Acquisition of Interest in Tulu Kapi

AIM: KEFI 11 December 2013 KEFI Minerals plc Acquisition of Interest in Tulu Kapi Placing of new Ordinary Shares Director Dealings and Notice of General Meeting KEFI Minerals, the AIM-quoted gold and copper exploration and developmentcompany, is pleased to announce that it has entered into a conditionalagreement to acquire 75% of the issued share capital of Nyota Minerals(Ethiopia) Limited (the "Target"), the owner of the Tulu Kapi licence (the"Acquisition"). The consideration will be satisfied by the payment of £1 million in cash andthe issue of up to 116,666,667 Ordinary Shares at a previously agreed value of3 pence per share. In addition, the Company has conditionally raised £4.5million (before expenses) through the placing of 225,000,000 new OrdinaryShares at 2 pence per share (the "Placing"). The Placing and the Acquisition are conditional, among other things, on thepassing of the resolutions to be proposed at the General Meeting (the"Resolutions"), to be held at the offices of Moore Stephens, Level 6, 460Church Street, Paramatta, New South Wales, Australia on 27 December 2013 at10.30 a.m. AEDT. The Company has today posted a circular to shareholders, which will beavailable to download from its website at www.kefi-minerals.com, which sets outthe details of the Proposals and the notice convening the General Meeting.Defined terms used in this announcement are the same as those defined in thecircular unless the context requires otherwise. The Company presentation isalso available to shareholders on the KEFI Minerals website. HIGHLIGHTS * KEFI Minerals will, as a result of the Acquisition and Placing, have an enlarged market capitalisation of £17 million (circa $28 million), representing $18 per ounce of its beneficial interests in 1.6Moz of JORC-compliant mineral resources within its two advanced gold development projects in the highly prospective Arabian-Nubian Shield. * KEFI Minerals has fully financed the Acquisition by raising £4.5 million (before expenses) at a placing price of 2p a share. Management preliminary estimates of the Tulu Kapi project indicate attractive operating costs of circa $500/oz Au. * The funds raised will be used to pay for the cash element of the Acquisition; to complete additional work at Tulu Kapi and refine the Definitive Feasibility Study ("DFS") prior to development in 2015; to complete the Pre-Feasibility Study for Jibal Qutman in Saudi Arabia in 2014; to ensure there are sufficient funds available to meet KEFI Minerals' share of the Target's VAT obligations to the Ethiopian Government in 2014, and for working capital purposes. * Tulu Kapi was first mined in the 1930s and a DFS was completed in December 2012, which produced a JORC-compliant Inferred and Indicated Resource estimate of 25Mt at 2.34g/t Au (1.9Moz Au), including a Probable Reserve of 17Mt at 1.82g/t Au (1.0Moz Au). * This DFS was based on the work performed to date, which comprised over 120,000m of drilling and an aggregate expenditure of over $50 million. * The Directors of KEFI have set a development plan for Tulu Kapi aimed at reducing the anticipated capital and operating expenditure, which should allow for a lower start-up risk and a higher overall return. * Following completion of the Acquisition, KEFI Minerals and its subsidiaries (the "Enlarged Group") will be positioned as an operator of two gold development projects within the Arabian-Nubian Shield. * The Directors believe that both of these projects have significant resource growth potential beyond the deposit estimates already reported. * By 2017 the aggregate estimated production at these projects attributable to KEFI Minerals could exceed 80Koz Au p.a. The cash generated will be used to fund further exploration and, when appropriate, payment of dividends. The Company is also pleased to announce that following the requisite approvals,Jeff Rayner, the Company's Managing Director, and Harry Anagnostaras-Adams, theCompany's Non-Executive Chairman, have agreed to subscribe for Ordinary Sharesas part of the Placing. Following the subscription, Jeff Rayner and HarryAnagnostaras-Adams will respectively be interested in 3,783,333 and 6,966,667ordinary shares, representing approximately 0.44 and 0.81 per cent of theEnlarged Share Capital (assuming the maximum number of Consideration Shares areissued). Jeff Rayner, Managing Director of KEFI Minerals, commented: "We are extremely excited by the prospects of the Tulu Kapi licence, which willsignificantly increase our development potential within the Arabian-NubianShield. Ethiopia has diverse untapped mineral resources and is activelyencouraging exploration and development and we look forward to growing ourportfolio of operations. "We remain equally focused on growing our footprint in Saudi Arabia - whereJibal Qutman has provided rapid progress to date. We once again upgraded theresource there and are continuing to move towards submitting a Mining LicenceApplication. We hope to grow the number of exploration licences both inEthiopia and