KEFI Gold and Copper Plc (KEFI) Earnings Call Transcript & Summary

Welcome to the KEFI Minerals live investor Q&A with the Executive Chairman, Harry Anagnostaras-Adams. Harry, it's great to have you today.

Yes, Pleasure to be here. Hi.

Now Harry, we've had a number of questions come in over the last few days and weeks. We've tried -- we'll try not to repeat ourselves. But if we go through it, we'll firstly look at some questions on ANS funding. First question is, when will ANS begin contributing dollars?

They've been given till the end of this quarter, end of June.

And does ANS actually have the $38 million?

They're an investment company with 15 Ethiopian institutions behind them. So they have to bring the money from those institutions. We've met nearly all of them. They're all major corporations with big balance sheets. So -- and they're all sincere, but ANS has to bring it in from them. And I'm sure you've got lots of questions on why the delays, and we'll get to procedural explanation in a minute. But big institutions, big balance sheets, and ANS brings it in as an investment company for them.

And has the company had any comment from ANS since the government stated it would get other local investors to step in if they had not paid their installment by the end of the second quarter?

Yes. I mean, it's not really for me air internal discussions, I think, publicly. But yes, I mean, there -- I think shareholders should know that they're very keen and committed to proceed, and they feel very frustrated that they haven't been able to yet. And they don't want to miss out all of those things, but I don't think I should go beyond that.

And Harry, do you have any recourse against ANS for not paying?

Well, ANS is not -- how do I put it, not acting insincerely. They're acting like a company that is committed but is sort of stumbling a bit over -- particularly over extraneous conditions. So I think the main game here is to cement the relationship and close and get on with it. But having said that, by the same token, with the government who are already spending money with us, we've agreed that we'll part replace or fully replace if needs be. But we're certainly not trying to sort of be antagonistic or to shoo them away. They're great institutions, and we would like to see them close despite their struggles and frustrations.

But if ANS does not contribute to the dollars in a timely manner, can KEFI replace ANS with another investor?

Yes.

Now given the strong gold price, why hasn't KEFI brought in a new non-Ethiopian investor to replace ANS? If the Ethiopian government is now looking at outside financial institution input, why should ANS be considered as a partner at all?

Well, they're not a partner today. They're a partner to be, and they put a lot of time and effort into it. And as I say, it's very, let's say, prestigious bunch of institutions behind ANS. But we are doing all of the above, Rosie. We're working with ANS because they are good people. But we've also made it clear that the project cannot be stopped or slowed down. And it has to proceed, and partners have to keep up their end. And that will be partly replaced if need be or fully replaced if needs be by locals or by foreigners. Whatever it takes, this will go ahead.

Now the IMF has recently approved $411 million in funding and substantial debt service relief for Ethiopia. Do you think this will have any impact on Tulu Kapi gold mines securing the first tranche of equity funding?

Yes. I mean, if any shareholder wanted to just get a little taste of what the financial world of Ethiopia is experiencing, just go into a search engine and look at banking, liquidity crisis or something like that in Ethiopia as a search topic. And you'll see that there's been liquidity crisis in the country since the beginning of the year, obviously, due to COVID. And that's what sort of stalled them most recently. And therefore, the country, whilst it remains the largest -- what we call, the highest growth country in Africa, it's got a terrible trade imbalance. And it's got a terrible shortage of hard currency. And internally, because of COVID for all the same reasons we're experiencing in other countries, there's been incredible strain on public and private sector. So that IMF thing was one thing, but the other perhaps even more important bit of government intervention was that the government has several times issued most recently only a couple weeks ago. What is it when I was last there, which is end of March, put in ETB 15 billion into the banking system to prop up liquidity. And that -- our local investors put in birr, they don't have to put in hard currency. But -- and a lot of them have large assets, what you call large balance sheets with capital reserves. Liquidity dried up because of what's going on in the country, I suppose the same as many respects in the U.K., Australia and elsewhere. And so the government pumped liquidity into the banking system to make sure that they stood up and kept doing their deals. And it's the government that's liaising closely with all these banking institutions that are behind ANS. Obviously, they know them all very well to do whatever they can to get the show on the road for ANS as I said earlier.

Now Harry, if ANS will not deliver their first payment because of the COVID state of emergency, why not allow them to pay a placeholder, a smaller payment to keep their place in their project and keep everything going until things settle down again, negating a need for a fundraising at the current lowly share price?

