House
2 Swan Lane
London EC4R 3TT
United Kingdom
www.fieldfisher.com
Auditors
Moore Stephens LLP
150 Aldersgate Street
London EC1A 4AB
United Kingdom
www.moorestephens.co.uk
KEFI Minerals Registered Office
27/28 Eastcastle Street
London W1W 8DH
United Kingdom
Share Registrar
Share Registrars Limited
Suite E,1st Floor
9 Lion & Lamb Yard, Farnham
Surrey GU9 7LL
United Kingdom
www.shareregistrars.com
Financial Public Relations Adviser
Luther Pendragon Ltd.
48 Gracechurch Street
London EC3V 0EJ
United Kingdom
www.luther.co.uk
Directors
Harry Anagnostaras-Adams, Executive Chairman
Mark Wellesley-Wood, Non-Executive Deputy Chairman
John Leach, Finance Director
Norman Ling, Non-Executive
Ian Plimer, Non-Executive
Company Secretary
Cargil Management Services Limited
27/28 Eastcastle Street
London W1W 8DH
United Kingdom
Nominated Adviser
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
United Kingdom
www.spangel.co.uk
Joint Broker
Brandon Hill Capital Ltd
1 Tudor Street
London EC4Y 0AH
United Kingdom
www.brandonhillcapital.com
Joint Broker
RFC Ambrian Limited
Level 5, Condor House
10 St Paul’s Churchyard
London EC4M 8AL
United Kingdom
www.rfcambrian.com
Joint Broker
Beaufort Securities Ltd
131 Finsbury Pavement
London EC2A 1NT
United Kingdom
www.beaufortsecurities.com
KEFI Minerals Plc ANNUAL REPORT 2016
Page 25
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Consolidated Financial Statements
Year ended 31 December 2016
CONTENTS
Group Strategic report
Report of the board of directors
Statement of directors’ responsibilities
Independent auditor’s report
Consolidated statement of comprehensive income
Statements of financial position
Consolidated statement of changes in equity
Company statement of changes in equity
Consolidated statement of cash flows
Company statement of cash flows
Notes to the consolidated financial statements
PAGE
27-31
32-38
39
40-41
42
43
44
45
46
47
48-75
KEFI Minerals Plc ANNUAL REPORT 2016
Page 26
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Group Strategic Report
For the year ended 31 December 2016
KEFI Minerals PLC Company number: 05976748
The directors present their Group Strategic Report for the year ended 31 December 2016.
Incorporation and principal activity
KEFI Minerals PLC (‘KEFI” or the “Company”) or together with its subsidiaries (“the Group”) was incorporated on 24 October 2006
and was admitted to AIM in December 2006 with an initial market capitalisation of £2.7 million at the placing price.
The principal activities of the Company are:
To explore for mineral deposits of precious and base metals and other minerals that show potential for commercial
exploitation;
To evaluate mineral deposits determining the viability of commercial development; and
To develop those mineral deposits and market the metals produced.
Review of operations
KEFI made solid progress during 2016 towards becoming a gold production company. The calm and pro-development situation in
Ethiopia, combined with the financing proposals being considered by KEFI, makes the Board confident that the Tulu Kapi Gold
Project (“Tulu Kapi”) should start development in 2017.
KEFI Minerals in Ethiopia
KEFI owns 100% of the Tulu Kapi Gold Project in Ethiopia. The Government of Ethiopia is entitled to a 5% free carried-interest and
a 7% royalty on gold production. Tulu Kapi has been overhauled and enhanced by the Company as follows:
Successfully overhauled the project’s development and operating plans;
Completed several independent cycles of due diligence on the optimised plans;
Subsequent refinements and the terms of appointment of the project contractors in October 2015 reduced the previous
owner’s estimated capital requirement of c. US$300 million to KEFI’s estimate of c. US$160 million, which has since been the
focus of the financing syndicate with a view to striking an appropriate balance between risk-mitigation and equity dilution.
The project now has soundly-based robust economics and significant growth potential beyond the existing Ore Reserves
estimate of 15.4Mt at 2.12g/t gold, containing 1.05Moz.
Received the Mining Licence which fully permits the development and operation pf the project;
Signed a bilateral Mining Agreement with the Government of Ethiopia setting out the fiscal regime for life of mine.
As part of preparations during 2016 for the development phase, Mr. John Leach joined the senior executive team as Finance
Director and Mr. Mark Wellesley-Wood, an experienced African mining operator, joined the Board as a Non-Executive Director.
The equity requirement for KEFI is targeted at c. US$20 million, after taking all components into account, including mezzanine
finance. But there can be no assurance of the final composition until closure.
KEFI is also assembling project funding proposals from alternative sources to examine all reasonable choices for triggering
development on a suitably risk managed basis whilst minimising equity dilution.
During 2016, the Company fully repaid the inherited VAT liability and became entitled to an ETB 73,497,020 VAT refund
(approximately £2.5 million). The Company received GBP 1 million post year end.
KEFI Minerals in the Kingdom of Saudi Arabia
In Saudi Arabia, KEFI’s gold discovery at Jibal Qutman appears to be quite robust based on preliminary economic assessment,
with a low-capex requirement and the potential to generate the net cash flows for financing an ambitious Saudi exploration
programme by the Gold and Minerals (“G&M”) joint venture, of which KEFI is 40% owner and operator. The Mining Licence
Application for the Jibal Qutman gold development was lodged with the Saudi Government in March 2017.
Plans are to explore the sizeable portfolio of licences and applications in Saudi Arabia, starting with the large target for precious
and base metals at Hawiah, where G&M has identified a huge target for precious and base metals based on the surface-sampling
of a six-kilometre long gossan and the results of the geophysical surveys of the ground beneath the gossan.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 27
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Group Strategic Report (continued)
For the year ended 31 December 2016
Funding
The Company successfully completed a number of equity placings in 2016. Overall the Company raised £5.6 million (before
expenses) through the placing of 1,261,281,530 new Ordinary Shares at an average price of 0.44p per share during the year. The
funds raised were allocated to:
Discharge of the KEFI Minerals Ethiopia Limited VAT obligations to the Ethiopian government in 2015. In August 2016,
the Company fully settled this obligation;
Tulu Kapi community resettlement, livelihood restoration and community activities which remain ongoing.
Completion of the Front End Engineering and Design (“FEED”) proposal from Lycopodium under its proposed fixed price
Engineering Procurement and Design (“EPC”) contract for Tulu Kapi.
KEFI’s ongoing corporate costs including the arrangement of project finance facilities for the planned gold mine
developments.
Key Performance Indicators
Key Performance Indicators for the Group for the year ended 31 December 2016 are those relevant to the exploration, acquisition,
project evaluation and early-stage finance phases of its activities.
Key Performance Indicators include:
Progress in FY 2016:
o Mining Licence Application for Jibal Qutman gold project in Saudi Arabia;
o Complete the FEED for Tulu Kapi;
o Trigger preparations for community resettlement in Ethiopia;
Focus for FY 2017:
o Formalisation of development funding for Tulu Kapi;
o Execution and regulatory clearance of project debt finance and contract documentation;
o Raising the equity required to complete the finance and trigger loan drawdown;
o Resettle the community; and
o Start construction.
The Group considers that its primary projects in Ethiopia and Saudi Arabia continue to progress satisfactorily and careful
monitoring and control has been carried out in respect of cash management.
This includes the periodic review of the Group’s results through management accounts, appraisal of technical reports, monitoring of
the marketplace and the Group’s physical presence in the Kingdom of Saudi Arabia and the Democratic Republic of Ethiopia,
including attendance at regular board meetings. Based on the results, the Board have concluded that no changes are required to
the current strategy.
Management ensure that the Group’s projects are in compliance with relevant environmental and employment legislation in the
applicable jurisdiction.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 28
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Group Strategic Report (continued)
For the year ended 31 December 2016
Results
As at 31 December 2016, the Group had net working capital of £1,495,000 (2015: (£ (983,000)) and the Company’s market
capitalisation was £12.43 million (2015: £8.39 million). At the year end the Group had equity of £15,547,000 (2015: £10,943,000).
During 2016, the Group has incurred exploration expenditure of £125,000 (2015: £4,000) from operations and an operating loss of
£974,000 (2015: £2,837,000).
The Company made several successful placements during the year raising £5.5 million (before expenses) as follows:
Issued
March 2016 at 0.35p
July 2016 at 0.50p
Funds raised before expenses
Less costs deducted from share premium and equity
£’000
1,746
3,810
5,556
(364)
5,192
All exploration expenditure incurred at the Group’s projects in the Kingdom of Saudi Arabia is written off when incurred in
accordance with IFRS 6, pending the Directors’ decision to commence project development.
Since the acquisition of KEFI Minerals Ethiopia Limited, the administrative expenditure increased because of the greater focus on
permitting, financing and staffing in preparation for exploitation of the Tulu Kapi asset. Direct development expenditure for the
Group’s project at Tulu Kapi in Ethiopia is capitalised, as this is intended to be developed for production. The Ethiopian
Government is entitled to a 7% royalty on the gold mining revenue and a 5% free carried interest in the project.
Operating Expenses
Exploration expenditure
Administrative expenses
Vat refund
Warrants issued costs
Share based payments
Share of loss from jointly controlled entity
Foreign exchange loss
Interest cost
Loss for the year
The Group's results for the year are set out on page 42.
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
(125)
(2,190)
2,512
(164)
(281)
(726)
(123)
(136)
(1,233)
(4)
(1,720)
-
(163)
(215)
(735)
(50)
(319)
(3,206)
KEFI Minerals Plc ANNUAL REPORT 2016
Page 29
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Group Strategic Report (continued)
For the year ended 31 December 2016
Organisation overview
The Corporate Head Office of the Group is located in Nicosia, Cyprus, and provides corporate and support services to the
overseas operations. An administration office is maintained in Izmir, Turkey. East African operations are managed out of Addis
Ababa, Ethiopia. The Saudi Arabia exploration is managed through the office on Riyadh. Field and base facilities are also
maintained as required.
Strategic approach
The Board’s strategic intent is to maximize shareholder value through the development of a focused portfolio of operations and
projects at various stages, while at the same time managing the significant risks faced by companies in the exploration and
development stage.
Our risk management approach places a clear focus on discovering and exploiting mineral wealth through multiple ventures within
a focused framework, thus increasing the odds of success. We continuously monitor and review our investment strategies and are
quick to relinquish licences which we believe will be uneconomic. We introduce partners in certain circumstances to minimise risk
and broaden the human and financial resources available.
The Group has to date financed its activities through periodic capital raisings.
Business model
The following business model sets out how the Group will deliver on its strategic aims:
Define additional reserves and resources in Saudi Arabia and Ethiopia;
Develop metals production;
Maintain good community relationships; and
Employ good environmental governance practices.
Principal risks and uncertainties
The Group’s operations are exposed to a variety of risks, many of which are outside of the Group’s control. The Group has put in
place controls to minimise these risks where possible.
Exploration industry risks:
Mineral exploration is speculative in nature, involves many risks and is typically unsuccessful in any one target. Following any
discovery, it can take a number of years from the initial phases of drilling and identification of mineralisation until production is
possible, during which time the economic feasibility of production may change.
Substantial expenditure is required to establish Ore Reserves through drilling, to determine metallurgical processes to extract
minerals from ore and to construct mining and ore processing facilities.
As a result of these uncertainties, no assurance can be given that the exploration programmes undertaken by the Group will result
in any new commercial mining operations being brought into operation.
Government activity, which could include non-renewal of licences, and may result in any income receivable by the Group being
adversely affected. In particular, changes in the application or interpretation of mining and exploration laws and/or taxation
provisions in the countries in which the Group operates could adversely affect the value of its interests.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 30
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Group Strategic Report (continued)
For the year ended 31 December 2016
Principal risks and uncertainties continued
Political risks:
All of the Group’s operations are located in foreign jurisdictions. As a result, the Group is subject to political, economic and other
uncertainties, including but not limited to changes in policies or the personnel administering them, terrorism, nationalisation,
appropriation of property without fair compensation, cancellation or modification of contract rights, foreign exchange restrictions,
currency fluctuations, export quotas, royalty and tax increases and other risks arising out of foreign governmental sovereignty over
the areas in which these operations are conducted, as well as risks of loss due to civil strife, acts of war, guerrilla activities and
insurrection.
The Group enjoys a good working relationship with the relevant authorities in Ethiopia and Kingdom of Saudi Arabia and has a
permanent management team in these countries to monitor developments.
Financial risks:
Commodity risk: A potential fall in commodity prices which could lead to it becoming uneconomic for the Group to mine its assets.
