FROM THE BROKING DESK
To follow up the latest release from KEFI Minerals†, Jim Taylor has put out KEFI Minerals — Tulu Kapi 2017 DFS Update, 25 May 2017. The company updated its DFS for the Tulu Kapi Gold Project in Ethiopia. Reserves and the mining schedule remain the same as our previous estimates, and cash costs are marginally lower. There were minor changes to capex too and an increased level of disclosure, plus the presentation of management’s upside case. Our target price has been revised downwards to reflect the new capex information and the latest FX rates.
We reiterated our Buy rating, with our target price going from 10.5p to 8.8p. We are adjusting our target price based on additional capex not previously captured in our model and the latest FX rates. While the upside to the current share price implied by our target price remains substantial (+61%), it is worth noting that the current share price implies a 0.2x P/NAV to our unrisked NAV. We believe the stock offers a substantial re-rating opportunity once the Ethiopian state of emergency has ended and financing is secured.