Well, the COVID -- sort of pardon me a minute. Just need a glass of water, sorry. As you can see, COVID hasn't stopped phone calls and Zoom meetings and whatever, and my voice is croaky after quite a lot of meetings today. But to go back to your question, the COVID slammed us all around the time of the last webinar, I believe, very day of the webinar that we had with our shareholders was a Friday. And it was slamming the stock market on that day, I believe. And it was -- and on that very day, I heard of quite a number of mining projects being suspended around the world. And that -- in that context, we did a number of things internally. We stopped all spending on anything other than closing the full funding. We rounded up over the space of some weeks all the consortium to check where they were, what they could and couldn't do, are they on, are they not, all those sorts of things. Everybody committed to proceed and the -- obviously, the one that was struggling a bit with what they had to do was ANS, it's public knowledge. And we also offered them what you just suggested because by slashing the budget without damaging the schedule for financial close, we're able to make it a bit easier for them to get on with it. So what you just suggested, I think, is consistent with one of the ideas we've got on the table, but we now need to wrap up.

And then Harry, if the Ethiopian government end up finding the finances required internally, is there a danger the whole project will be nationalized against KEFI interests?

No, I don't think so. I don't think that's a real risk. KEFI is the creator of the project, the manager of the project. The structure has been designed explicitly to have KEFI in control all the way through, so that's held to account as the project manager and no one is trying to change any of that. But having said that, the government is keen to and acknowledges that the public-private partnership is something important for social license in the long term and would like this replicated in other projects if it all possible, So they see KEFI's willingness to share ownership with Ethiopians as a real plus. They like that, but they certainly don't want to -- they don't want KEFI to go away or to be -- get off the hook or whatever. They want KEFI to be there doing his job. And so I don't think that's a real risk.

Harry, when was the ANS first meant to contribute?

About 12 months ago. The problem at that time was security. There was quite a lot of instability, particularly in that region, West Welega, Oromia and that was settled down. The government put in strong security blanket over that whole district -- when was it, by third quarter last year and about then. So that's when it was first meant to invest. But again, it -- I'm as frustrated as anybody else, but one should be -- one should acknowledge the reality that security went askew. And the government had to fix it, and it did fix it. And then the next deadline -- the most recent deadline has been the first quarter this year. And we all know what's happened in the first quarter this year to make it more difficult for them and everybody else. That's what we've been talking about how to sort of navigate through COVID and close and get on with it in a correct, safe manner. That's what we're doing. The country as institutions, KEFI, the management, the community, everybody is still driven, dedicated. But we have to be a bit flexible to adjust around the implications of what happens on the ground with COVID, and we've done that, I think. So I think we're on top of that. And likewise, as regards the ANS participation.

Harry, as you just answered a number of questions, a number of investors did ask what happened to ANS. They signed an agreement which they're now clearly in breach of. So is legal action taking place?

No. No. I don't accept that assertion. I'm not suggesting that despite the fact that KEFI and the Tulu Kapi gold mine project company have met their conditions precedent. I don't think anybody really can assert that COVID is not a force majeure if elected to be a force majeure when it is the -- I mean, I don't need to tell anybody what COVID is doing to the world and what it's doing to the banking systems of the world. So I think legal proceeding has nothing to do with this. This is about properly, professionally traversing the consequences of COVID, skipping around them, keeping our financing and project on track and helping ANS to close in whichever way is professionally feasible and if not, replacing them with a number of alternatives that have been cooked up. So it's nothing to do with blaming ANS for anything to COVID or whatever. It's about protecting the project and getting on with.

Now Harry, the Bank of America has recently forecasted that gold will reach $3,000 an ounce in the next 1 to 2 years. Is KEFI, therefore, going to guarantee that the Tulu Kapi mine will be fully producing by the fourth quarter of 2022? Is the Board aware that every month of further delay could mean missing this huge opportunity to benefit for the inevitable fall in the gold price, which will follow that rise?

Well, I mean, it goes -- I would like to think it goes without saying that the Board and everyone in the company is fully cognizant of the fact that any delay is not -- nothing that we want but the opposite. We've got a community that's particularly sensitive, frankly. And they're sick of hearing about the project and not getting on with it because our predecessors there were ready to roll with this project purportedly. And then the gold price collapsed on them, and they were left sort of, caught short, and they couldn't get on with it. So the community was pretty angry, and KEFI was brought in as a sort of a fixture. And of course, we've worked through states of emergency and now COVID, it's bit like the Duracell battery, you have to keep bouncing forward no matter what you get hit with. But we're doing it. And we're cognizant of the fact that we don't want delays. So yes, I mean, and asking me a guarantee when production will be, obviously, I can't give a personal guarantee. But I can tell you that the whole Lycopodium and Perenti, the contractors, are ready to mobilize their people. They've been working very hard and our management team likewise and everybody. So we want to get on with this, and it's been -- the scheduling has been crafted to hit the road in October for a number of reasons. And production would be no earlier than 18 months later, no later than 2 years later.

Harry, do you fell that being on the AIM market is holding or has been holding KEFI back with regards to funding?