The Group’s principal interest is gold. The Group will consider the use of appropriate hedging products to mitigate this risk as it
approaches production.
The Group’s other financial risks and use of financial instruments are described in Note 3 to the consolidated financial
statements. Other risks are described in the Chairman’s and Finance Director’s Reports.
Future developments
The Group will continue to focus efforts in Ethiopia and Kingdom of Saudi Arabia with the objective of identifying mineral prospects
for further exploration and development.
By Order of the Board
Cargil Management Services Limited
27/28 Eastcastle Street
London
United Kingdom
Company Secretary
4 June 2017
KEFI Minerals Plc ANNUAL REPORT 2016
Page 31
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Report of the board of directors
For the year ended 31 December 2016
The Board of Directors presents its report for KEFI Minerals PLC and its subsidiaries (the “Group”) together with the financial
statements of the Group for the year ended 31 December 2016.
General information
The following information is set out in the Group Strategic Report and includes: Incorporation and Principal Activity, Review of
Operations, Funding, Key Performance Indicators, Results, Organisation Overview, Strategic Approach, Business Model, Principal
risks and uncertainties, and Future Developments.
Board of directors
The members of the Board of Directors of the Company as at 31 December 2016 and at the date of this report are shown on page
25. In accordance with the Company's Articles of Association, one third of the board of directors must resign each year. The
remaining directors, presently members of the Board, will continue in office.
The Board comprises five Directors.
Harry Anagnostaras‐Adams
Executive Director – Chairman
Mr Anagnostaras-Adams (B.Comm, MBA) has been Executive Chairman since 2014 and was previously a Non- Executive
Chairman. Mr Anagnostaras-Adams is Chairman of the Physical Risks Committee. He holds a Bachelor of Commerce (Finance
and Systems) from the University of New South Wales, Australia and a Master of Business Administration from the Australian
Graduate School of Management. He qualified as a Chartered Accountant while working with PricewaterhouseCoopers and has a
Master of Business Administration from the Australian Graduate School of Management where he was awarded the John Story
Memorial Prize as outstanding graduate.
Mr Anagnostaras-Adams founded AIM and TSX - listed Atalaya Mining PLC (previously EMED Mining Public Ltd). Mr
Anagnostaras-Adams has previously served as the Managing Director of Atalaya Mining PLC, ASX and AIM-listed, Devex Limited
(later Gympie Gold Limited), Executive Director of investment company Pilatus Capital Ltd., General Manager of resources
investment group Clayton Robard Limited Group, Senior Investment Manager of Citicorp Capital Investors Australia Ltd. and
serves (or has served) as a non-executive Director of many other public and private companies across a range of industries. He
has overseen many successful start-ups.
Mark Wellesley‐Wood
Deputy Chairman and Lead Independent Director
Mr Mark Wellesley-Wood is a mining engineer, with over 40 years’ experience in both the mining industry and investment banking.
He has been closely involved in mining activities in Africa, having started his career on the Zambian copper-belt. Mark is a former
Executive Chairman and CEO of South African gold miner, DRDGold Limited, and a former director of Investec Investment
Banking and Securities in London. He is currently Chairman of AIM-quoted Tri-Star Resources plc.
John Edward Leach
Finance Director
Mr Leach was appointed non-executive director and part-time Finance Director in December 2006 with responsibility for oversight
of the Company’s finance and accounting functions. In August 2016, he assumed a full-time role as Finance Director as part of the
Company’s transition towards gold production.
Mr Leach holds a Bachelor of Arts (Economics) and a Masters of Business Administration. Mr Leach is a member of the Institute of
Chartered Accountants (Australia), the Canadian Institute of Chartered Accountants and a Fellow of the Australian Institute of
Directors. He has over 30 years’ experience in senior financial and executive director positions within the mining industry
internationally. Mr Leach is non-executive Chairman of ASX listed Pan Continental Oil & Gas NL and has served on the Board of
AIM and TSX listed Atalaya Mining PLC (2007 to 2014), and is a former member of the boards of Resource Mining Corporation
Limited (2006 to 2007) and Gympie Gold Limited (1995 to 2003).
KEFI Minerals Plc ANNUAL REPORT 2016
Page 32
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Report of the board of directors (continued)
For the year ended 31 December 2016
Norman Ling
Non‐Executive Independent Director
Mr Norman Ling holds a BA (Hons) German and Economic History and has previously served as a non-executive director of Nyota
Minerals Limited. He has held a series of appointments at the UK Foreign and Commonwealth Office in a career spanning more
than 30 years. Mr Ling's last post was as British Ambassador to Ethiopia, Djibouti and the African Union from 2008 to 2011, when
he retired from government service.
Ian Rutherford Plimer
Non‐Executive Director
Professor Ian Plimer BSc (Hons), PhD, FTSE, FGS, FAIMM was appointed Non-Executive Deputy Chairman in December 2006
and is Chairman of the Group’s Audit Committee. He is Emeritus Professor at The University of Melbourne where he was
Professor and Head (1991-2005). He was Professor of Geology (University of Newcastle 1985-1991) and Professor of Mining
Geology (University of Adelaide 2005-2012). He has been awarded the prestigious Leopold von Buch Medal for Science, the
Centenary Medal and the Eureka Prize (twice). Professor Plimer has published more than 130 scientific papers and is author of
multiple best-selling books for the general public. Professor Plimer’s main geological interests are in mineral resources. He serves
on the boards of Silver City Minerals (ASX:SCI) and Niuminco Group Ltd (ASX:NIU), unlisted Hancock Prospecting Pty Ltd
companies (Roy Hill Holdings, Hope Downs, Queensland Coal Investments) and represents Hancock Prospecting on the Lakes Oil
NL board (ASX:LKO).
Directors’ indemnities
The Group maintains directors’ and officers’ liability insurance providing appropriate cover for any legal action brought against its
Directors.
Directors’ interests
The interests of the Directors and their immediate families (all of which are beneficial unless otherwise stated) and of persons
connected with them in the existing ordinary shares as at date of report are as follows:
Director
H Anagnostaras-Adams
I Plimer
J Leach
N Ling
Number of existing
ordinary shares
% of issued
share capital
5,794,809
822,816
1,715,742
296,265
1.74%
0.25%
0.52%
0.09%
On the 2 March 2017 the Company consolidated 17 Existing Ordinary Shares into one New Ordinary Share. The Directors to whom
options over Ordinary shares have been granted after the share consolidation at the date of this document and the number of
ordinary shares subject to such options are as follows:
KEFI Minerals Plc ANNUAL REPORT 2016
Page 33
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Report of the board of directors (continued)
For the year ended 31 December 2016
Grant
Date
Expiration
Date
Exercise
Price
H.
Anagnostaras-
Adams
I. Plimer
J. Rayner
J. Leach
N Ling
22-Mar-17
21-Mar-23
7.5
3,442,184
441,176
674,083
M.Wessley-
Wood
882,353
05-Aug-16
04-Aug-22
6.8
-
-
-
882,353
-
588,235
19-Jan-16
18-Jan-22
7.14
943,412
314,471
943,412
314,471
314,471
20-Mar-15
19-Mar-21
22.44
382,353
58,824
382,353
58,824
117,647
12-Sep-14
11-Sep-20
29.92
-
-
-
-
132,353
27-Mar-14
26-Mar-20
39.1
382,353
259,824
519,588
132,353
13-Sep-12
12-Sep-18
68
176,471
147,059
294,118
88,235
-
-
-
-
-
-
-
5,326,773
1,221,354
2,139,471
2,150,319
564,471
1,470,588
Directors’ emoluments
In compliance with the disclosure requirements of the listing requirements of AIM, the aggregate remuneration paid to the directors
of KEFI for the year ended 31 December 2016 is set out below:
31 December 2016
Executive
J Rayner-Retired¹
H. Anagnostaras-Adams
J. Leach-Appointed¹
Non-Executive
I. Plimer
N. Ling
M Wellesley-Wood¹
Salary
and fees
Other
compensation
²Share based
benefit
incentive options
³Deferred
incentive
bonus
2016
Total
96
211
87
25
71
10
500
21
18
10
-
-
-
49
47
46
31
14
16
13
167
-
-
-
-
-
-
-
164
275
128
39
87
23
716
31 December 2015
Salary
and fees
Other
compensation
Share based
benefit
incentive options
³Deferred
bonus
incentive
2015
Total
Executive
J. Rayner
H. Anagnostaras-Adams
Non-Executive
I. Plimer
J. Leach
N. Ling
147
198
25
25
76
471
26
25
-
-
-
51
55
46
19
12
14
146
-
50
-
-
-
50
228
319
44
37
90
718
¹Appointments and Retirement as Director: In August 2016 Mr. Wellesley-Wood was appointed as Non-Executive director and Mr Leach assumed the role
of Finance Director. Mr. Rayner stepped down from the Board in August 2016 but continues to serve as Adviser – Exploration and Corporate
Development.
² Share based benefit incentive options: These represent the proportion of the fair value of the options at the grant date that vested in the current year,
and are not a cash payment.
³Deferred incentive bonus: Bonus payable once finance is secured or approved by board. The deferred incentive bonus in 2015 was paid in KEFI shares.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 34
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Report of the board of directors (continued)
For the year ended 31 December 2016
Corporate governance statement
The Board is committed to maintaining high standards of corporate governance. The Directors recognise the importance of sound
corporate governance and intend to observe the requirements of the UK Corporate Governance Code, as published by the
Financial Reporting Council, and the Corporate Governance Code for Small and Mid-Sized Quoted Companies 2013, as published
by the Quoted Companies Alliance, to the extent they consider appropriate in light of the Company’s size, stage of development
and resources. However, it should not be considered that the Company has complied with the UK Corporate Governance Code or
the Corporate Governance Code for Small and Mid-Sized Quoted Companies 2013.
Board of Directors
The Company supports the concept of an effective Board leading and controlling the Company. The Board is responsible for
approving Company policies and strategies. It meets at least every three months and is supplied with appropriate and timely
information and the Directors are free to seek any further information they consider necessary. All Directors have access to advice
from the Company Secretary and independent professionals at the Company's expense. Training is available for new Directors and
other Directors as necessary. The Group's key strategic and operational decisions are reserved exclusively for the decision of the
Board.
The Board consists of two full time Executive Directors who hold key operational positions in the Company (the Executive
Chairman and Finance Director), and three Non-Executive Directors. Two of the Non-Executive Directors, Mark Wellesley-Wood
and Norman Ling, are considered to be independent of management and any business or other relationship which could interfere
with the exercise of their independent judgment, bring a breadth of experience and knowledge to the Company. Mark Wellesley-
Wood was appointed as lead independent director in March 2017. The Board regularly reviews key business risks, including the
financial risks facing the Group in the operations of its business. The Directors are of the opinion that the Board composition
contains a suitable balance. The Board maintains regular contact with its advisers and public relations consultants in order to
ensure that the Board develops an understanding of the views of shareholders about the Company.
Board meetings
The Board meets regularly throughout the year. The Board is responsible for formulating, reviewing and approving the Company's
strategy, financial activities and operating performance. Day to day management is devolved to the Executive Directors who are
charged with consulting the Board on all significant financial and operational matters. All Directors have access to the advice of the
Company’s solicitors. Necessary information is supplied to the Directors on a timely basis to enable them to discharge their duties
effectively, and all Directors have access to independent professional advice, at the Company’s expense, as and when required.
Board committees
The Board has established the following committees, each of which has its own terms of reference:
Audit Committee
The Audit Committee considers the Company’s financial reporting (including accounting policies) and internal financial controls.
The Audit Committee comprises two Non-Executive Directors: Ian Plimer (Chairman) and Mark Wellesley-Wood (Lead
Independent Director), and is responsible for ensuring that the financial performance of the Company is properly monitored and
reported on and in this capacity interacts as needed with the Company’s External Auditors. The Finance Director is invited and
attends the audit committee meetings to provide his skills and knowledge in audit committee matters.
Remuneration Committee
The Remuneration Committee is responsible for making recommendations to the Board on the remuneration of the Directors and
senior executives. It comprises three Non-Executive Directors: Mark Wellesley-Wood (Chairman), Ian Plimer and Norman Ling.
Directors’ remuneration and conditions are considered and agreed by the Board.
Financial packages for Executive Directors are established by reference to those prevailing in the employment market for
executives of equivalent status both in terms of level of responsibility of the position and their achievement of recognized job
qualifications and skills. The Committee also takes into consideration the terms that may be required to attract equivalent
experienced executives to join the Board from other companies.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 35
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Report of the board of directors (continued)
For the year ended 31 December 2016
Internal controls
The Directors acknowledge their responsibility for the Company’s systems of internal controls and for reviewing their effectiveness.