Saudi Arabia and are working hard towards becoming a producingentity focused on generating dividends as well as organic growth within ahighly prospective region." Enquiries KEFI Minerals Jeff Rayner +90 533 928 1913 Fox-Davies Capital Simon Leathers +44 203 463 5010 Bishopsgate Communications Nick Rome/Anna Michniewicz +44 20 7562 3395 Background to the Acquisition KEFI Minerals has identified a gold opportunity in the Arabian-Nubian Shield("ANS") of Western Ethiopia, the Tulu Kapi gold deposit, currently owned byNyota Minerals Limited ("Nyota"). KEFI Minerals has agreed to acquire 75% ofthe issued share capital of the Target, a wholly owned subsidiary of Nyota andthe holder of the Tulu Kapi Exploration Licence ("EL") and surrounding ELs,with Nyota retaining a participating 25% interest. The consideration comprisesup to 116,666,667 new Ordinary Shares (the "Consideration Shares") (subject toadjustment as described below) at an agreed price of 3 pence per share and acash payment of £1 million (circa $1.6 million). The Consideration Shares arebeing issued in addition to the Placing Shares and the cash payment will befunded by the proceeds of the Placing. Information on Tulu Kapi Tulu Kapi was first mined in the 1930s and a DFS was completed in December2012, which produced a JORC-compliant Inferred and Indicated Resource estimateof 25Mt at 2.34g/t Au (1.9Moz Au), including a Probable Reserve of 17Mt at1.82g/t Au (1.0Moz Au). This DFS was based on the work performed to date, whichcomprised over 120,000m of drilling and an aggregate expenditure of over $50million. KEFI Minerals has devised an alternative approach, which the Directors believewill reduce the anticipated capital and operating expenditure, thusfacilitating a lower start-up risk and higher overall return. Working inpartnership with Nyota, KEFI Minerals believes a limited programme of RCdrilling, surface sampling and metallurgical test work in 2014 will besufficient to refine a DFS for planned development in 2015 based on aproduction plan of ± 85Koz Au p.a. Management's preliminary estimates of theTulu Kapi project indicate attractive operating costs of $500/oz Au. Summary of the Acquisition terms The Company has entered into a share purchase agreement pursuant to which ithas conditionally agreed to acquire 75% of the issued share capital of theTarget. The principal terms of the Acquisition, as set out in the share purchaseagreement, are as follows: * KEFI Minerals will acquire 75% of the issued share capital of the Target. The consideration will be satisfied as to £1 million in cash and the issue of up to 116,666,667 Ordinary Shares. * The number of Consideration Shares to be issued to Nyota Bermuda - the vendor of the shares in the Target - (or, at the option of Nyota Bermuda, another member of its group) will be reduced by an amount equivalent to any sums due to KEFI Minerals under the secured loan facility referred to below. * Completion of the Acquisition is conditional on, inter alia; the satisfaction or waiver of the following conditions on or before 13 January 2014 (or such later date as the parties may agree): (i) Shareholders approving the Resolutions; (ii) Admission; and (iii) KEFI Minerals being satisfied in its absolute discretion of the formalisation of an agreement with the Ethiopian Ministry of Finance on payment of the Target's reverse VAT liability and such liability not exceeding 105 million Birr (circa £ 3.31 million). * Each of KEFI Minerals and Nyota Bermuda has given the other party certain customary warranties. In addition, Nyota Bermuda has indemnified KEFI Minerals and the target in respect of certain matters. * Nyota has agreed to guarantee the obligations of Nyota Bermuda under the Share Purchase Agreement. * Nyota Bermuda has undertaken not to dispose of any interest in the Consideration Shares for six months following Admission, subject to certain limited exceptions or with the prior written consent of KEFI Minerals and have further undertaken for 12 months only to dispose of such shares on an orderly market basis. Following completion of the Acquisition, the relationship between KEFI Mineralsand Nyota, as respective 75:25 joint venture partners in the Target, will begoverned by the terms of a shareholders' agreement, the principal terms ofwhich are as follows: * KEFI Minerals will be the manager of the Target and senior KEFI management will be based at the field offices. * Nyota's 25 per cent. beneficial interest in the Target remains undiluted by further investment made by KEFI Minerals until a revised JORC-compliant resource estimate for Tulu Kapi has been approved. KEFI Minerals currently anticipates publishing these revised estimates in Q1 2014. * Nyota will guarantee the obligations of Nyota Bermuda under this agreement. * The agreement contains provisions for the approval of work programmes and budgets, together with the manner of funding the Target's operations. * The agreement contains standard provisions concerning the transfer and issue of further shares together with certain