KEFI Gold and Copper (KEFI) is “significantly undervalued” according to a report issued by Orior Capital, a Hong Kong-based equity research house. 

Orior notes recent share price strength, as KEFI has delivered positive newsflow and against a backdrop of a strong gold price. 

Nevertheless, says Orior, valuing KEFI’s Tulu Kapi gold project in Ethiopia in line with valuation put on other Africa-focussed developers would underpin a share price at construction start of 3.3p a share. 

That also allows for a US$120 per ounce valuation for KEFI’s other assets, in Saudi Arabia.

Construction at Tulu Kapi is now imminent, and yet KEFI’s shares are currently trading at less than half that price. 

Tulu Kapi is expected to commence production in late-2027, at which point Orior reckons the shares will merit a valuation of 7.1p per share. 

“These valuations are considered conservative,” adds Orior. 

“They factor in additional share issues at one level or another in the KEFI group to complete the funding of Tulu Kapi. Yet, they take no account of other potential value drivers. This includes the full development of the underground mine, the potential for other projects in Ethiopia, further resource growth in Saudi Arabia, the larger scale development of Jibal Qutman, the potential start-up of Hawiah, the potential for capital management initiatives once Tulu Kapi is in production, and the potential for a move to a main stock exchange board in London or elsewhere.”

The high gold price is a considerable factor in driving value at Tulu Kapi. 

“At US$3,600 per ounce oz gold, Tulu Kapi boasts an estimated levered NPV5 at construction start of US$1.5billion and an internal rate of return of 109%,” says Orior. 

And the gold price is currently considerably higher than that. 

“The project is expected to generate average EBITDA of US$493 million per year,” continues Orior, “in the first three years of operations.” 

Orior’s analyst notes that such significant cash flows would enable rapid repayment or refinancing of the initial funding debt. 

“Based on these figures, the construction start valuation of 3.3p per share represents an EV/EBITDA multiple of 1.8x at US$3,600 per ounce of gold and 1.5x at US$4,200.” 

 

View from Vox

 

The gold price has dropped back slightly from when Orior compiled this report, but the numbers are no less compelling for that. Who would have thought 2025 would be the year in which a gold price assumption of US$3,600 per ounce could be considered alternative. But here we are. KEFI’s timing has been serendipitous, its just closed its debt financing deal, and the equity portion should be sewn up soon. Will Orior’s valuations be borne out? It doesn’t seem unlikely in this market.