These internal controls are designed to safeguard the assets of the Company and to ensure the reliability of financial information
for both internal use and external publication. Whilst the Directors are aware that no system can provide absolute assurance
against material misstatement or loss, regular reviews of internal controls are undertaken to ensure that they are adequate and
effective.
Risk management
The Board considers risk assessment important in achieving its strategic objectives. There is a process of evaluation of
performance targets through regular reviews by senior management who compare actual progress to forecasts. Project milestones
and timelines are regularly reviewed.
Risks and uncertainties
Risk assessment and evaluation is an essential part of the Company’s planning and an important aspect of the Company’s internal
control system. The principal risks facing the Company are set out in the Strategic Report.
Risk management and treasury policy
The Board considers risk assessment as an integral activity in achieving its strategic objectives, with the Board regularly reviewing
its projects and activities in this regard. The Company finances its operations through equity and holds its cash as a liquid resource
to fund the obligations of the Company. Decisions regarding the management of these assets are approved by the Board. Please
refer to page 51 of the financial statements.
Securities trading
The Directors intend to comply with Rules 21 and 31 of the AIM Rules relating to Directors’ dealings and will take all reasonable
steps to ensure compliance by the Group’s applicable employees as well. The Board has adopted a Share Dealing Code that is
appropriate for an AIM quoted company and this applies to Directors, senior management and any employees who are in
possession of “unpublished price sensitive information”. All such persons are prohibited from trading in the Company’s securities if
they are in possession of “unpublished price sensitive information”. Subject to this condition and trading prohibitions applying to
certain periods, trading can occur provided the relevant individual has received the appropriate prescribed clearance.
Relations with shareholders
The Board is committed to providing effective communication with the shareholders of the Company. Significant developments are
disseminated through stock exchange announcements and regular updates of the Company’s website. The Board views the AGM
as a forum for communication between the Company and its shareholders and encourages their participation in its agenda.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 36
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Report of the board of directors (continued)
For the year ended 31 December 2016
Shareholders holding more than 3% of share capital
The Shareholders holding more than 3% of the share capital of the Company as at the date of this report and as far as the
Directors’ are aware:
Name
The Bank Of New York (Nominees) Limited
Nomura Custody Nominees Limited
Securities Services Nominees Limited
Barclayshare Nominees Limited
BNY (OCS) Nominees Limited
Ausdrill International Pty Ltd
Jim Nominees Limited
Beaufort Nominees Limited
Registered holdings per TR-1 disclosures were:
Lanstead Capital LP
Odey Asset Management LLP
Ausdrill International Pty Ltd
Events after the reporting date
Consolidation of Ordinary Shares
Percentage
Number of Shares
21.9%
8.7%
7.1%
5.9%
5.4%
5.0%
4.6%
3.0%
26.0%
18.9%
5.0%
73,035,872
28,823,529
23,823,530
19,661,765
18,090,000
16,559,487
15,366,334
9,877,598
86,470,588
62,764,330
16,559,487
At the close of business, 1 March 2017, shareholders received one New Ordinary Share of nominal value 1.7 pence each for every
17 Existing Ordinary Shares of nominal value 0.1 pence each. Immediately following the Consolidation (and prior to the issue of the
Fundraising Shares) the number of New Ordinary Shares in issue and admitted to trading on AIM was 228,407,085.
Placing and the Lanstead Subscription
The Company conditionally raised £5,620,000 before expenses on 1 March 2017 through a placing of 104,295,888 ordinary shares
of 1.7p each at a price of 5.61p per share. After the placing and the 17:1 consolidation approved on 1 March 2017 there are
332,702,973 shares on issue.
The Lanstead Subscription involves the issuance of 82,352,941 shares and is governed according to a ‘sharing agreement’ and
structured relative to a benchmark price, which has been set at 7.48p/share (0.44p/share pre-consolidation), such that KEFI may
receive more than £4,620,000 if the share price exceeds this level and vice versa if it does not. To this end, £693,000 was
contributed in March 2017 by Lanstead, with the balance being paid in equal instalments of £218,000 per month (subject to
adjustment upwards or downwards) for 18 months commencing in April 2017.
Other
On 22 March 2017, 6,829,613 options were issued to persons who discharge director and managerial responsibilities ("PDMRs")
and a further 2,705,509 options have been granted to other non-board members of the senior management team. The options
have an exercise price of 7.5p, expire after 6 years, and vest in two equal annual instalments, the first upon the achievement of
practical completion of the planned processing plant at the Tulu Kapi Gold Project and the second upon the achievement of
nameplate capacity for a twelve-month period.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 37
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Report of the board of directors (continued)
For the year ended 31 December 2016
Auditors
The auditors, Moore Stephens LLP, have expressed their willingness to continue in office and a resolution giving authority to the
Board of Directors to fix their remuneration will be proposed at the Annual General Meeting.
Directors’ confirmation
Each of the persons who are a director at the date of approval of this annual report confirms that:
there is no relevant audit information of which the Company’s auditors are unaware; and
each Director has taken all the steps that ought to have been taken as a Director, in order to be aware of any relevant audit
information and to establish that the Company’s auditors are aware of that information.
By Order of the Board
Company Secretary
Cargil Management Services Limited
27/28 Eastcastle Street
London
United Kingdom
4 June 2017
KEFI Minerals Plc ANNUAL REPORT 2016
Page 38
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Statement of directors’ responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors prepare
the consolidated financial statements in accordance with IFRS as adopted by the European Union and applicable law. The
financial statements must, in accordance with IFRS as adopted by the European Union, present fairly the financial position and
performance of the Company; such references in the UK Companies Act 2006 to such financial statements giving a true and fair
view are references to their achieving a fair presentation. Under company law Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view. The Directors are also required to prepare the financial statements in
accordance with the rules of the London Stock Exchange for companies trading on AIM.
In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether the consolidated financial statements have been prepared in accordance with IFRS as adopted by the
European Union; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure
that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements
may differ from legislation in other jurisdictions.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 39
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Independent auditor’s report
To the shareholders of KEFI Minerals PLC
We have audited the financial statements of KEFI Minerals PLC for the year ended 31 December 2016 which are set out on pages
42 to 75. The financial reporting framework that has been applied in their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as
applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 39, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of Financial Statements is provided on the Financial Reporting Council’s website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the Group’s and the parent company’s affairs as at 31
December 2016 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter – Going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made
in Note 2 to the financial statements concerning the Company and Group’s ability to continue as a going concern. The going
concern presumption may not be appropriate because its validity depends principally on securing funding to develop the Tulu Kapi
mine project as an economically viable mineral deposit, and the availability of subsequent funding to extract the resource, or
alternatively the availability of funding to extend the Company’s and Group’s exploration activities. These conditions indicate the
existence of a material uncertainty which may cast significant doubt about the Company and Group’s ability to continue as a going
concern. The financial statements do not include the adjustments that would result if the Company and Group were unable to
continue as a going concern.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 40
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Independent auditor’s report (continued)
To the shareholders of KEFI Minerals PLC (continued)
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the Strategic Report and the Directors’ Report for the financial year for which the group financial
statements are prepared is consistent with the group financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the parent company and its environment obtained in the course of the audit, we
have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our
opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Stephen Corrall, Senior Statutory Auditor
For and on behalf of Moore Stephens LLP, Statutory Auditor
150 Aldersgate Street
London
EC1A 4AB
5 June 2017
KEFI Minerals Plc ANNUAL REPORT 2016
Page 41
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Consolidated statement of comprehensive income
Year ended 31 December
Revenue
Exploration costs
Gross loss
Administrative expenses
Vat refund
Share-based payments
Share of loss from jointly controlled entity
Operating loss
Foreign exchange loss
Finance costs
Loss before tax
Tax
Loss for the year
Other comprehensive income:
Exchange differences on translating foreign operations
Total comprehensive loss for the year
Notes
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
17
19
6
8
9
-
(125)
(125)
(2,190)
2,512
(445)
(726)
(974)
(123)
(136)
(1,233)
-
(1,233)
-
(4)
(4)
(1,720)
-
(378)
(735)
(2,837)
(50)
(319)
(3,206)
-
(3,206)
200
56
(1,033)
(3,150)
Basic and fully diluted loss per share (pence)
10
(0.037)
(0.203)
The notes on pages 48 to 75 are an integral part of these consolidated financial statements.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 42
The
Company
2016
The
Group
2015
The
Company
2015
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Statements of financial position
31 December
Notes
11
12
13.1
13.2
14
15
16
17
17
17
17
ASSETS
Non-current assets
Property, plant and
equipment
Intangible assets
Fixed asset investments
Investments in jointly
controlled entities
Current assets
Available for sale financial
assets
Trade and other receivables
Cash and cash equivalents
Total assets
EQUITY AND LIABILITIES
Equity attributable to
owners of the Company
Share capital
Deferred Shares
Share premium
Share options reserve
Foreign exchange reserve
Accumulated losses
Total equity
Current liabilities
Trade and other payables
20
Total liabilities
Total equity and liabilities
The
Group
2016
61
13,992
-
-
14,053
95
3,056
410
3,561
6
3,939
4,598
181
8,724
-
8,069
400
8,469
17,614
17,193
3,883
12,436
16,279
1,474
170
(18,695)
15,547
2,067
2,067
2,067
17,614
3,883
12,436
16,279
1,474
-
(18,496)
15,576
1,617
1,617
1,617
17,193
81
11,845
-
-
11,926
92
358
562
1,012
12,938
2,623
12,436
12,347
1,212
(30)
(17,645)
10,943
1,995
1,995
1,995
3
1,078
4,598
181
5,860
8
7,710
393
8,111
13,971
2,623
12,436
12,347
1,212
-
(15,623)
12,995
976
976
976
12,938
13,971
The notes on pages 48 to 75 are an integral part of these consolidated financial statements.
The Company has taken advantage of the exemption conferred by section 408 of Companies Act 2006 from presenting its own
statement of comprehensive income. Loss after taxation amounting to £3.1 million (2015: £2.5 million) has been included in the
financial statements of the parent company.
On the 4 June 2017, the Board of Directors of KEFI Minerals PLC authorised these financial statements for issue.