reserved matters requiring the approval of both parties. In connection with the Proposals, KEFI Minerals has also provided a subsidiaryof Nyota with a £360,000 (circa $590,000) secured loan facility. As notedabove, any amounts due to KEFI Minerals under this facility on completion ofthe Acquisition will reduce the number of Consideration Shares to be issued toNyota Bermuda using the agreed price of 3p per Ordinary Share. The loan isrepayable on the earlier of completion of the Acquisition or 31 August 2014.Interest accrues on the loan at a rate of 10 per cent. per annum. Background to and reasons for the Placing KEFI Minerals is raising £4.5 million (before expenses) to satisfy: (i) thecash element of the Acquisition consideration; (ii) complete additional work atTulu Kapi and refine the DFS prior to development in 2015; (iii) complete thePre-Feasibility Study for Jibal Qutman in Saudi Arabia in 2014; (iv) ensurethere are sufficient funds available to meet KEFI Minerals' share of theTarget's VAT obligations to the Ethiopian Government in 2014, and (v)contribute toward KEFI Minerals' ongoing corporate costs including thearrangement of project finance facilities for the planned gold minedevelopments. The Enlarged Group Following Completion, the Enlarged Group will be positioned as an operator oftwo gold development projects within the Arabian-Nubian Shield: Tulu Kapi inEthiopia and Jibal Qutman in Saudi Arabia. The Directors believe that both ofthese projects have significant resource growth potential beyond the depositestimates already reported. Kefi Minerals' market capitalisation on Admission at the Placing Price of $27.7million implies a valuation of $18/oz Au for its beneficial interest in 1.6Mozof JORC-Compliant mineral resources within its two advanced gold developmentprojects in the highly prospective Arabian-Nubian Shield. By 2017 the aggregate estimated production at these projects attributable toKEFI Minerals could exceed 80Koz Au p.a. The cash generated will be used tofund further exploration and, when appropriate, a dividend policy which theDirectors highlight as a priority. Further ELs are expected to be granted in Saudi Arabia and project generationis expected on other Ethiopian ELs, subject to the renewal and extension of theexisting ELs on acceptable terms. The Placing The Company has conditionally raised £4.5 million (before expenses) by way of aplacing by Fox-Davies, as agent to the Company, of 225,000,000 new OrdinaryShares at 2 pence per share pursuant to the Placing Agreement. WHI Stockbrokersassisted in the Placing and acted as agents to Fox-Davies. The Placing Shareshave been conditionally placed with existing Shareholders and institutionalinvestors. The Placing is conditional, among other things, on Completion of theAcquisition, the passing of the Resolutions to be proposed at the GeneralMeeting and Admission becoming effective on or before 8.00 a.m. on 30 December2013 (or such later date as Fox-Davies and the Company may agree being notlater than 13 January 2014). The Company is also pleased to announce that following the requisite approvals,Jeff Rayner, the Company's Managing Director, and Harry Anagnostaras-Adams, theCompany's Non-Executive Chairman, have agreed to subscribe for Ordinary Sharesas part of the Placing. Following Admission, Jeff Rayner and HarryAnagnostaras-Adams will respectively be interested in 3,783,333 and 6,966,667Ordinary Shares, representing approximately 0.44 and 0.81 of the Enlarged ShareCapital on Admission (assuming the maximum number of Consideration Shares areissued). Under the terms of the Placing Agreement, the Company has given certaincustomary warranties and indemnities to Fox-Davies in connection with thePlacing and other matters relating to the Company and its affairs. The Placing Shares will be allotted and credited as fully paid and will rankpari passu in all respects with the existing Ordinary Shares, including theright to receive all dividends and other distributions declared, made or paidon or after the date of their allotment. The Placing Price was determined having regard to market conditions at the timethe Placing Agreement was entered into. The VWAP of the Ordinary Shares duringNovember 2013 was 2.32 pence and the Placing Price represents a 14 per cent.discount to the VWAP. The Directors believe that the Placing Price is fair andreasonable as far as Shareholders are concerned. Application will be made to London Stock Exchange plc for the ConsiderationShares and Placing Shares to be admitted to trading on AIM and it is expectedthat, subject to the passing of the Resolutions at the General Meeting,Admission will become effective and that dealings will commence in theConsideration Shares and Placing Shares on 30 December 2013. Following Admission, there will be 863,255,721 Ordinary Shares in issue(assuming the maximum number of Consideration Shares are issued) and Nyota willbe the beneficial owner of approximately 13.5% of the Enlarged Share Capital.

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