Tulu Kapi Gold Project Finance Update

23 January 2023

KEFI Gold and Copper plc

("KEFI" or the "Company")

Tulu Kapi Gold Project Finance Update

Final Steps Requested from Government and Being Addressed

KEFI (AIM: KEFI), the gold exploration and development company with projects in the Federal Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, is pleased to provide an update following the Company's announcement on 21 November 2022 in which we reported that the finance plan for the c.US$320 million financing of the Tulu Kapi Gold Project ("Tulu Kapi" or the "Project") had been agreed in principle by the lenders so that draft definitive agreements could be finalised for approval by syndicate members and regulators.

We are now pleased to report that all lead contracting and equity investment parties have agreed their draft agreements and confirmed their intention to sign. Likewise for nearly all Government agencies which have to also sign agreements within the syndicate.

For their part, the lenders have re-affirmed the financing plan in principle and have formally set out their indicative terms and conditions which include, as expected, satisfaction by all parties of their respective conditions and the receipt of all the necessary remaining Ethiopian Government ("Government") approvals. To this end, during the last months of 2022 the various relevant regulatory agencies were advised of the specific conditions and clarifications required from them in order that progress can be made with the financing and definitive documentation signed.

Whilst the Government is clarifying the outstanding regulatory matters, it is also reorganising its systems around the Project, including for upgraded security and for preparing the community for resettlement.

Following the completion of these steps, and the receipt of final credit committee approval by the lenders, KEFI will call a General Meeting of KEFI shareholders to seek formal shareholder approval of the transaction, in particular any convertibility rights (into KEFI shares) embedded in the financings at the KME level by regional investors as previously outlined.

The Company expects all outstanding issues to be addressed imminently, the exact timing of which will largely be driven by the Government process, so that final lender documentation can be completed, and signing can take place, enabling the KEFI General Meeting to be called, funds to flow and full Project launch to proceed.

The Company and the full syndicate remain focused on achieving full Project launch as soon as practicable. KEFI remains focused on achieving full production from the open pit operations in 2025 and from the combined open pit-underground operation a few years later for combined gold exports of near 200,000 oz per annum (KEFI beneficial interest 80% or near 160,000 oz per annum).

The Company is pleased to provide more details of the key syndicate members as follows:

Commenting, KEFI senior management said:

Finance Director, John Leach:

"It is very pleasing that we are finalising the US$320 million financing of the Tulu Kapi Gold Project. This is a large complex transaction in a challenging working environment, against a backdrop of turbulent equity markets and progressive political reforms in Ethiopia. KEFI is therefore delighted with the first-class syndicate we have established to make the long-standing Tulu Kapi Gold Project an operational reality.

"Our Tulu Kapi financing package is predominately at the Project or subsidiary level. This is also as planned for our Saudi project developments, the first of which, Jibal Qutman Gold, is smaller than Tulu Kapi and now expected to start construction around the end of 2023 and the second of which, Hawiah Copper-Gold, is bigger than Tulu Kapi and expected to start construction after production has commenced at Tulu Kapi and Jibal Qutman."

Chief Operating Officer, Eddy Solbrandt: "We have already launched key initial aspects of the Tulu Kapi Project development and intend to continue our staged build up to full launch in full collaboration and support of all key stakeholders. In Saudi Arabia during 2023 we focus on the Definitive Feasibility Study and project financing for Jibal Qutman, the Pre-Feasibility Study for Hawiah and the regional exploration programme.

"KEFI's first eight years after the IPO was prospecting which led to, since 2013, our assembly of five million ounces of JORC resources. In KEFI's second eight years, we collaboratively assisted to unclog in-country obstacles that held back mining for all, and we assembled our finance. In a few years we expect to be a significant gold producer and, shortly thereafter, also copper."

Executive Chairman, Harry Anagnostaras-Adams: "The Board is very proud of the teams in Ethiopia and in Saudi Arabia. It has taken a huge effort over a much longer period than we had anticipated in both countries to deal with innumerable frontier market (for mining) challenges and we greatly appreciate the patience and support of all stakeholders and, in particular, of our host governments and communities, our partners and of course our financiers and shareholders.