Harry Anagnostaras-Adams
Executive Director- Chairman
Company Number: 05976748
KEFI Minerals Plc ANNUAL REPORT 2016
Page 43
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Consolidated statement of changes in equity
Year ended 31 December 2016
Attributable to the owners of the Company
Share
Share
options
capital
reserve
Share
premium
Deferred
shares
Foreign
exchange
reserve
Accumulat
ed
losses
Total
At 1 January 2015
Loss for the year
Other comprehensive income
Total Comprehensive Income
Recognition of share based
payments
Cancellation of options
Issue of share capital
Restructuring of share
capital
Share issue costs
At 31 December 2015
Loss for the year
Other comprehensive income
Total Comprehensive Income
Recognition of share based
payments
Cancellation of options
Issue of share capital
Share issue costs
At 31 December 2016
12,352
-
-
-
-
-
2,707
(12,436)
-
2,623
-
-
-
-
-
-
-
-
-
-
-
12,436
-
12,436
-
-
-
-
8,433
-
-
-
-
-
4,293
-
848
-
-
-
378
(14)
-
-
(86)
-
56
56
-
-
-
-
(14,389)
(3,206)
-
(3,206)
-
14
-
-
7,158
(3,206)
56
(3,150)
378
-
7,000
-
(379)
12,347
-
1,212
-
(30)
(64)
(17,645)
(443)
10,943
-
-
-
-
-
-
-
445
(183)
-
-
1,474
-
200
200
-
-
-
-
170
(1,233)
-
(1,233)
-
183
-
-
(18,695)
(1,233)
200
(1,033)
445
-
5,556
(364)
15,547
-
1,260
-
3,883
-
-
-
12,436
-
4,296
(364)
16,279
The following describes the nature and purpose of each reserve within owner’s equity:
Reserve
Share capital
Deferred shares
Description and purpose
amount subscribed for ordinary share capital at nominal value
on 16 June 2015, under the restructuring of share capital, ordinary shares of 1p each in the
capital of the Company were sub-divided into one new ordinary share of 0.1p and one deferred
share of 0.9p
Share premium
amount subscribed for share capital in excess of nominal value, net of issue costs
Share options reserve
reserve for share options granted but not exercised or lapsed
Foreign exchange reserve
cumulative foreign exchange net gains and losses recognized on consolidation
Accumulated losses
cumulative net gains and losses recognized in the statement of comprehensive income,
excluding foreign exchange gains within other comprehensive income
Non-controlling interest (NCI)
the portion of equity ownership in a subsidiary not attributable to the parent company
The notes on pages 48 to 75 are an integral part of these consolidated financial statements.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 44
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Company statement of changes in equity
Year ended 31 December 2016
Share
capital
Deferred
shares
Share
premium
Share
options
reserve
Accumulated
losses
At 1 January 2015
Comprehensive loss for the year
Recognition of share based
payments
Cancellation of options
Restructuring of share capital
Issue of share capital
Share issue costs
At 31 December 2015
Comprehensive loss for the year
Recognition of share based
payments
Cancellation of options
Issue of share capital
Share issue costs
At 31 December 2016
12,352
-
-
-
(12,436)
2,707
-
2,623
-
-
-
1,260
-
3,883
-
-
-
-
12,436
-
-
12,436
-
-
-
-
-
12,436
8,433
-
-
-
-
4,293
(379)
12,347
-
-
-
4,296
(364)
16,279
848
-
378
(14)
-
-
-
1,212
-
445
(183)
-
-
1,474
(13,117)
(2,456)
-
14
-
-
(64)
(15,623)
(3,056)
-
183
-
-
(18,496)
Total
8,516
(2,456)
378
-
-
7,000
(443)
12,995
(3,056)
445
-
5,556
(364)
15,576
The following describes the nature and purpose of each reserve within owner’s equity:
Reserve
Description and purpose
Share capital
amount subscribed for ordinary share capital at nominal value
Deferred shares
on 16 June 2015, under the restructuring of share capital, ordinary shares of 1p each in the capital of
the Company were sub-divided into one new ordinary share of 0.1p and one deferred share of 0.9p
Share premium
amount subscribed for share capital in excess of nominal value, net of issue costs
Share options reserve
reserve for share options granted but not exercised or lapsed
Accumulated losses
cumulative net gains and losses recognized in the statement of comprehensive income
The notes on pages 48 to 75 are an integral part of these consolidated financial statements.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 45
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Consolidated statement of cash flows
Year ended 31 December 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax
Adjustments for:
Depreciation of property, plant and equipment
Share based payments
Impairment of intangible asset
Issue of warrants
Share of loss from jointly controlled entity
Exchange difference
Changes in working capital:
Trade and other receivables
Trade and other payables
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Deferred exploration costs
Project evaluation costs
Acquisition of property plant and equipment
Advances to jointly controlled entity
Proceeds from disposal of available for sale asset
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital
Issue costs
Net cash from financing activities
Net decrease in cash and cash equivalents
Effect of cash held in foreign currencies
Cash and cash equivalents:
At beginning of the year
At end of the year
Notes Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
(1,233)
55
281
266
164
726
44
303
(2,701)
51
(2,347)
(1,189)
(1,224)
(35)
(566)
16
(2,998)
5,556
(364)
5,192
(153)
1
562
410
11
18
12
17
19
17
17
16
16
(3,206)
90
215
-
163
735
37
(1,966)
29
(1,111)
(3,048)
(967)
(1,739)
(11)
(790)
-
(3,507)
6,923
(443)
6,480
(75)
(3)
640
562
The notes on pages 48 to 75 are an integral part of these consolidated financial statements.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 46
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Company statement of cash flows
Year ended 31 December 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax
Adjustments for:
Share based payments
Issue of warrants
Impairment of loan to subsidiary
Impairment of amount receivable from jointly controlled entity
Exchange difference
Changes in working capital:
Trade and other receivables
Trade and other payables
Net cash used in operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of property plant and equipment
Project evaluation costs
Advances to jointly controlled entity
Proceeds from disposal of available for sale asset
Loan to subsidiary
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital
Issue costs
Net cash from financing activities
Net incease/(decrease) in cash and cash equivalents
Cash and cash equivalents:
At beginning of the year
At end of the year
Notes
Year Ended
Year Ended
31.12.16
£’000
31.12.15
£’000
(3,056)
(2,456)
18
17
17
17
16
16
281
164
64
494
1
(2,052)
37
641
(1,374)
(3)
(2,861)
(566)
16
(397)
(3,811)
5,556
(364)
5,192
7
393
400
215
163
28
720
74
(1,256)
45
20
(1,191)
(1)
(587)
(790)
-
(4,125)
(5,503)
6,923
(443)
6,480
(214)
607
393
The notes on pages 48 to 75 are an integral part of these consolidated financial statements.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 47
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements
Year ended 31 December 2016
1. Incorporation and principal activities
Country of incorporation
KEFI Minerals PLC (the “Company”) was incorporated in United Kingdom as a public limited company on 24 October 2006. Its
registered office is at 27/28, Eastcastle Street, London W1W 8DH.
The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its individual
statement of comprehensive income and related notes that form a part of these financial statements.
Principal activities
The principal activities of the Group for the year were:
To explore for mineral deposits of precious and base metals and other minerals that appear capable of commercial
exploitation, including topographical, geological, geochemical and geophysical studies and exploratory drilling.
To evaluate mineral deposits determining the technical feasibility and commercial viability of development, including the
determination of the volume and grade of the deposit, examination of extraction methods, infrastructure requirements and
market and finance studies.
To develop mineral deposits and market the metals produced.
2. Accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have
been consistently applied throughout both periods presented in these financial statements unless otherwise stated.
Basis of preparation and consolidation
The Company and the consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union. They comprise the accounts of KEFI Minerals PLC and all its subsidiaries
made up to 31 December 2016. The Company and the consolidated financial statements have been prepared under the historical
cost convention, except for the revaluation of certain financial instruments.
Going concern
The Directors have formed a judgment at the time of approving the financial statements that there is a reasonable expectation that
the Company and Group will be able to secure adequate resources to continue in operational existence for the foreseeable future.
The financial information has been prepared on the going concern basis, the validity of which depends principally on securing
funding to develop the Tulu Kapi mine project as an economically viable mineral deposit, and the availability of subsequent funding
to extract the resource, or alternatively the availability of funding to extend the Company’s and Group’s exploration activities.
These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Company and Group’s
ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Company
and Group were unable to continue as a going concern.
Functional and presentational currency
Items included in the Group’s financial statements are measured using the currency of the primary economic environment in which
the entity operates (“the functional currency”) which for the Company is British Pounds (GBP). The financial statements are
presented in British Pounds (GBP).
KEFI Minerals Plc ANNUAL REPORT 2016
Page 48
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
2. Accounting policies (continued)
Foreign currency translation
(1) Foreign currency translation
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the
transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and
liabilities denominated in foreign currencies are recognized in profit or loss in the statement of comprehensive income.
(2) Foreign operations
On consolidation, the assets and liabilities of the consolidated entity’s foreign operations are translated at exchange rates
prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period unless
exchange rates fluctuate significantly in which case they are recorded at the actual rate. Exchange differences arising, if any, are
recognized in the foreign currency translation reserve and as a component of other comprehensive income, and recognized in
profit or loss on disposal of the foreign operation.
Revenue recognition
The Group had no sales or revenue during the year ended 31 December 2016 (2015: £Nil).
Property plant and equipment
Property plant and equipment are stated at their cost of acquisition at the date of acquisition, being the fair value of the
consideration provided plus incidental costs directly attributable to the acquisition less depreciation.
Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their
estimated useful life. The annual depreciation rates used are as follows:
Furniture, fixtures and office equipment
Motor vehicles
Plant and equipment
25%
25%
25%
Acquisitions and goodwill
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued
by the Group in exchange for control of the acquiree. Any costs directly attributable to the business combination are written off to
the statement of comprehensive income. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition under IFRS 3 are recognized at their fair values at the acquisition date. Where the Group acquires a
subsidiary for less than the fair value of its assets and liabilities, this results in negative goodwill which is recognized in profit and
loss.
Purchased goodwill is capitalized and classified as an asset on the statement of financial position. Goodwill arising on acquisition
is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s
interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized.
Goodwill is reviewed for impairment on an annual basis. When the directors consider the initial value of the acquisition to be
negligible, the goodwill is written off to the statement of comprehensive income immediately. Trading results of acquired subsidiary
undertakings are included from the date of acquisition.
Goodwill is deemed to be impaired when the present value of the future cash flows expected to be derived is lower than the
carrying value. Any impairment is charged to the statement of comprehensive income immediately.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 49
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
2. Accounting policies (continued)
Interest in jointly controlled entities
Joint venture arrangements that involve the establishment of a separate entity in which each venturer has joint control are referred
to as jointly controlled entities. The results and assets and liabilities of jointly controlled entities are included in these financial
statements for the period using the equity method of accounting.
Finance costs
Interest expense and other borrowing costs are charged to the statement of comprehensive income as incurred.
Tax
The tax payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the statement of
comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. Tax is payable in the relevant jurisdiction at the rates described in note 9.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the
statement of financial position liability method. Deferred tax liabilities are generally recognized for all taxable differences and
deferred tax assets are recognized to the extent that taxable profits will be available against which deductible temporary differences
can be utilized. The amount of deferred tax is based on the expected manner of realisation or settlement of the carrying amounts of
assets and liabilities, using tax rates that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off deferred tax assets against deferred
tax liabilities and when the deferred taxes relate to the same fiscal authority.
Investments
Investments in subsidiary companies are stated at cost less provision for impairment in value, which is recognized as an expense
in the period in which the impairment is identified, in the Company accounts. These investments are consolidated in the Group
accounts.
Exploration costs
The Group has adopted the provisions of IFRS 6 “Exploration for and Evaluation of Mineral Resources”.
Exploration, evaluation and development expenditure, including acquisition costs of licences, in respect of each identifiable area of
interest is expensed to the statement of comprehensive income as incurred, until the point at which development of a mineral
deposit is considered economically viable.
Once the Board decides on the development of a project, development expenditure will be capitalized as incurred and amortized
over the estimated useful life of the area according to the rate of depletion of the economically recoverable reserves or over the
estimated useful life of the mine, if shorter.
The directors consider that the stage of development of its Licence areas in Saudi Arabia has not yet met its criteria for
capitalization. Capitalized development costs for the Group’s project in Ethiopia have been recognized on acquisition, and will
continue to be capitalised since this date, in accordance with IFRS 6.
A regular review will be undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in
relation to that area of interest. Accumulated capitalized costs in relation to an abandoned area of interest will be written off in full
against profit in the year in which the decision to abandon the area is made. Capitalized development expenditure will be
amortized from the date at which production commences on a unit of production basis over the lifetime of the ore reserves for the
area to which the costs relate.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 50
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
Share-based compensation benefits
IFRS 2 “Share-based Payment” requires the recognition of equity-settled share-based payments at fair value at the date of grant
and the recognition of liabilities for cash-settled share-based payments at the current fair value at each statement of financial
position date. The total amount expensed is recognized over the vesting period, which is the period over which performance
conditions are to be satisfied.
The fair value is measured using the Black Scholes pricing model. The inputs used in the model are based on management’s best
estimate, including consideration of the effects of non-transferability, exercise restrictions and behavioural considerations.
Financial instruments
Financial assets at amortized cost
Loans and receivables are recognized when the Group becomes party to the contractual provisions of the financial instrument.
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market
are classified as ‘loans and receivables’. Loans and receivables are measured at amortized cost using the effective interest
method, less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables
when the recognition of interest would be immaterial.
Financial assets at fair value through profit or loss
Subsequent to initial recognition, when a financial asset is designated as such on initial recognition, it is classified as held at fair
value through profit or loss. Assets other than held for trading are designated at fair value through profit and loss when the Group
manages the holdings and makes purchase and sale decisions based on fair value assessments and documented risk
management and investment strategies. Attributable transaction costs and changes in fair value are recognized in profit or loss.
Financial liabilities - equity
Financial liabilities are recognized when the Group becomes party to the loan. Financial liabilities represent trade payables and are
initially measured at fair value and subsequently at amortized cost.
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the
contractual arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue
costs. The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they
expire.
3. Financial risk management
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise cash at bank and in hand with an original
maturity date of less than three months.
Financial risk factors
The Group is exposed to market risk (interest rate risk and currency risk), liquidity risk and capital risk management arising from the
financial instruments it holds. The risk management policies employed by the Group to manage these risks are discussed below:
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations. The Group does not consider this risk to be significant.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 51
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
3. Financial risk management (continued)
Market risk - Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group’s
operating cash flows are substantially independent of changes in market interest rates as the Group has no significant interest-
bearing assets. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed
rates expose the Group to fair value interest rate risk. The Group’s management monitors the interest rate fluctuations on a
continuous basis and acts accordingly.
At the reporting date the interest rate profile of interest-bearing financial instruments was:
Variable rate instruments
Financial assets
2016
410
2015
562
Sensitivity analysis
An increase of 100 basis points in interest rates at 31 December 2016 would have increased equity and profit or loss by the
amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. Given
current interest rate levels, a decrease of 25 basis points has been considered, with the impact on profit and equity shown below.