I think the market is the market. It's whether it's AIM or Australia or whatever, market is the market. You can't criticize the market. I think if you said, I'll do it if I had perfect foresight and I could have many years ago foreseen that it would be a weak capital market for junior mining up until last year, it's starting to firm up now. But if I could have foreseen that or anyone could have foreseen that, that it will be set for as a capital market. So reluctant to support junior mining until sometime last year. Then I think one would have said, well, let's go private, and let's do this with the private structure. It is -- I don't think it's -- the ebb and flow of the stock market and the gyrations and volatility of all the variables that affect the stock market wouldn't have been so impacting or impactful on building a mine in Ethiopia. But that's all hindsight, it's quite irrelevant. So I think the flip side is also very relevant. We're at a really fascinating, at an opportune moment. We -- because for a couple of reasons. I think everybody would know that gold price is firming right up, and it looks like it's going to get a lot stronger. And everything I see, both in the industrial discussions that are coming to us as well as just reading the financial gurus and all the stuff that everyone must read tells me that this gold market is going to be a really powerful part of the next few years at least. And we happen to be coming on into it, and that's a tremendous opportunity. And if I superimpose on that, AIM's peculiarities -- AIM is renowned in the international mining world at least for sort of, how do I put it, abandoning the sector longer and harder and then driving the sector longer and harder. In other words, when the AIM investment community gets on board, they can push harder and higher as a stock market. The more volatile, in other words, will drive deeper and will drive higher. And once we get this thing moving later in the year, we'll hopefully be the beneficiaries of not only -- and shareholders hopefully will be the beneficiaries of not only strong gold price and a project sort of getting going in this environment, but also of being members of a stock market that is quite renowned for going harder, harder down and harder up.

Now there's been a couple of questions on U.K. bulletin boards. Does anyone on the KEFI board read the U.K. bulletin board share chats? And in your opinion -- what is your opinion of the continued bashing of this company and personal attacks on various share foreign boards?

I don't know if anybody else reads them. I don't. I find it -- I think that's a very useful function to allow people to chat and share ideas and whatnot, but I'm really not at all -- A, regulatory and company policy is that we do not participate in bulletin boards. That's just -- that's a regulatory thing for all companies really. So no staff were allowed to participate. And secondly, trying to decipher the musings of anonymous people over their day-to-day chats and so on is not really what I'm paid to do. So to me, it's not really particularly relevant. What I really need to do is focus on the business and managing the company and doing my job for the business.

Harry, with the importance on Ethiopia's economy for the mining sector in general, also the significant drilling results in Saudi Arabia, has KEFI been approached by any other mining companies?

Yes. I don't know what the f*** will I say. But I mean, we -- it's not exactly a rocket science. If you're a first mover in any sector in any country, there's a set of people around to keep an eye on things because they want to somehow jump on board at some stage in their own way. And anyone who's in that position, whatever their business is or whatever their country is, usually knows who those people are. That's the same here.

Now once funding is fully closed in October 2020, do you feel that any further funding for Tulu Kapi will be required?

No. Well, it can't be, in the sense that it can't full close unless all the stakeholders, all the consortium are satisfied that is fully funded. That's the fund -- that's, in a sense, the fundamental definition of full financial closing. Some people are prepared to put in money to get to that point such as the government, such as KEFI. And our contractors have spent a lot of time and some of their money to get us to that point. But the whole shooting match is the best part of a $300 million job, and that needs full financial close to make sure one can complete the job. So short -- long answer for a short question.

So now that the Ethiopian Central Bank has approved the debt structure, what are the key steps in achieving financial close in October 2020?

Last month, the off-site works -- I mean, we saw in contracts for the off-site works a long time ago, but the normal procurement jobs to deliver all the bits and pieces of transformers and whatnot in towers and self-electricity, they've been signed to the subcontractors just going through into this month. This month has been quite a bevy of things, the month of May, ranging from Lycopodium and Perenti doing their updated schedules and pricing for confirmation by the bank's independent technical, what you call it, an expert to sign off for contracting purposes. The banks were waiting for the central bank to clear so they could go formal with their independent technical expert review of all our stuff from Lycopodium and Perenti and the other things. So that's why all these contracting jobs have been important to get them lined up for now because as soon as the central bank gave its clearance, we need to submit all that stuff to the bank's independent technical people for their desktop reviews of all the work that's been done. So what else? The next month, the banks will go through it with their experts, and they'll issue their facility agreement. They'll draft the facility agreement. Again, for approval by the central bank, the details of the detailed documentation, the banking -- bank account documentation has to be approved by the contractors of the $200 million a month flowing through these various international bank accounts. So they need to be approved by everybody, make sure that we get paid in accordance with the cascade that's required. And then we land ourselves in September when the COVID state of emergency is meant to expire in Ethiopia. And we will get to the point where we will all meet in Ethiopia, hopefully, in September. And we'll all check out the site, check out security, make sure the place hasn't collapsed under some weird COVID-related problem, which doesn't look like it's going to happen. But everyone obviously needs to check, and then they go to their Boards for their permission to go ahead for closing in October. So that's the plan. It's been rather than like, how to put it, like many development projects around the world simply being suspended to wait and see what happens. We have been given consortium support and backing for -- getting everything ready for closing and then just meeting there in September to make sure everything is ready for closing and then closing. So we've avoided a suspension, and we keep pushing forward for that. So that's really the plan. It's really going to pure closing procedures now. Everything is designed around satisfaction of Board and bank requirements for closure.