"Ethiopia's first modern mining development will include our large Tulu Kapi project which today would be the largest single export-generator for the country. We are looking forward to working with the newly appointed Minister for Mines, H.E. Habtamu Tegegn who was already supporting the project from his previous role as head of the Ethiopian Roads Authority.

"In the Kingdom of Saudi Arabia, after some fourteen years of patient ground-work, the rate of our progress there has taken off at a remarkable pace - with our two advanced projects being at the forefront of ambitious minerals development plans in that country which are being vigorously supported by the Government locally and have been just recently recognised internationally."

Additional Information on the Tulu Kapi Gold Project

Final Steps to Financial Close

As with any project financings, standard conditions precedent and subsequent must be satisfied (before and after) the signing of definitive agreements by all parties, including but not limited to there being no material adverse change in markets, completion/registration of all documents with the various government agencies, opening international project bank accounts (in Ethiopia requiring collaboration with the National Bank of Ethiopia), placing insurances internationally (in Ethiopia requiring local agents), registering loan-security, receiving confirmations of tenure for mining and for exploration and the lenders' independent experts' confirmation that security, community and environmental conditions on the ground are conducive to the planned operations and compliant with IFC World Bank Performance Standards (which in Ethiopia involves significantly upgraded security and community compensation processes in the field).

Such conditions are normal for all mining project finance transactions regardless of commodity, country or company. Tulu Kapi was designed with our Government partners as a show-case project per the latest international standards. All syndicate members are leaders in their field and naturally require completion of due process.

The remaining Government regulatory steps comprise commitments and clarifications as follows, which are required for the definitive agreements to be signed:

It should be noted that the huge effort over the past few years by the Ethiopian Government and its agencies has resulted in only very few regulatory actions and clarifications now remaining, which are being addressed. We greatly appreciate this intense effort which has involved extensive local and international consultations, policy revisions and many other steps taken to facilitate the development of a modern mining sector in the country. KEFI believes there are no grounds to think all clearances and assurances will not be received.

Uses and Sources of Funds

(excludes mining fleet and historic investment)

Notes to planned sources and uses:

¹ Excludes Saudi.

Notes:

Planned Tulu Kapi Project summary economics.

Please note that some of these statistics have improved since they were last published due to the 2023 Mine Plan integration of some underground production and the increased KEFI planned beneficial interest, in addition to some exchange rate movement. The per share statistics are based on Tulu Kapi only (Saudi assets excluded from this Ethiopia-focused analysis) and KEFI fully-diluted shares in issue as at 31 December 2022 of 5,034 million.

·    The 2023 Mine plan, as summarised herein assumes:

o  mining of ore is at the rate of 2,629,000 tonnes per annum

o  processing is at the rate of 1,989,000 tonnes per annum which is the warranted design nameplate

o  as regards the ore available for mining. there is some upside potential because it is expected that:

§ in-fill drilling during plant construction will increase Mineral Resource and Ore Reserve of the open pit by including mineralisation which is already identified but not yet drilled to sufficient density for inclusion in Resources

§ the underground mine feasibility study to be completed during plant construction will demonstrate the feasibility of extracting more than the assumed c. 200,000 ounces from underground resource of c. 600,000 ounces

o  as regards the processing rate, it is expected that there is potential flexibility around the assumed rate which is based simply on contractually warranted minimum design-capacity. Minor capital expenditure during production could allow :

§ a 10-15% per annum higher processing rate

§ a reduced rate in later years if desired in order to extend mine life for smaller throughput rates after depleting the open pit, by mining from underground or potential satellite pits

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

Enquiries

KEFI Gold and Copper plc

KEFI is focused primarily on the advancement of its three development projects in Ethiopia and Saudi Arabia, plus its pipeline of highly prospective exploration projects in these two large jurisdictions of the under-explored Arabian-Nubian Shield.

KEFI targets that production in Ethiopia (at Tulu Kapi Gold) and in Saudi Arabia (at Jibal Qutman Gold and then Hawiah Copper-Gold) will, in aggregate, generate cash flows for capital repayments, further organic growth and, ultimately, dividends to shareholders.