Variable rate instruments
Financial assets – increase of 100 basis points
Financial assets – decrease of 25 basis points
Equity
2016
Profit or Loss
2016
Equity Profit or Loss
2015
2015
4
(1)
4
(1)
6
(1)
6
(1)
Currency risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk
arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not the
functional currency of the entity.
The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the Euro, Turkish
Lira, US Dollar, Ethiopia ETB and Saudi Arabian Riyal. Since 1986 the Saudi Arabian Riyal is pegged to the US Dollar, it is fixed at
USD/SAR 3.75. The Group’s management monitors the exchange rate fluctuations on a continuous basis and acts accordingly.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date
are as follows: The Saudi Arabian Riyal exposure is included in the USD amounts.
Australian Dollar
Euro
Turkish Lira
US Dollar
Ethiopia ETB
Liabilities
2016
Assets
2016
Liabilities
2015
Assets
2015
215
205
1
1,025
187
-
2
40
318
2,943
24
276
1
663
779
-
2
40
266
354
KEFI Minerals Plc ANNUAL REPORT 2016
Page 52
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
3. Financial risk management (continued)
Sensitivity analysis
A 10% strengthening of the British Pound against the following currencies at 31 December 2016 would have increased/(decreased)
equity and profit or loss by the amounts shown in the table below. This analysis assumes that all other variables, in particular
interest rates, remain constant. For a 10% weakening of the British Pound against the relevant currency, there would be an equal
and opposite impact on the loss and equity.
AUD Dollar
Euro
Turkish Lira
US Dollar
Ethiopia ETB
Equity
2016
Profit or Loss
2016
Equity Profit or Loss
2015
2015
22
20
(4)
58
(276)
22
20
(4)
58
(276)
3
27
(4)
40
42
3
27
(4)
40
42
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially
enhances profitability, but can also increase the risk of losses. The Group has procedures with the object of minimising such losses
such as maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of
committed credit facilities.
The Group’s contractual cash flows for its financial liabilities are all due within 3 months or less. In January 2014 agreement was
made with the Ethiopian tax authorities to pay the reverse VAT over a period of three years (principal and interest). The VAT
amount was settled during 2016 and has given rise to a VAT refund.
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to
shareholders through the optimization of the debt and equity balance. This is done through the close monitoring of cash flows.
The capital structure of the Group consists of cash and cash equivalents of £410,000 (2015: £562,000) and equity attributable to
equity of the parent, comprising issued capital and deferred shares of £16,319,000 (2015: £15,059,000), other reserves of
£17,923,000, (2015: £13,529,000) and accumulated losses of £18,695,000 (2015: £17,645,000). The Group does not use
derivative financial instruments and has no long term debt facilities.
Fair value estimation
The fair values of the Group’s financial assets and liabilities approximate their carrying amounts at the reporting date.
Financial assets
Cash and cash equivalents (Note 16)
Available for sale financial assets (Note 14)
Trade and other receivables (Note 15)
Financial liabilities
Trade payables (Note 20)
Carrying Amounts
2015
2016
Fair Values
2016
2015
410
95
3,056
562
92
358
410
95
3,056
562
92
358
2,067
1,995
2,066
1,995
Available for sale financial assets are classified as Level 1 within the fair value hierarchy, except for Ethiopian Government bonds,
which are classified as Level 2. Level 1 items are derived from quoted prices (unadjusted) in active markets for identical assets or
liabilities. Level 2 items are derived from inputs other than quoted prices included within Level 1 that are observable for the assets
either directly or indirectly.
Other financial assets and liabilities are short term and their carrying value is considered to approximate to their fair value.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 53
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
4. Use and revision of accounting estimates and judgements
The preparation of the financial report requires the making of estimations and assumptions that affect the recognized amounts of
assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. The estimates and associated assumptions
are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
Significant judgements include:
Going concern
The going concern presumption depends principally on securing funding to develop the Tulu Kapi mine project as an economically
viable mineral deposit, and the availability of subsequent funding to extract the resource, or alternatively the availability of funding
to extend the Company’s and Group’s exploration activities.
Significant estimates include:
Fair value of acquisitions
The 'acquisition method', which generally requires assets acquired and liabilities assumed to be measured at their fair values at the
acquisition date. Fair value estimates are required. In calculating the fair value estimates of net identifiable net assets on
acquisition significant judgements and estimates are required.
Share based payments
In calculating the fair value at the grant date, the Black Scholes model requires us to estimate the inputs to this model, in particular
in respect of volatility. This assessment is based on historical share price movements assuming these will continue into the future.
Impairment review of asset carrying values
Events or changes in circumstances can give rise to significant impairment charges or reversals of impairment in a particular year.
Where the recoverable amounts of Group cash generating units are assessed by analyses of discounted cash flows, the resulting
valuations are particularly sensitive to changes in estimates of long term commodity prices, exchange rates, operating costs, the
grouping of assets within cash-generating units and discount rates.
Capitalisation of exploration and evaluation costs
Under the Group’s accounting policy, exploration and evaluation expenditure is not capitalised until the point is reached at which there is a
high degree of confidence in the project’s viability and it is considered probable that future economic benefits will flow to the Group.
Subsequent recovery of the resulting carrying value depends on successful development or sale of the undeveloped project. If a project
does not prove viable, all irrecoverable costs associated with the project net of any related impairment provisions are written off.
Contingent liabilities
A contingent liability arises where a past event has taken place for which the outcome will be confirmed only by the occurrence or non-
occurrence of one or more uncertain events outside of the control of the Group, or a present obligation exists but is not recognised
because it is not probable that an outflow of resources will be required to settle the obligation. A provision is made when a loss to the
Group is likely to crystallise. The assessment of the existence of a contingency and its likely outcome, particularly if it is considered that a
provision might be necessary, involves significant judgment taking all relevant factors into account.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 54
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
5. Operating segments
The Group has only one distinct operating segment, being that of mineral exploration. The Group’s exploration activities are
located in the Kingdom of Saudi Arabia (through the jointly controlled entity), Ethiopia and its administration and management is
based in Cyprus.
Cyprus
Turkey Bulgaria
Ethiopia
Consolidated
2016
Operating (loss)/profit
(2,467)
(34)
(3)
Material non-recurring item
Foreign exchange profit/(loss)
Interest
Share of loss from jointly
controlled entity
Loss before tax
Tax
Loss for the year
Total assets
Total liabilities
Depreciation of property, plant
and equipment
Impairment of intangible assets
(482)
(193)
(136)
(3,278)
4,520
1,617
1
-
-
70
-
36
42
2
-
-
(255)
2,994
-
-
-
-
-
(3)
2,739
4
4
-
-
13,049
443
54
266
(2,759)
2,512
(123)
(136)
(506)
(726)
(1,232)
-
(1,232)
17,615
2,066
55
266
Cyprus
Turkey Bulgaria
Ethiopia
Consolidated
2015
Operating loss
Foreign exchange profit/(loss)
Interest
Share of loss from jointly
controlled entity
Loss before tax
Tax
Loss for the year
Total assets
Total liabilities
Depreciation of property, plant
and equipment
(1,552)
13
(179)
(33)
(26)
-
(1,718)
(59)
1,695
976
42
2
-
-
-
8
-
-
8
4
4
(525)
(37)
(140)
(702)
11,197
1,013
90
(2,102)
(50)
(319)
(2,471)
(735)
(3,206)
-
(3,206)
12,938
1,995
90
KEFI Minerals Plc ANNUAL REPORT 2016
Page 55
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
6. Expenses by nature
Exploration costs
Depreciation of property, plant and equipment (Note 11)
Material non-recurring item- vat refund (Note 15 and Note 20)
Impaired intangible assets (Note 12)
Warrants issue costs (Note 17)
Share based benefits to employees (Note 17)
Share of losses from jointly controlled entity (Note 5 and Note 19)
Directors’ fees and other benefits (Note 21.1)
Consultants’ costs
Auditors’ remuneration - audit current year
Auditors’ remuneration - associated firm
Other expenses
Operating loss
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
125
55
(2,512)
266
164
77
726
716
439
62
7
849
974
4
90
-
-
163
69
735
718
246
51
-
761
2,837
The Group’s stages of operations in Saudi Arabia as at the year-end and as at the date of approval of these financial statements
have not yet met the criteria for capitalization of exploration costs. The Company only capitalises direct development costs for the
Tulu Kapi gold project in Ethiopia.
7. Staff costs
Salaries
Accumulated Leave Provision
Termination Package
Social insurance costs and other funds
Average number of employees
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
550
49
126
32
757
45
474
-
-
39
513
46
Excludes Directors’ remuneration and fees which are disclosed in note 21.1. These staff costs are capitalised in development
exploration costs.
8. Finance costs
Interest paid to Ethiopian Revenue and Customs Authority (“ERCA”) – Note 20
Other finance costs
9. Tax
Loss before tax
Tax calculated at the applicable tax rates
Tax effect of non-deductible expenses
Tax effect of tax losses
Tax effect of items not subject to tax
Tax effect of capital allowances
Tax effect of other timing differences
Charge for the year
2016
2015
-
136
136
140
179
319
2016
2015
(1,233)
(3,206)
(382)
248
341
(207)
-
-
-
(515)
308
280
(92)
19
-
-
The Company is resident in Cyprus for tax purposes. A deferred tax asset of £1,242,770 (2015: £1,336,989) has not been
accounted for due to the uncertainty over future recoverability.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 56
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
9. Tax (continued)
Cyprus
The corporation tax rate is 12.5%. Under certain conditions interest income may be subject to defence contribution at the rate of
15%. In such cases this interest will be exempt from corporation tax. In certain cases, dividends received from abroad may be
subject to defence contribution at the rate of 20% for the tax year 2013 and 17% for 2014 and thereafter. Due to tax losses
sustained in the year, no tax liability arises on the Company. Under current legislation, tax losses may be carried forward and be
set off against taxable income of the five succeeding years. As at 31 December 2016, the balance of tax losses which is available
for offset against future taxable profits amounts to £ 9,942,163 (2015: £ 7,795,644).
Bulgaria
Mediterranean Minerals (Bulgaria) EOOD, the 100% subsidiary of the Company, is resident in Bulgaria for tax purposes. The
corporation tax rate is 10%. Due to tax losses sustained in the period, no tax liability arises on the Mediterranean Minerals
(Bulgaria) EOOD. Under current legislation, tax losses may be carried forward and be set off against taxable income of the
following five years. As at 31 December 2016, the balance of tax losses which is available for offset against future taxable profits
amounts to £25,476 (2015: £34,035). The reduction in tax losses from the prior year is due to losses passing the five year
threshold for their utilization.
Turkey
Doğu Akdeniz Mineralleri Sanayi ve Ticaret Limited Şirket (Doğu Akdeniz Mineralleri), the 100% subsidiary of Mediterranean
Minerals (Bulgaria) EOOD, and ultimately 100% subsidiary of the Company, is resident in Turkey for tax purposes. The
corporation tax rate is 20%. Under local tax legislation, exploration costs are can only be set off against income from mining
operations. Tax losses may be carried forward and be set off against taxable income of the five succeeding years. As at 31
December 2016, the balance of exploration costs that is available for offset against future income from mining operations amount
to £ 811,471 (2015: £948,764).
Ethiopia
KEFI Minerals Ethiopia Limited is subject to other direct and indirect taxes in Ethiopia through its foreign operations. The mining
industry in Ethiopia is relatively undeveloped. As a result, tax regulations relating to mining enterprises are evolving. There are
transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is
uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be
due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will
impact the current and deferred tax provisions in the period in which such determination is made.
During 2013, the House of People's Representatives passed an amendment to the Mining Income Tax Proclamation, reducing
income tax from 35% to 25% and had received an initial draft of proposed amendments to the Mining Proclamation, which includes
a reduction in royalty on gold production from 8% to 7%.
10. Loss per share
The calculation of the basic and fully diluted loss per share attributable to the ordinary equity holders of the parent is based on the
following data:
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
Net loss attributable to equity shareholders
Average number of ordinary shares for the purposes of basic loss per share (000’s)
(1,233)
3,313,626
(3,206)
1,577,708
Loss per share:
Basic and fully diluted loss per share (pence)
(0.037)
(0.203)
The effect of share options and warrants on losses per share is anti-dilutive.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 57
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
11. Property, plant and equipment
The Group
Cost
At 1 January 2015
Additions
Disposals
At 31 December 2015
Additions
At 31 December 2016
Accumulated Depreciation
At 1 January 2015
Charge for the year
Disposals
At 31 December 2015
Charge for the year
At 31 December 2016
Net Book Value at 31 December 2016
Net Book Value at 31 December 2015
Motor
Vehicles
Plant and
equipment
Furniture,
fixtures and
office
equipment
Total
60
-
(17)
43
32
75
39
5
(17)
27
6
33
42
16
198
7
(70)
135
-
135
73
67
(70)
70
46
116
19
65
61
4
(6)
59
3
62
47
18
(6)
59
3
62
-
-
319
11
(93)
237
35
272
159
90
(93)
156
55
211
61
81
The above property, plant and equipment is located in Turkey and Ethiopia.