So Harry, is achieving financial closing in October 2020 dependent on the Ethiopian elections happening prior to the closing date?

No. The point about the elections was that they probably -- I mean, without running a digressive, time doesn't permit a long dissertation on in Ethiopian politics, but Ethiopia is going through this incredible transformation. There were states of emergency there over a 3-year period demanding democratic rights. And then there -- started to be introduced. And what's looming is perhaps the most important election in the country's history. But having said that, the country has settled down extremely well. And the great fear of a bank is not who wins an election. It's nothing to do with -- the banks couldn't care less really on politics. What everybody, banks and the contractors and KEFI and our shareholders should be the same. They just want somewhere just safe and secure and reliable to be in production. Nobody wants to put lives at risk or capital at risk in a place that's unsafe or unstable. So the relevance of the election is purely that the first major election under the new independent Electrical Commission and so on be under control. Whether it's held in September or held the following September is not really the point. So the election of itself is no longer relevant. It's process and the atmosphere and the security of the country that's relevant.

Harry, when are the local farmers going to be moved off their tribal homeland and into the new accommodation that was built last year?

Well, the question is not phrased quite rightly. The farmers, there's about 2,000 affected people on the mining license area. It's about 7 square kilometers, about 350 households and about 2,000 affected people within that framework. And last year, the new house lands were picked out, all the compensation entitlements were calculated out, all the property surveys were completed, statistical summaries of everything, World Bank, international compliance auditors came through. And ever since then, it's been awaiting financial completion, ready to go. So yes, having selected new lands and having designed everything, so we've done all that. But we don't hand over $20 million and start moving people until you actually trigger the on-site construction works. You just don't do that. And so that aspect of what I'd call handing over money and moving them into new land only starts with the full financial completion.

Now Harry, we've got a number of questions around coronavirus. So I'll just move on to those. First question was, well done for getting the fundraising away in this market. Where are you staying during the pandemic?

I was in Ethiopia. I remember clearly, the day I left was the 23rd of March because the borders were closing around the place on that very day as I was in air. I've been there some months, and I moved down to -- I dispatched my family back to Australia. We're on the citizen. I'm not a citizen of any other country. So I went to my homeland of citizenship, and I've been in rural Australia and Metropolitan Sydney since then. So that's where I'm doing. But it's so strange, isn't it? I'm sure everyone is saying, it's pretty weird is, on the one hand, the world is experiencing a fear and a pervasive sort of wave of health concerns that are perhaps unprecedented. The world is unifying in such a dramatic way to defeat the common enemy. And our lives are being trained into some unusual patterns. And I didn't get a chance to spend 2 months with my wife for straight, frankly, for -- gee, it's probably 20 years. But at the same time, I'm doing all this work by Zoom and Skype and telephones, and I suppose because we all rely on the relationships we've built, and all the contacts we have and all the familiarity we build. And now we're sort of drawing on that historical legacy of knowing all the people we have to deal with and being able to deal with them by remote means. Pretty weird times.

Harry, how do you think Ethiopia has been impacted by COVID-19 and the associated SOE?

Well, I mean, far be it for me to analyze why it's being so lightly affected in terms of the statistics. From memory, I don't remember all the numbers, but I think the -- out of the 5 or 6 countries we really are exposed to as a business, KEFI, the U.K., by far, is the worst affected. I've forgotten how many thousands of cases per million there are, but it's some thousands of cases per million. And the next one down would be probably Saudi and then probably Cyprus and then probably Australia. And the least affected is Ethiopia, which has got less than 10, I think, cases per million. They've even conducted door-to-door surveys to see if anyone is infected or has symptoms rather because they haven't been able to run so many tests that they literally hired tens of thousands of people to go around good the door to see if there's anyone with symptoms. And all the cases -- possible cases, they picked up, they tested, and they weren't positive. So there's something about the climate, the altitude, the people, which perhaps has made them more resistant. But having said all that, the country is in lockdown. So it's like -- and the lockdown of Ethiopia economically is far more damaging than the lockdown of Australia or the U.K. or Cyprus. Because there are a lot of people in Ethiopia who have to work today to eat tomorrow. There's not the social welfare that some other countries benefit from. So it's a serious thing. And it only highlights, I think, the critical importance of this project. Just think about that, that the people in Ethiopia, really -- a lot of people really do need to work today to eat tomorrow. So projects like this have to be kept going. And so these banks that are involved are motivated to do their bit as development banks to support the country. The government is doing its bit to support the country. ANS wants to support the country. So everyone in this consortium has got a special motivation to make this happen. And I know it's terribly frustrating for a shareholder who's put money and see the shares go down. But the second stance is as such that it's hard to put into words how dedicated all these people are to make this go ahead because the country really needs it.