KEFI operates these projects via joint venture operating companies Tulu Kapi Gold Mines S.C in the Federal Democratic Republic of Ethiopia (TKGM) and Gold and Minerals SLA in the Kingdom of Saudi Arabia ("GMCO"). These operating companies are technically guided and supported by KEFI so that each of these operating joint venture companies as soon as possible builds the local organisational structure suitable for long term production as well as exploration and future development opportunities. We have already appointed some of the key senior management into TKGM and GMCO and the teams are being built up as we move forward.

Historically KEFI and its partners have spent over US$80 million in Ethiopia and US30 million in Saudi Arabia. These programs have led to Mineral Resources in excess of 5 million ounces gold-equivalent (at analysts' long-term consensus forecast - CIBC Global Mining Group Analyst Consensus Long Term Commodity Price Forecasts 1 December 2022) being assembled and reported since 2013, 1.7 million ounces gold in Ethiopia and approximately 3.3 million ounces gold-equivalent in Saudi Arabia. KEFI's aggregate beneficial interest is approximately 2.7 million ounces gold equivalent.

KEFI Gold and Copper in Ethiopia (planned to be c. 80% KEFI-owned)

Ethiopia is currently undergoing a remarkable transformation both politically and economically.

The Tulu Kapi gold project in western Ethiopia is being progressed towards development, following a grant of a Mining Licence in April 2015. No other mining project of this scale in Ethiopia has been brought to Tulu Kapi's stage of advancement during recent years and Tulu Kapi will be the first industrial scale mine development in Ethiopia in over 30 years. It has taken years of extensive technical re-design of the project, years of overhaul by the Ethiopian authorities of financial policies which previously hindered mining project finance and the patient and cautious traversing by the Company of recent well-publicised events within the country. The project has imposed many demands on a regulatory system which the Ethiopian Government continues to upgrade, determined to build a modern minerals sector. KEFI is honoured to play its part in this process and has assembled a first-tier syndicate of international industry expert management, contractors, banks and investors.

The Company has now refined contractual terms for construction and operation of the open pit mine. Management has also developed preliminary plans to develop the underground mine once open-pit production has started.

All aspects of the Tulu Kapi (open pit) gold project have been reported in compliance with the JORC Code (2012) and subjected to reviews by appropriate independent experts. The underground project is defined based on internal PEA-level analyses which have yet to be subjected to DFS-level investigation and independent review, which is planned to be carried out during the construction of the open pit.

KEFI remains keen to re-commence its exploration of the additional prospects it has successfully identified within the Tulu Kapi district exploration area from within which the mining licence was duly excised as a result of the successful discovery of the Tulu Kapi deposit. Whilst most historical drilling was naturally of the Tulu Kapi deposit, there was significant work done on many further prospects which await follow-up. Regulatory clarifications are awaited as regards our exploration areas.

Whilst awaiting regulatory permission to re-activate the Company's Ethiopian exploration, which is critical for long term planning for all stakeholders in the community as well as the Company, the exploration focus has been successfully switched to Saudi Arabia.

KEFI Gold and Copper in the Kingdom of Saudi Arabia (planned to be c. 30% KEFI-owned)

In 2009, KEFI formed Gold & Minerals Limited ("GMCO") in Saudi Arabia with local Saudi partner, ARTAR, to explore for gold and associated metals in the Arabian-Nubian Shield. KEFI has a c. 30% interest in GMCO.

ARTAR, on behalf of GMCO, and GMCO directly held Exploration Licence ("EL") applications pending the introduction of the new Mining Law. These new regulations have recently been proclaimed and the licences are being transferred to GMCO. GMCO has had fourteen new licences issued in the past twelve months - more licence grants than in the previous 14 years and all highly prospective and strategically important for GMCO, ELs are renewable for up to five years and bestow the exclusive right to explore and to obtain a 30-year exploitation (mining) licence within the area which is now 1,035 square kilometres.

In addition, GMCO has a Mining Licence Application over the Jibal Qutman Gold Project which recent informal indications by the authorities provide some confidence that the licence will be granted.