The Company has no significant property, plant and equipment.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 58
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
12. Intangible assets
The Group
Cost
At 1 January 2015
Additions
At 31 December 2015
Additions
At 31 December 2016
Accumulated Amortization and Impairment
At 1 January 2015
Charge for the year
At 31 December 2015
Impairment Charge for the year
At 31 December 2016
Net Book Value at 31 December 2016
Net Book Value at 31 December 2015
The Company
Cost
At 1 January 2015
Additions
Transfer from subsidiary
At 31 December 2015
Additions
Transfer to subsidiary
At 31 December 2016
Accumulated Amortization and Impairment
At 1 January 2015
Charge for the year
At 31 December 2015
Charge for the year
At 31 December 2016
Net Book Value at 31 December 2016
Net Book Value at 31 December 2015
Project
evaluation
costs
Deferred
exploration
costs
976
1,739
2,715
1,224
3,939
-
-
-
-
-
8,163
967
9,130
1,189
10,319
-
-
-
266
266
Total
9,139
2,706
11,845
2,413
14,258
-
-
-
266
266
3,939
2,715
10,053
9,130
13,992
11,845
Project
evaluation
costs
976
587
(485)
1,078
1,225
1,636
3,939
-
-
-
-
-
3,939
1,078
Total
976
587
(485)
1,078
1,225
1,636
3,939
-
-
-
-
-
3,939
1,078
KEFI Minerals Plc ANNUAL REPORT 2016
Page 59
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
12. Intangible assets
Deferred exploration costs are associated with the Tulu Kapi mine in Ethiopia. The group recognized deferred exploration costs
with a fair value of US$ 6,900,000 on acquisition of the project in December 2013. Further costs incurred by the Group since the
acquisition have been capitalized.
Once the Board decides on the development of a project, development expenditure will be capitalized as incurred and amortised
over the estimated useful life of the area according to the rate of depletion of the economically recoverable reserves or over the
estimated useful life of the mine, if shorter.
As at 31 December 2016 management performed an impairment review for deferred exploration costs, which relate to the Tulu
Kapi licence area, at 31 December 2016.The Net Present Value of the Tulu Kapi asset exceeded the net book value significantly.
The impairment review compared the recoverable amount of assets to the carrying value. The recoverable amount of an asset is
assessed by reference to the higher of value in use (“VIU”), being the net present value (“NPV”) of future cash flows expected to be
generated by the assets, and fair value less costs to dispose (“FVLCD”). The FVLCD is based on an estimate of the amount that
the Company may obtain in a sale transaction on an arm’s length basis.
Project evaluation costs relating to work performed in assessing the economic feasibility and the independent technical review of
the Tulu Kapi project have been capitalised by the Company. In August 2015, the Company published the Tulu Kapi Definitive
Feasibility Study (“DFS”) evaluating a conventional open-pit mining operation and carbon-in leach (“CIL”) processing plant.
Feedback on the 2015 Definitive Feasibility Study (“2015 DFS”) from project contractors, financiers and partners was incorporated
into an improved plan in early 2016. All refinements to the 2015 DFS were, in May 2017, incorporated into the 2017 DFS Update in
preparation for financing. This reflects, among other things, the fixed price, lump-sum processing plant construction contract with
Lycopodium and a warranted ore processing rate of 1.5-1.7 million tonnes per annum.
The Tulu Kapi Mining Agreement between the Ethiopian Government and the Company was formalised in April 2015. The terms
include a 20-year Mining License, full permits for the development and operation of the Tulu Kapi gold project and a 5%
Government free-carried interest. The Company is working towards funding the development of the Tulu Kapi project.
The schedule remains on track for project finance syndicate documentation and inter-creditor arrangements to be assembled and
approved by syndicate and National Bank of Ethiopia for full drawdown by late- 2017. The Government of Ethiopia confirmed its
intention to invest equity capital of US$20 million.
KEFI Minerals Ethiopia also has no other mining exploration licences in Ethiopia. All development costs relating to Yubdo and Billa
Guilisso exploration licenses capitalised in previous years was impaired in the current year.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 60
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
13. Investments
13.1 Fixed asset investments
The Company
Cost
At 1 January
Acquisitions
At 31 December
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
4,598
-
4,598
4,598
-
4,598
Subsidiary companies
Mediterranean Minerals (Bulgaria) EOOD
Doğu Akdeniz Mineralleri Sanayi ve Ticaret Limited Şirket
KEFI Minerals Ethiopia Limited
KEFI Minerals Marketing and Sales Cyprus Limited
Date of
acquisition/
incorporation
08/11/2006
08/11/2006
30/12/2013
30/12/2014
Country of
incorporation
Bulgaria
Turkey
United Kingdom
Cyprus
Effective
proportion of
shares held
100%-Direct
100%-Indirect
100%-Direct
100%-Direct
Subsidiary companies
The following companies have the address of:
Mediterranean Minerals (Bulgaria) EOOD
10 Tsar Osvoboditel Blvd., 3rd floor, Sredets Region, 1000 Sofia,
the Republic of Bulgaria.
Doğu Akdeniz Mineralleri Sanayi ve Ticaret Limited Şirket Zeytinalani Mah. 4183 SK. Kapı No:6 Daire:2 UrlaA Izmir
KEFI Minerals Ethiopia Limited
KEFI Minerals Marketing and Sales Cyprus Limited
27/28 Eastcastle Street, London, United Kingdom w1w 8DH
23 Esekia Papaioannou Floor 2, Flat 21 1075, Nicosia Cyprus
On 8 November 2006, the company entered into an agreement to acquire from Atalaya Mining PLC (previously EMED) the whole
of the issued share capital of Mediterranean Minerals (Bulgaria) EOOD, a company incorporated in Bulgaria, in consideration for
the issue of 29,999,998 ordinary shares in the Company.
Mediterranean Minerals (Bulgaria) EOOD owns 100% of the share capital of Doğu Akdeniz Mineralleri (“Dogu”), a private limited
liability company incorporated in Turkey, engaging in activities for exploration and developing of natural resources.
The Company owns 100% of Kefi Minerals Ethiopia, which operates the Tulu Kapi project in Ethiopia. The Government of Ethiopia
is entitled to a 5% free-carried interest in the Tulu Kapi Gold Project. This entitlement is enshrined in the Ethiopian Mining Law and
the Ethiopian Mining Agreement between the Ethiopian Government and KEFI Minerals Ethiopia. The implementation of this
entitlement is intended to issue 5% of the shareholding of KEFI Minerals Ethiopia at the time of the final completion of the full
project finance of the Tulu Kapi Gold Project. Once all the relevant documents are executed the intended arrangement would add
5% to the shareholding paid by the Ethiopian Government.
The company owns 100% of KEFI Minerals Marketing and Sales Cyprus, a company incorporated in Cyprus. The company was
dormant for the year end 31 December 2016 and 2015. KEFI Minerals Marketing and Sales Cyprus had no assets or liabilities at
the date of acquisition. No additional disclosure is considered necessary, as the entity is not significant to the financial statements.
KEFI Minerals Marketing and Sales Cyprus will provide sales and marketing services for the Group once production commences. It
is planned that this company will act as agent and off-taker for the onward sale of gold and other products in international markets.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 61
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
13.2 Investment in jointly controlled entity
The Company
At 1 January/31 December
Jointly controlled entity
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
181
181
Date of acquisition/
incorporation
Country of
incorporation
Effective proportion of
shares held
Gold and Minerals Co. Limited (G&M)
04/08/2010
Saudi Arabia
40%-Direct
The company owns 40% of G&M more information in note 19.2.
14. Available for sale financial assets
The Group
At 1 January
Change in value of available-for-sale financial assets
On 31 December
The Company
At 1 January
Disposal of Investment
Profit on Sale
Change in value of available-for-sale financial assets
At 31 December
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
92
3
95
Year
Ended
31.12.16
£’000
8
(16)
8
-
-
86
6
92
Year Ended
31.12.15
£’000
8
-
-
-
8
The Company successfully divested four Licences in Turkey in July 2011 to AIM listed Ariana Resources (AIM:AAU) for a nominal
cash payment of 10,000 Turkish Lira, 910,747 new ordinary shares in Ariana and a Net Smelter Royalty (“NSR”) of 2%. The NSR
is payable by Ariana’s wholly owned Turkish subsidiary Galata Madencilik San. ve Tic. Ltd. (“Galata”) to KEFI Mineral’s Turkish
Subsidiary, Dogu, on commercial production of any mineral from the licences. No value has been attributed in these financial
statements for the NSRs, due to uncertainty regarding when income from the NSRs will commence.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 62
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
15. Trade and other receivables
The Group
Other receivables
Placing funds
Amount receivable from Saudi Arabia Jointly controlled entity (Note 21.3)
VAT Refund
Deposits and prepayments
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
38
198
6
2,809
5
3,056
45
207
6
95
5
358
The Company fully discharged the inherited VAT liability during August 2016 and is entitled to a £2.7 million (Birr 73,5000,000) VAT
refund. The directors are of the opinion that the results of recent discussion with the VAT office that the reverse VAT refund is been
processed by the relevant VAT branch office for settlement. Post Balance sheet during April 2017, the company received c.£1
million of the £2.7 million VAT refund. The Company has come to an agreement with Ethiopian Revenues and Customs Authority to
receive the remainder of the funds by mid-2017.
The Company
Deposits
Placing Funds
KEFI Minerals Marketing and Sales Cyprus Limited (Note 21.3)
Advance to KEFI Minerals Ethiopia Limited (Note 21.3)
Amount receivable from Saudi Arabia Jointly controlled entity (Note 21.3)
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
8
198
3
7,815
45
8,069
3
207
3
7,417
80
7,710
Amounts owed by group companies total £7,818,000 (2015: £7,420,000). Balances of £1,256,000 have been fully provided for all
projects except for Ethiopia due to the uncertainty over the timing of future recoverability. The advance issued to KEFI Minerals
Ethiopia Limited are unsecured interest free and repayable on demand. At the reporting date, no receivables were past their due
date.
16. Cash and cash equivalents
The Group
Cash at bank and in hand
The Company
Cash at bank and in hand
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
410
400
562
393
KEFI Minerals Plc ANNUAL REPORT 2016
Page 63
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
17. Share capital
Number of
shares ’000
Share
Capital
Deferred
Shares
Share
premium
Issued and fully paid
At 1 January 2015
Issued 20 March 2015 at 1p
Issued 16 May 2015 at 1p
Sub-division of shares 16 June 2015 0.1p
Issued 16 June 2015 at 0.8p
Issued 11 December 2015 at 0.3p
Share issue costs
At 31 December 2015
Issued 22 March 2016 at 0.35p
Issued 29 July 2016 at 0.5p
Share issue costs
At 31 December 2016
1,235,337
80,000
66,611
-
362,500
877,191
-
2,621.639
499,360
761,922
-
3,882,921
12,352
800
667
(12,436)
363
877
-
2,623
499
761
-
3,883
-
-
-
12,436
-
-
-
12,436
-
-
-
12,436
8,433
-
-
-
2,538
1,755
(379)
12.347
1,248
3,048
(364)
16,279
Total
20,785
800
667
-
2,901
2,632
(379)
27,406
1,747
3,809
(364)
32,598
Share issue costs of £Nil (2015: £64,000) relating to the 146,610,600 shares issued at par value during 2015 have been charged
to equity. The remainder of share issue costs are charged against share premium arising on issue.
Authorized capital
That the articles of association of the Company were amended in 2010 and the liability of the members of the Company is limited.
Issued capital
2015
On 20 March 2015, 80,000,000 shares of 1p were issued at a price of 1p per share.
On 16 May 2015, 66,610,600 shares of 1p were issued at a price of 1p per share.
On 16 June 2015, 362,500,000 shares of 0.1p were issued at a price of 0.8p per share. On issue of the shares, an amount of
£2,537,500 was credited to the Company’s share premium reserve.
On 11 December 2015, 877,191,422 shares of 0.1p were issued at a price of 0.3 p per share. On issue of the shares, an amount
of £1,754,500 was credited to the Company’s share premium reserve.
