Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
This Kefi Minerals (KEFI) share tip at a 0.58p offer has not been a good one so far. We apologise and as shareholders share your pain. The shares are now 0.34p-0.36p. We took more shares in this fundraise at 0.33p on the view that the underlying value is c1p per share. So what has happened?
£5.62 million gross was raised via a placing to funds of £600,000, insiders - including directors - of £400,000 and a complex note structure investment by Lanstead Capital of £4.62 million. Oh no we hear you cry - death spiral ahoy!. Well it is that sort of instrument but it is structured in a way that Lanstead needs to see the shares well above 0.4p to make any money. And there will be no persistent forward selling by Lanstead as you see with some death spiral facilities. Not all Death Spirals are actually death spirals and this one is not.
There is also a 17 for 1 share consolidation so 0.33p is acually 5.61p in new money
The key thing is that Kefi is now fully funded for 12 months ( 18 at a stretch) to finalise financing arrangements and the triggering of development at the Company's flagship Tulu Kapi project, as well as additional exploration work in Ethiopia and Saudi Arabia and also PLC costs.
We expect that Tulu Kapi will secure project finance within six months so start building it out well before Christmas so there is an awful lot of wriggle room here. And using a conservative gold price that project alone is worth 1p per share.
So we now have a company with no funding worries and a great project worth three times the current market cap. As a bonus things are looking up for the gold price. So grit your teeth and buy.
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