So are businesses and government still working? Or is all the attention focused on COVID containment? Are there strict containment rules still in place?

Yes. The latter, the -- for example, public servants who have to rely on public transport, which is 99.9% of them, have been told to stay at home, work from home. So unless you're a Minister or seeing your policy adviser or something in private transport, they stay at home. So I have no doubt that the country will open up as soon as they can. But at the moment, it's pretty much in lockdown and just bracing itself and trying to understand this thing. But I'm sure it will open up as soon as it possibly can.

So are the travel restrictions impacting the work needed to achieve to the KEFI development timetable?

There's been some -- I mean, there's restrictions everywhere, as we all know. But the only thing that I'm aware of right now that is holding anything up is that our auditors can't fly to do their last verification jobs to sign off the audit. So it's like only those people who have to physically go somewhere else to physically see something to finish their job are the ones who can't do their job. But everything else to do with this in project is not being held up. We thought we were going to have a problem with Saudi Arabian drilling because the lab got infected with the virus, and all our samples in the lab, they got shut down. But then it got reopened afterwards. So they're scurrying to catch up again. So by and large, we haven't been damaged by it.

So moving on to Saudi Arabia now, Harry. We've had a number of questions coming around that. First question was, was G&M able to complete all of the planned drilling at Hawiah?

It's finishing off for now. I'm not sure exactly which day, but it's imminent within these days that it's being finished off. We put in a second rig a couple of months ago to -- because COVID restrictions limit us to day shift in Saudi Arabia. So we've put in a second rig to keep it up, keep up the rate of drilling. And now it's being wound up. We also had a -- because we won an independent sign-off on the maiden resource, we're planning to assemble and report within the next couple of months. The independent experts, we were selecting from, we had to pick one that actually had people in the country who could get out and inspect and verify and so, but that was sorted out. So we've seen it got around the threat of the COVID. You still there? Can you still hear me?

Yes. Yes. Still hear you. Loud and clear. Keep going. Next question was, will the maiden resource be done at midyear?

Yes, that's still the plan. So I haven't seen all the drilling results myself because of what I said about those -- the lab being shut down for -- because of a COVID infection for a month or so. But I know the drillings are winding up very shortly, and that the lab is scurrying to catch up. So unless there's something that I don't know about, we'll get all those results in and do our maiden resource around the end of June.

Will G&M complete APA following the maiden mineral resource estimate in mid-2020?

Yes. Yes, that's correct.

And going forward, does KEFI plan on contributing to G&M? Or will it dilute its interest further?

No. The plan is to contribute. But obviously, we're constrained by the competition for capital at the moment within the company. What I would say that with what you call it the Hawiah project or anything in Saudi Arabia, we've got one strong partner. We've got strong internal development banks who don't suffer liquidity problems or capital adequacy constraint. So the financing of the development of Hawiah will be a much more straightforward proposition than Ethiopia's Tulu Kapi project, which has a much more complex partnership structure with financial institutions involved from outside the country for project loans and has the complexities of a public-private partnership and the first development for decades and so on and so forth. So I think we only put up about 1/3 of the equity capital required in Ethiopia -- Saudi Arabia, sorry. And the capital of the partners and the capital of the lenders is far more visible, transparent and reliable just because of the nature of the country's capital market. So I don't see it as a big issue. I think that this -- until the company will start moving. The stock market will start moving. It's an incredibly powerful gold price outlook. And so I think funding our bit of the equity component out in Hawiah, frankly, will not register on the rig to scale of this company where we're going.

So given that the in-situ metal value of Hawiah is already similar to the Tulu Kapi gold reserve, why doesn't KEFI sell its G&M interest instead of diluting shareholders further to fund Tulu Kapi?

Yes. Well, we haven't even reported a maiden resource yet, so it's a bit early as I'm talking about selling something you haven't even defined what you got yet. But I mean, it's true is -- and the shareholders' question is very pertinent that if the stock market is unable to or unwilling to put a value on a project, then let someone who's prepared to run with them, whether it's Tulu Kapi or Hawiah or whatever else. It comes down to what is the best application of capital for the project. And with Tulu Kapi, we deliberately bought a project that already had best part of $50 million spent on it before we came along. And we deliberately established a structure, which has, by far, the lion's share of capital required to develop it provided by partners and contractors and lenders. So this project will have cost probably $350 million by the time it's up and running. And the KEFI shareholders would have themselves funded very little of that. So it's certainly the case that we're sharing ownership to minimize dilution. That may not look like that, but that's obviously what we've done. That's exactly what we're doing. If it had been a boomer of a market for the last 8 or 9 years, it might look a bit different today. But it wasn't, and we are where we are. But we'll continue to play that out that way, where we'll do whatever is best in that judgment.