2016
On 22 March 2016, 499,359,791 shares of 0.1p were issued at a price of 0.35p per share. On issue of the shares, an amount of
£1,248,299 was credited to the Company’s share premium reserve.
On 29 July 2016, 761,921,739 shares of 0.1p were issued at a price of 0.5p per share. On issue of the shares, an amount of
£3,047,687 was credited to the Company’s share premium reserve.
Restructuring of share capital into deferred shares
On 16 June 2015 the Company’s issued ordinary shares of 1p each in the capital of the Company were sub-divided into one new
ordinary share of 0.1p and one deferred share of 0.9p. The deferred shares have no value or voting rights. After the share capital
reorganization there were the same number of New Ordinary Shares in issue as there are existing Ordinary Shares. The New
Ordinary Shares have the same rights as those currently accruing to the existing Ordinary Shares in issue under the Company’s
articles of association, including those relating to voting and entitlement to dividends.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 64
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
17. Share capital (continued)
Warrants
2015
On 18 March 2015, the Company issued 4,000,000 warrants to subscribe for new ordinary shares of 1p each at 1p per share.
On 11 May 2015, the Company issued 1,680,530 warrants to subscribe for new ordinary shares of 1p each at 1p per share.
On 15 June 2015, the Company issued 14,500,000 warrants to subscribe for new ordinary shares of 0.1p each at 0.8p per share.
On 11 December 2015, the Company issued 43,859,571 warrants to subscribe for new ordinary shares of 0.1p each at 0.3p per
share.
2016
On 22 March 2016, the Company issued 24,967,989 warrants to subscribe for new ordinary shares of 0.1p each at 0.35p per
share.
On 29 June 2016, the Company issued 38,096,087 warrants to subscribe for new ordinary shares of 0.1p each at 0.5p per share.
During the period 1 January 2016 to 31 December 2016, 22,780,000 warrants were cancelled or expired.
Details of warrants outstanding as at 31 December 2016:
Grant date
Expiry date
Exercise price
Expected Life Years
20-Feb-12
04-Jul-13
16-Oct-13
02-Dec-14
16-Dec-14
18-Mar-15
11-May-15
15-Jun-15
11-Dec-15
22-Mar-16
29-Jul-16
19-Feb-17
03-Jul-18
15-Oct-18
01-Dec-17
15-Dec-17
17-Mar-18
10-May-18
14-Jun-18
10-Dec-18
21-Mar-19
28-Jul-19
3.00p
2.10p
2.25p
1.00p
1.00p
1.00p
1.00p
0.80p
0.30p
0.35p
0.50p
5 years
5 years
5 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
000's
2,917
1,310
1,111
4,000
5,500
4,000
1,680
14,500
43,860
24,968
38,096
141,942
KEFI Minerals Plc ANNUAL REPORT 2016
Page 65
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
17. Share capital (continued)
Warrants (continued)
The Company has issued warrants to advisers to the Group. All warrants, as noted above expire between two to five years after
grant date and are exercisable at the exercise price.
Outstanding warrants at 1 January 2016
- granted
- cancelled/forfeited/expired
Outstanding warrants at 31 December 2016
Number of warrants
000’s
101,658
63,064
(22,780)
141,942
The estimated fair values of the warrants were calculated using the Black Scholes option pricing model.
The inputs into the model and the results for warrants granted during the year are as follows:
Closing share price
at issue date
Exercise price
Expected volatility
Expected life
Risk free rate
Expected dividend
yield
Estimated fair value
29 July
2016
22 March
2016
11 Dec
2015
15 June
2015
11 May
2015
18 Mar
2015
0.56p
0.50p
87.3%
3yrs
0.31%
Nil
0.32p
0.36p
0.35p
80.3%
3yrs
0.31%
Nil
0.17p
0.32p
0.3p
79.10%
3yrs
0.39%
Nil
0.17p
0.90p
0.8p
61.10%
3yrs
0.98%
Nil
0.40p
0.88p
1.00p
60.90%
3yrs
0.98%
Nil
0.33p
1.33p
1.00p
59%
3yrs
0.98%
Nil
0.64p
Expected volatility was estimated based on the historical underlying volatility in the price of the Company’s shares.
For 2016, the impact of issuing warrants is a net charge to income of £164,000 (2015: £163,000). At 31 December 2016, the
equity reserve recognized for share based payments, including warrants, amounted to £1,474,000 (2015: £1,212,000).
Opening amount
Warrants issued costs (Note 6)
Share options issued to employees (Note 6)
Share options issued to directors and key management (Note 6)
Cancelled options
Closing amount
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
1,212
164
77
204
(183)
1,474
848
163
69
146
(14)
1,212
KEFI Minerals Plc ANNUAL REPORT 2016
Page 66
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
18. Share options reserve
Details of share options outstanding as at 31 December 2016:
Grant date
Expiry date
Exercise price
13-Sep-12
24-May-13
03-Sep-13
08-Oct-13
08-Jan-14
16-Jan-14
01-Feb-14
27-Mar-14
04-Apr-14
12-Sep-14
20-Mar-15
16-Jun-15
19-Jan-16
23-Feb-16
05-Aug-16
12-Sep-18
23-May-19
02-Sep-18
07-Oct-18
07-Jan-20
15-Jan-20
31-Jan-20
26-Mar-20
03-Apr-20
11-Sep-20
19-Mar-21
15-Jun-21
18-Jan-22
22-Feb-22
05-Aug-22
4.00p
2.915p
2.94p
2.27p
1.88p
1.99p
1.89p
2.30p
1.83p
1.76p
1.32p
1.32p
0.42p
0.74p
0.60p
Number of
shares
000’s
14,150
1,000
1,000
350
400
100
100
27,125
100
2,250
27,000
6,500
80,190
3,000
35,000
198,265
Outstanding options at 1 January 2016
- granted
- cancelled/forfeited/expired
Outstanding options at 31 December 2016
Weighted average ex.
Price
0.48p
3.94p
Number of shares
000’s
81,275
118,190
(1,200)
198,265
The Company has issued share options to directors, employees and advisers to the Group.
On 13 September 2012, 15,500,000 options were issued which expire six years after the grant date, and are exercisable at the
exercise price in whole or in part no more than one half after one year from the grant date and one half two years from the grant
date.
On 24 May 2013 1,000,000 options were issued which expire six years after the grant date and are exercisable in part no more
than one half after one year from the grant date and one half two years from the grant date. On 3 September 2013 1,000,000
options were issued and on 8 October 2013, 350,000 options were issued both which expire five after the grant date and are
exercisable in part no more than one half after one year from the grant date and one half two years from the grant date
During January 2014 and February 2014 600,000 options were issued which expire six years after the grant date and are
exercisable in part no more than one half after one year from the grant date and one half two years from the grant date.
On 27 March 2014, 22,000,000 options were issued to the Directors and a further 5,400,000 options have been granted to other
non-board members of the senior management team. Of the options issued, previously granted options over 22,100,000 Ordinary
shares which were due to expire during 2014 have all been cancelled and the new grants of options have been made, in
accordance with the terms of the Scheme the options vest in equal annual instalments over a period of 2 years and expire after 6
years.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 67
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
18. Share options reserve (continued)
On 4 April 2014, 100,000 options were issued which expire six years after the grant date and are exercisable in part no more than
one half after one year from the grant date and one half two years from the grant date.
On 12 September 2014, 2,250,000 options were issued which expire six years after grant date and vest in equal annual
instalments over a period of two years.
On 20 March 2015, 27,000,000 options were issued which expire six years after grant date and vest in equal annual instalments
over a period of two years.
On 16 June 2015, 6,500,000 options were issued which expire six years after grant date and vest in equal annual instalments over
a period of two years.
On 19 January 2016, 80,190,000 options were issued which expire six years after grant date and vest in normal circumstances,
vest in two equal annual instalments, the first upon the achievement of practical completion of the planned processing plant at the
Tulu Kapi Gold Project and the second upon the achievement of nameplate capacity for a twelve-month period.
On 23 February 2016, 3,000,000 options were issued which expire six years after grant date and vest immediately.
On 5 August 2016, 35,000,000 options were issued which expire six years after grant date and vest in normal circumstances, vest
in two equal annual instalments, the first upon the achievement of practical completion of the planned processing plant at the Tulu
Kapi Gold Project and the second upon the achievement of nameplate capacity for a twelve-month period.
The option agreements contain provisions adjusting the exercise price in certain circumstances including the allotment of fully paid
Ordinary shares by way of a capitalisation of the Company's reserves, a sub division or consolidation of the Ordinary shares, a
reduction of share capital and offers or invitations (whether by way of rights issue or otherwise) to the holders of Ordinary shares.
The estimated fair values of the options were calculated using the Black Scholes option pricing model. The inputs into the model
and the results are as follows:
Date
05-Aug-16
23-Feb-16
19-Jan-16
16-Jun-15
20-Mar-15
12-Sep-14
04-Apr-14
27-Mar-14
01-Feb-14
16-Jan-14
08-Jan-14
08-Oct-13
03-Sep-13
24-May-13
13-Sep-12
Closing
share price
at issue
date
Exercise
price
Expected
volatility
Expected
life
Risk free
rate
Expected
dividend
yield
Discount
factor
Estimated
fair value
0.56p
0.33p
0.34p
0.83p
1.20p
1.43p
1.83p
1.85p
1.90p
1.83p
1.85p
2.69p
2.76p
2.19p
3.63p
0.60p
87.20%
0.74p
82.65%
0.42p
83.18%
1.32p
61.11%
1.32p
59.04%
1.76p
43.40%
1.83p
59.60%
2.30p
59.60%
1.89p
59.60%
1.99p
59.60%
1.88p
59.60%
2.27p
63.83%
2.94p
63.63%
2.92p
59.80%
4.00p
56.90%
6yrs
6yrs
6yrs
6yrs
6yrs
6yrs
6yrs
6yrs
6yrs
6yrs
6yrs
5yrs
5yrs
6yrs
6yrs
0.75%
0.90%
0.90%
1.53%
1.53%
1.09%
2.17%
2.17%
2.17%
2.17%
2.17%
1.70%
1.70%
5.00%
5.00%
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
50%
50%
0%
0%
0.40p
0.11p
0.22p
0.38p
0.64p
0.52p
0.94p
0.94p
0.94p
0.94p
0.94p
0.80p
0.75p
1.18p
2.05p
Expected volatility was estimated based on the historical underlying volatility in the price of the Company’s shares.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 68
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
18. Share options reserve (continued)
For 2016, the impact of share option-based payments is a net charge to income of £281,000 (2015: £215,000). At 31 December
2016, the equity reserve recognized for share option-based payments, including warrants, amounted to £1,474,000 (2015:
£1,212,000).
19. Jointly controlled entities
19.1 Jointly controlled entity with Centerra Gold (KB) Inc.
On 22 October 2008, the Company entered into a Joint Venture Agreement in respect of its 100%-owned Artvin Project with
Centerra Gold (KB) Inc (“Centerra KB”), a wholly-owned subsidiary of Centerra Gold Inc. In August 2011, KEFI Mineral’s
subsidiary holding these licences, was sold in return for a cash payment of US$100,000 and a 1% Net Smelter Royalty on all future
mineral production from the Artvin licences.
19.2 Joint controlled entity with Gold and Minerals
Company name
Date of incorporation
Country of
incorporation
Effective proportion of
shares held at 31 December
Gold & Minerals Co. Limited
3 August 2010
Saudi Arabia
40%
Gold & Minerals Co. Limited has the following registered address: Olaya District. 659, King Fahad Road, Riyadh, Kingdom of Saudi
Arabia.
Amounts relating to the Jointly Controlled
Entity
Year Ended
31.12.16
Year Ended
31.12.15
Year Ended
31.12.16
Year Ended
31.12.15
SAR’000
GBP’000
Non-current assets
Current assets
Non-current liabilities
Current liabilities
223
685
908
60,594
667
61,261
493
1,473
1,966
54,974
1,048
56,022
Net liabilities
(60,353)
(54,056)
Share capital
Accumulated losses
Exchange rates SAR to GBP
Closing rate
2,500
2,500
(62,853)
(60,353)
(56,556)
(54,056)
19
59
78
5,246
58
5,304
(5,226)
217
(5,443)
(5,226)
36
106
142
3,971
76
4,047
(3,905)
181
(4,086)
(3,905)
0.2165
0.1806
In May 2009, KEFI announced the formation of a new minerals exploration jointly controlled entity, Gold & Minerals Co. Limited
(“G&M”), a limited liability company in Saudi Arabia, with leading Saudi construction and investment group Abdul Rahman Saad Al-
Rashid & Sons Company Limited (“ARTAR”). KEFI is the operating partner with a 40% shareholding in G&M with ARTAR holding
the other 60%. KEFI provides G&M with technical advice and assistance, including personnel to manage and supervise all
exploration and technical studies. ARTAR provides administrative advice and assistance to ensure that G&M remains in
compliance with all governmental and other procedures. G&M is treated as a jointly controlled entity and has been equity
accounted and has reconciled its share in G&M’s losses.
