External pressures that have weighed on the share price performance of KEFI Minerals plc (LON:KEFI) are easing, according to Cantor Fitzgerald.
The broker initiated coverage on the gold miner with a ‘buy’ recommendation and 26p target price, not far off five times the current share price of 5.57p.
The Tulu Kapi gold project in Ethiopia now stands on the cusp of development and could be producing up to 134,000 ounces of gold a year from 2019, while the Jibal Qutman heap leach project in Saudi Arabia could, Cantor submits, provide a low-cost means of financing greater production and more intensive exploration in a country seeking to expand its mining industry.
Cantor saluted the burnishing job KEFI has done on the Tulu Kapi project that it bought from Nyota Minerals in 2014.
“When KEFI acquired the Tulu Kapi project in 2013/14 it appeared to be an uneconomic gold deposit; however, KEFI's management team skilfully increased the mineral resource by 68% through strategic drilling and trenching, and have shown that through tighter operational planning and by focusing on higher grade mining and reducing costs, Tulu Kapi can be a robust gold mine producing an average 115kozpa at steady state with costs in the lower third on the global cost curve,” Cantor noted.
The broker says the Ethiopian Government is investing, and the project has begun again to attract interest from international debt financing groups.