So with regards to Saudi Arabia, KEFI has diluted their stake from 38% to 34%. With the positive assay results thus far and hopefully, further positive drilling results, how will KEFI start funding this mining development?

Well, I think we've sort of covered that. I mean, at the end of the day, if shareholders of a stock market-listed company do not want an exploration and development company to explore and develop then it won't. But if the shareholders of this public-listed company want the deal to proceed for their stake, for their benefit, then they will fund their share. And Hawiah is the, what you call it, the intrinsic value of it, the fundamental value of it if it's anything like I'm visualizing, it's something like Tulu Kapi plus a lot more because we haven't really got to the bottom of it. We just don't know [indiscernible]. So to fund 1/3 of the equity component, which will be like 25% of the development capital will be equity. So we'll fund 30% of -- 1/3 of -- 25%, whatever that is, under 10%, I mean if we're not in that game, we shouldn't be in this game. In fact, that's all I can say. If the company doesn't have the wherewithal to do that, it shouldn't be in the game. And if shareholders don't want to see a company that is in the business of exploration, development explore and develop, then there's something amiss. There's something missing here, right? That's all I'll say.

Harry, please explain of what's good looks like and what the numbers you'd like to see in JORC to consider it a success?

10 million tonnes at 2% copper equivalent would be very good for a start. That would be great. And yes, and this could easily be -- I mean, who knows how deep it goes. We've only -- we've got about -- we've got some kilometers along strike, and we've only drilled down to a few hundred meters at depth. And we don't, it could go for kilometers. We just don't know. So this could easily turn out to be the biggest mine in -- biggest copper gold mine in Saudi Arabia quite easily. We've just started. We haven't been -- we only discovered it less than 6 months ago. So we're -- it's really early days. This is remarkable to me. I've been on exploration, development, operational Boards since my mid-20s for decades. And this is the first time we've made a discovery declaring a resource within 12 months, going -- starting the PEA, and we could be developing this thing within 18 months to 24 months. That is remarkable. The typical mining project takes 15 years from the first discovery hole to an operation of production. This one will be a fraction of that if it keeps going at this pace. I mean, it is quite remarkable.

Harry, would it be possible to arrange a KEFI geologist to explain the Hawiah JORC report via a podcast to shareholders?

Yes, I'll have a difficulty preventing them getting on and explaining it. They'll be so bursting to explain it.

Now, Harry, we haven't got that much time left, but there's been a number of questions on the recent placing and your general meeting on the 28th of May. Firstly, why do the placing so close to project equity is coming in?

Because we needed the money. ANS was slower than we all want it and are scheduled, and we needed the money.

Why such a discount on the share price for the share placing?

Well, the day, I mean, this was remarkable. I was quite astounded, to be honest. It's the first in my experience. To trigger replacing, set the price around an anchor investor, and then the share price takes off going up, whilst you're in the middle of a book build. No disrespect to AIM and its stock brokers, but my experience has been 9 times out of 10, that stock prices languished when one starts the book build and for a whole combination of reasons. But on this particular occasion, having set the price around an anchor investor at, I think, 12% discount to the VWAP of 3 days, it just seemed to coincide with the share price taking off. So it wasn't set at any deep discount. It was set a conventional discount, and the share price took off. It just seemed to coincide with an apparent swooping in onto this company by a wave of buying, which I was oblivious too, you could say, but a wave of buying came in. And I think it must be an angering. It's angering to me. I mean it's -- and I deliberately didn't participate in it myself and management didn't because we didn't want to be accused of taking advantage. But it was terribly disappointing that swoop into the stock didn't happen a week or 2 early. Anyone could have gone and bought shares cheaper than the placing price previously. And no sooner did I start building a book that the share price took off. So very frustrating and disappointing. But no, it's the markets you've got to -- as I said earlier, the market is the market. You can't argue with it. And once we started the book close, we have to close the deal.

KEFI -- Harry, what does the placing do for the valuation upside for KEFI shares?

Well, the one good thing about the current circumstance is that there's such a deep discount between the market cap and the value that, frankly, it doesn't -- it take it's shape of the upside, but it doesn't really fundamentally damage the investment proposition. The investment proposition is that is -- this looks like a 10 bagger based on Tulu Kapi, and Hawiah looks like doubling it or more. So I'm not promising anybody. And if someone have asked me in 3 months' time, you guaranteed new 10 bagger, I say I never did guarantee a 10 bagger to anybody because I'm not. I'm just saying what it looks like to me, given what's happening in the gold market and given what we're -- where we are with Tulu Kapi and where we are with Hawiah. A 10 bagger is on the table, placing or no placing. So I can tell you that there will be no 10 bagger if we didn't have any money, and we went broke. So we better have a 10 bagger than to have a 0 bagger. But anyway, I'm not trying to be flippant here, but we've got a business to run. We -- money didn't come in on schedule. We had to raise money to make sure that we pushed ahead. And quite remarkably in the stock market in the middle of what appears to be a gold boom, the stock is being traded at today at what appears to be a 10 bagger plus. So it's -- there's a lot of upside.