The above figures reported represent cumulative exploration activity incurred by G&M since its incorporation in 2009. The
accounting policy for exploration costs recorded in the G&M audited financial statements is to capitalise qualifying expenditure and
review for impairment, if applicable. This is in contrast to the Group’s accounting policy relating to exploration costs which is to
expense costs through profit and loss until the Board decides on the development of a project (Note 2). Consequently, exploration
costs of G&M at 31 December 2016 amounting to SAR62.6 million (2015: SAR56.6 million) have been adjusted to bring the figures
in line with the Group’s accounting policies.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 69
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
19. Jointly controlled entities (continued)
19.2 Jointly controlled entity with Gold and Minerals (continued)
A loss of £726,000 was recognized by the Group for the year ended 31 December 2016 (2015: £ 735,000) representing the
Group’s share of losses in the year.
As at 31 December 2016 KEFI owed ARTAR an amount of £170,000 (2015: receivable £90,000) - Note 21.5.
As at 31 December 2016, G&M owed KEFI an amount of £6,000 (2015: £6,000) – Note 21.4.
20. Trade and other payables
The Group
Accruals and other payables
Other loans
Payable to shareholders (Note 21.2)
Payable to jointly controlled entity (Note 21.4)
VAT Liability
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
1,640
257
-
170
-
2,067
1,011
236
8
90
650
1,995
In January 2014 an agreement was made with Ethiopian Revenue and Customs Authority (“ERCA”) to repay the balance of the
VAT liability plus interest accruing on the unpaid principal amount over a three-year payment plan in accordance with the relevant
tax proclamation, 25% of the assessed outstanding amount is payable immediately and the balance under an agreed payment
schedule. . The balance of the liability plus interest accruing on the unpaid principal amount was paid within the three year payment
period.
Other loans are unsecured, interest free and repayable on demand.
The Company
Accruals and other payables
Payable to jointly controlled entity (Note 21.4)
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
1,447
170
1,617
886
90
976
The fair values of trade and other payables due within one year approximate to their carrying amounts as presented above.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 70
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
21. Related party transactions
The following transactions were carried out with related parties:
21.1 Compensation of key management personnel
The total remuneration of key management personnel was as follows:
Directors' consultancy fees *
Directors’ other consultancy benefits
Directors’ bonus
Share option-based benefits to directors (Note 17)
Other key management personnel fees and other benefits
Other key management personnel bonus
Share option-based benefits other key management personnel (Note 17)
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
500
49
-
167
323
-
37
1,076
471
51
50
146
204
37
11
970
* Part of the salary of the Exploration Director was paid directly by the jointly-controlled entity G&M.
* Directors’ fees paid to the Executive Director Chairman and Finance Director are paid to consultancy companies of which they
are beneficiaries.
Share-based benefits
The Company has issued share options to directors and key management. All options, except those noted in Note 18, expire six
years after grant date and and vest in normal circumstances, vest in two equal annual instalments, the first upon the achievement
of practical completion of the planned processing plant at the Tulu Kapi Gold Project and the second upon the achievement of
nameplate capacity for a twelve month period.
21.2 Payable to shareholders
Name
Atalaya Mining PLC (previously EMED) Finance
Nature of transactions
Relationship
Shareholder
Name
Nature of transactions
Relationship
2016
-
2015
8
Atalaya Mining PLC (previously EMED) Provision of management and
Shareholder
other professional services
18
8
21.3 Receivable from related parties
The Group
Name
Gold & Minerals Co. Limited
Nature of transactions
Finance
Relationship
Jointly controlled
entity
The Company
Name
Gold & Minerals Co. Limited
KEFI Minerals Marketing and Sales
Cyprus Limited
Kefi Minerals Ethiopia Limited
Nature of transactions
Finance
Finance
Relationship
Jointly controlled entity
Subsidiary
Advance
Subsidiary
2016
2015
6
6
6
6
2016
2015
45
3
80
3
7,815
7,863
7,417
7,500
KEFI Minerals Plc ANNUAL REPORT 2016
Page 71
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
21. Related party transactions (continued)
21.4 Payable to related parties
The Group
Name
Abdul Rahman Saad Al-Rashid & Sons
Company Limited (“ARTAR”)
The Company
Name
Abdul Rahman Saad Al-Rashid & Sons
Company Limited (“ARTAR”)
22. Contingent liabilities
22.1 Geological database
Nature of transactions
Finance
Relationship
Jointly controlled entity
Nature of transactions
Finance
Relationship
Jointly controlled entity
2016
2015
170
170
90
90
2016
2015
170
170
90
90
In 2006, Atalaya Mining PLC (previously EMED) acquired a proprietary geological database that covers extensive parts of Turkey
and Greece and transferred to the Company that part of the geological database that relates to areas in Turkey.
Under the agreement, the Company has undertaken to make a payment of approximately £61,400 (AUD 105,000) for each
tenement it is subsequently awarded in Turkey and which was identified from the database. The maximum number of such
payments required under the agreement is four, resulting in a contingent liability of up to £246,000. These payments are to be
settled by issuing shares in the Company. To date, only one tranche of shares have been issued under this agreement in June
2007 for £43,750 (AUD 105,000).
22.2 Charge issued
On 13 August 2015, the Company created a fixed charge in favour of AIB Group (UK) Plc over amounts held in the Company’s
deposit accounts with the bank. The charge is in regard to time credit banking facilities provided by AIB Group (UK) Plc. At 31
December 2016, the balance in the deposit accounts was £20,000.
22.3 Legal Allegations
A claim for damages of £9,000,000 (approximately ETB249 million) had been lodged against the Company in 2014. The claim was
based on the impact of exploration field activities conducted between 1998 and 2006, a period which pre-dated the Company’s
involvement in the Tulu Kapi project. These exploration activities comprised the construction of drill pads and access tracks. No
objections had been made until 2014 when certain parties from outside the Tulu Kapi district raised this matter and initiated court
action. Those parties have since been removed by the Court rulings from the list of plaintiffs. The Oromia Regional Supreme Court
in April 2017 rejected 95% of these claims as having no basis in fact or law and reduced KEFI’s potential liability to c.£435,000
(ETB12,762,721). Moreover, the Company has appealed to the Federal Supreme Court with regards to the remaining
ETB12,762,721 on the basis that it remains firmly of the belief, on legal advice and as previously reported, that it has no contingent
or actual liability, having already settled any obligations when the matter was originally closed by both the regulators and the land
occupiers. The Federal Supreme Court last week officially admitted the Company’s appeal after due review, and the case is
expected to be heard within the next two years.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 72
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
23. Capital commitments
The Group has the following capital or other commitments as at 31 December 2016 Nil (2015 0.03 Million),
Year Ended
31.12.16
£’000
Year Ended
31.12.15
£’000
-
-
-
-
27
27
Exploration programme commitments
Property, plant and equipment
24. Events after the reporting date
Consolidation of Ordinary Shares
At the close of business, 1 March 2017, shareholders received one New Ordinary Share of nominal value 1.7 pence each for every
17 Existing Ordinary Shares of nominal value 0.1 pence each. Immediately following the Consolidation (and prior to the issue of the
Fundraising Shares) the number of New Ordinary Shares in issue and admitted to trading on AIM was 228,407,085.
Placing and the Lanstead Subscription
The Company conditionally raised £5,620,000 million before expenses on 1 March 2017 through a placing of 104,295,888 ordinary
shares of 1.7p each at a price of 5.61p per share. After the placing and the 17:1 consolidation approved on 1 March 2017 there are
332,702,973 shares on issue.
The Lanstead Subscription involves the issuance of 82,352,941 shares and is governed according to a ‘sharing agreement’ and
structured relative to a benchmark price, which has been set at 7.48p/share (0.44p/share pre-consolidation), such that KEFI may
receive more than £4,620,000 if the share price exceeds this level and vice versa if it does not. To this end, £693,000 was
contributed in March 2017 by Lanstead, with the balance being paid in equal instalments of £218,000 per month (subject to
adjustment upwards or downwards) for 18 months commencing in April 2017.
Other
On 22 March 2017, 6,829,613 options were issued to persons who discharge director and managerial responsibilities ("PDMRs")
and a further 2,705,509 options have been granted to other non-board members of the senior management team. The options
have an exercise price of 7.5p, expire after 6 years, and vest in two equal annual instalments, the first upon the achievement of
practical completion of the planned processing plant at the Tulu Kapi Gold Project and the second upon the achievement of
nameplate capacity for a twelve-month period.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 73
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
25. Adoption of new and revised International Financial Reporting Standards (IFRSs)
During the current year the Group adopted all the new and revised International Financial Reporting Standards (IFRS) that are
relevant to its operations and are effective for accounting periods beginning on 1 January 2016. This adoption did not have a
material effect on the accounting policies of the Group.
Up to the date of approval of the consolidated financial statements, certain new standards, interpretations and amendments to
existing standards have been published that are not yet effective for the current reporting period and which the Group has not early
adopted, as follows:
Issued by the IASB and adopted by the European Union New standards
IFRS 9 ‘’Financial Instruments’’ (effective for annual periods beginning on or after 1 January 2018).
IFRS 15 ‘’Revenue from Contracts with Customers’’ (effective for annual periods beginning on or after 1
January 2018).
IFRS 9 “Financial Instruments”
IFRS 9 makes substantial changes to the measurement of financial assets and financial liabilities. There will only be three
categories of financial assets at either fair value through profit and loss, fair value through comprehensive income or measured at
amortized cost. On adoption of the standard the Group will have to re-determine the classification of its financial assets based on
the business model for each financial asset. This is not considered likely to give rise to any significant adjustments, other than the
re-classification.
The principal change to the measurement of financial assets measured at amortized cost or fair value through other
comprehensive income is that impairments will be recognized on an expected loss basis, compared with the current incurred loss
approach. As such, where there are expected to be credit losses, these are recognized in profit or loss. For financial assets
measured at amortized cost, the carrying amount is reduced for the loss allowance. For financial assets measured at fair value
through other comprehensive income, the loss allowance is recognized in other comprehensive income and does not reduce the
carrying amount of the financial assets.
Financial liabilities of the Group are expected to continue to be recognized at amortized cost.
IFRS 15 ”Revenue from Contracts with Customers”
The standard has been developed to provide a comprehensive set of principles in presenting the nature, amount, timing and
uncertainty of revenue and cash flows arising from a contract with a customer. The standard is based around five steps in
recognizing revenue:
Identify the contract with the customer;
Identify the performance obligations in the contract;
1.
2.
3. Determine the transaction price;
4. Allocate the transaction price; and
5. Recognize revenue when a performance obligation is satisfied.
The Group is not currently generating income from gold sales revenue, hence there is not considered to be any significant impact
at the Group’s current stage of development. Management are currently evaluating the impact of the standard on the financial
statements.
KEFI Minerals Plc ANNUAL REPORT 2016
Page 74
KEFI MINERALS PLC
(All amounts in GBP thousands unless otherwise stated)
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
25. Adoption of new and revised International Financial Reporting Standards (IFRSs)
(continued)
Amendments
New IFRICs
Amendments to IFRS2: Classification and Measurement of Share-based Payment Transactions (effective for
annual periods beginning on or after 1 January 2018).
Clarifications to IFRS 15 ‘’Revenue from Contracts with Customers’’ (effective for annual periods beginning on
or after 1 January 2018).
IAS 7 (Amendments) ‘’Disclosure Initiative’’ (effective for annual periods beginning on or after 1 January 2017)
IAS 12 (Amendments) ‘’Recognition of Deferred Tax Assets for Unrealised Losses’’ (effective for annual periods
beginning on or after 1 January 2017).
Annual Improvements to IFRSs 2014–2016 Cycle (issued on 8 December 2016) (effective for annual periods
beginning on or after 1 January 2017).
Annual Improvements to IFRSs 2014–2016 Cycle (issued on 8 December 2016) (effective for annual periods
beginning on or after 1 January 2018).
IFRIC Interpretation 22 ‘’Foreign Currency Transactions and Advance Consideration’’ (effective for annual
periods beginning on or after 1 January 2018).
The Group is currently evaluating the effect of these standards or interpretations on its consolidated financial statements
KEFI Minerals is listed on AIM (Code: KEFI)
www.kefi-minerals.com
KEFI Minerals Plc ANNUAL REPORT 2016
Page 75