Now Harry, with regard to the recent placing, why were private investors omitted from participating in the heavily discounted offer when they could have been included by using primary bid? One shareholder says he considers it unfair that private investors should be admitted for applying however large or smaller discount might be.

Yes. Well, that is one criticism I would make is, I, to be honest, that is that from a regulatory point of view, you are really quite hamstrung the way the market works from doing pari-passu office, which will be much better. I think the primary bid certainly couldn't have raised GBP 3.7 million. So it's a red herring, if you like. And it's also red herring just say it was a deep discount because as I said, when the book was priced and it opened, an order was taken, subject to full closing of the book, it was only a 12% discount. So you've got to roll with the punches here if we -- if shareholders are really the desperate to buy shares, they should have bought shares a bit earlier a bit cheaper in the market. What can I say? Primary bid, I understand, is a very successful concept. But based on my understanding, it's not a reliable way to raise GBP 3.7 million. And it is not something we can close the risk of failure of placing over the raising before you announce it. So it's -- you have to be very careful not to announce things until they're done, having been done. So I really do struggle, frankly, on AIM. And I ask these questions all the time of the advisers. Is there some way we can expose this to more shareholders so they can participate? And the answer has always been the same that if you need to close out your financing risk before you announce, you have to do a private placing and only announce it when it's closed. Otherwise, the -- there are people in the market who will attack you, destroy your financing and hold you to ransom during the financing. So on that note, I do blame the regulatory system. It's not for a Board not wanting to involve all shareholders. Quite the opposite, but we have to protect the company and make sure that it closes its financing deals before an announced system as having been closed.

Harry, why was RAB Capital chosen? And what's their strategy for KEFI?

They're quite driven to be a long-term shareholder. I understand there are some tax rules, not familiar with all the tax rules in the U.K., but institutions that hold for more than a year have a particular tax status, and that's important to them as well. So they're pretty serious about having [indiscernible] as being the multi bagger that they value the upside of and that they want to hold for the long term. They wanted the right to appoint the director. They've known me and us or me in particular, going back more than 20 years in previous companies. So they felt comfortable in terms of trust. But clearly, they're interested -- it's gold. It's all about gold and all about the leverage of the share here into great gold upside. So I think the institutional market in the U.K. or anywhere aren't real interested in companies at this small stage of market cap typically. They make a few exceptions, and RAB has made this one of their exceptions.

Harry, there's been a couple of questions on the GM. Why hold this GM prior to releasing the 2019 yearly financial report, which is due to be released by the end of June? And why is the GM being held in Australia?

The -- well, we wanted to raise capital to protect the project. And as to when one holds the AGM was a secondary consideration, to be honest. It's more about financing and business protection and progress. From the point of view of the AGM, the Annual General Meeting, I think I mentioned earlier in today's discussion that -- about the only thing that seems to be a problem on timetabling at the moment as a COVID sort of restriction is that our audit cycle is being held up by some weeks because the auditors can't fly to check for themselves and physically inspect, but they have to do to sign off the order. So we'll get the accounts out in June, given the travel restrictions that are being lifted at the moment in Cyprus where the books are. But we'll probably have the AGM in early, what do you call it, early July, the way we're going. But the accounts will have been signed off by the end of the year as soon as the auditors can get over there and do that. So, how do I put it, holding up a capital raise that's required by the business for the sake of the procedure of the audit cycle wasn't something that we considered our priority. And then so far as the question that you asked, why is it in Australia? Well, it's because I'm in Australia and the finance director is in Australia. And we're not allowed to fly anywhere at the moment. And the other directors will join by telephone dial-in. And I'm not sure if the office buildings in most metropolitan cities of the world would even allow a general meeting to be in their offices at the moment, given the restrictions on how many people can get together. But it shouldn't affect us really because we've always been driven by proxy votes. We get fairly good proxy responses. And frankly, we've never had more than a handful of people physically turn up, shareholders, I mean, at the general meeting. So the proxy system will do the job hopefully properly.

Harry, we've just got time for a couple more questions. One shareholder asks, I would ask that when you arrange the next fund raise, could you please think about maybe including an open offer to shareholders? I know it would cost extra money, but I think you owe it to them. If warrants were offered with the shares, you could probably get a premium or at least parity to the prevailing share price.

Yes. I think based on the advice that we've always received, I think the way that one could do that would be to -- if you have to raise X, raise X, but be prepared to take Y by having an open office subsequent to raising X. So as you can lock down the capital you really need and take an additional Y or an open offer to allow the smaller shareholders to participate as well. That's the only way I've been advised. It could be done without compromising the financing risk for the business. So -- but I think it's a well-intended question, and I think we should look at that when the transaction allows.

Harry, you -- another question. You will have noted many businesses and executives and workers across the world are taking significant pay cuts due to the unfolding crisis. Please can you inform the market whether the Board of KEFI will be taking similar pay cuts?

Well, if one -- if the shareholder looked at the recent quarterly report a week or so ago, you'd see in that, that we reported that the top 9 people in the company, the Board and the senior executive team have not taken any fees this year, 0 because COVID started hitting earlier in the year. It started hammering me, I must say. I could see it starting to sweep around the place in February. And in March, it really did hammer home in most countries. And we haven't taken any money this year. So we will, we'll have -- not everybody can go forever without any money. But we've announced also in the quarterly that we would also reduce. When it comes back on, it will be at a reduced rate, 25% lower. But I do highlight that again, those top 9 people haven't all been in the company for 6 years, but I have been. I was the founding Chairman of the company. I didn't actually take any fees at all for the first 8 years, I think. And then I became Executive Chairman 6 years ago. I was being paid fees and have been paid fees. But the top 9 people in the company, if you add them all together, myself, the Finance Director, the other directors and the senior executive team, we will get tabulated in the RNS as the PDMRs, I think, the people who have to be reported to shareholders and so on. Altogether, for me individual and for all that set of people together, those people have invested more cash into this company than they've been paid by this company. So I don't think it's right to imply that we have people with their snout in the trough. We've put more money into the company than we've been paid. I didn't take a dollar out of it for the first 8 years. And we haven't been paid anything this year until these financings settled down, and we could see the light at the end of the tunnel because we're all very driven to make this work. We feel a great sense of responsibility. We've been -- we've worked tirelessly on the ground in Ethiopia and elsewhere through states of emergency and whatnot, security incidents and whatever. We're not doing it for fun. We're doing it because we can see the price there, and we're driven by it. And we certainly don't relish the opportunity of working for nothing. We're here to make money properly and honorably in the proper way. But I don't think you need to look at us as people who would take advantage. I don't think we are like that.

Now Harry, we've been going for over an hour now. So I would just like to hand back to you for any final remarks.

Well, it's a weird moment in time. I mean, I -- words can't quite express for me the wee juxtaposition of today's circumstances. The -- and it takes very careful thought and discipline to traverse that. I know that many shareholders are extremely disappointed with the share market performance. I know many shareholders would criticize management and me, in particular, because the buck stops here. But all I can say is that it's a wee period of time for the world and for this company. And the only really striking thing to me from the point of view of what gets me out a bit in the morning is that just as -- I mean, most of these questions you asked were about a particular shareholder not being able to put his money in, the Ethiopian shareholders. Now anybody looking at the headlines about if you have a liquidity crisis, we'd understand in a flash what went wrong. I would understand that in a flash. Just spend 5 minutes on Google, and you can see what happens. And then the fact that the government is prompting and pushing to preserve the deal and get it going, that's perfectly understandable also. What you see is beating the obvious. The highest growth country in Africa with a Nobel Prize-winning Prime Minister, they're absolutely driven to make this business go. And I think anybody who follows us with any sense of objectivity over some years would know that we're tenacious people, and we're honorable people. Now I'm sure there's always exceptions to that, and people are welcome to their opinions. If they want to make criticisms, that's their right. But I think anyone with any objectivity would know that we have been on the ground doing it. And that's what we do. But the weird thing at the moment to me is that -- and I've never quite experienced this before is that the more worrisome the world gets, the more upside there is in our principal commodity. And that's something I've never really lived with before. The more worrisome the world is getting around this COVID thing, this gold price is just being unglued at various points to take off. So I think that we will close Tulu Kapi. We have a number of tricks up our sleeve type of thing to make sure we close. We've had to do it before, and we'll do it again, where we have to go to plan B or C or whatever, if plan A doesn't work, and that's only if it doesn't work. But the outlook for the company is really quite mindblowing. We've got 2 projects now on the table, and that's ignoring the third one that's in for a mining license and a gold one in Saudi Arabia called Jibal Qutman that our new shareholder probably never heard of. But we made another discovery, gold discovery, and we have applied for mining license on that one as well. So we've got 3 development projects, I think, on the table today plus the underground mine on the table today will come along to the company fairly quickly underneath the open pit. It really is striking. But once we close the first one and then get it rolling, we're going to amass quite impressive upside in a commodity gold, which is running hard. And I think we'll blow the ceiling off the way it's shaping up in the next few years in my view. And we actually happen to be listed in the stock market, which is terribly punitive and impatient, not terribly familiar with mining, but terribly punitive if you don't perform for whatever reason. But it's also -- with the flip side, it also runs you harder and faster if you do perform. So that's what's motivating me that I think have been the rightful frustration and impatience of a shareholder, whether he's been there for a long time or a short time, has a good chance here of being finally rewarded with investments...

Well, Harry, thank you very much for your time today. We got through a lot of questions, and look forward to speaking to you again soon.

Thanks, Rosie. Look after yourself.