Dear Shareholders and Business Colleagues

The Board of Kibo Mining plc recognises the currently severe conditions we are experiencing in the natural resource equities sector. We also note and appreciate the impact for Kibo Mining investors where a significant fall in share price has occurred over recent years.

Acknowledging this extremely difficult environment, I am writing to shareholders to reaffirm our enthusiasm for the company’s assets under exploration and development and our commitment to work to ensure the value we believe your assets hold is properly recognised in our share price and market capitalisation going forward.

Sadly, it is not within the gift of me or the Board to dictate general market conditions within the natural resource sector. It is however our responsibility to diligently build the business and through effective communications articulate the value we feel your company’s assets hold. There are various elements to this which for brevity’s sake are not all covered entirely within this letter.

Financing strategy

We note the comments made by various shareholders with regard to fundraisings undertaken by Kibo and the concerns raised about the dilution shareholders have experienced as a result of them. To answer these comments and concerns I wanted to explain our thoughts with regard to our financing strategy.

We believe it is a primary responsibility of natural resource exploration and development companies to ensure sufficient capital is available to maintain and, where justifiable, advance projects to create value. A natural continuum of this point is that we believe the additional money raised through the company’s recent fundraisings was absolutely required. The manner in which those funds have been spent is addressed below. Nonetheless we appreciate that any fundraising strategy must bear proper consideration to the dilution caused to existing shareholders, many of whom committed their personal wealth to buying shares in Kibo at significantly higher prices than current market levels.

The Board is therefore exploring alternative, non-equity based sources of finance which might provide the additional funding, required to support the company’s operations in a manner which is less dilutive to shareholders than standard equity issues undertaken at the current low prices for Kibo shares.

Project Expenditure

We believe that exploration and development companies should always undertake project spending diligently and with an eye to identifiable value creation or addition. Since the substantial changes made in the Kibo asset portfolio in 2012 the company has raised approximately £5.9million. With this money we have:

  • Restructured Kibo at a corporate and operational level to align the company with its new corporate strategy announced in September 2012;
  • Materially advanced our Coal/Power asset at Rukwa;
  • Acquired and advanced our significant 720,000 ounce gold project at Lake Victoria (Imweru 550,000oz JORC compliant and Lubando 170,000oz NI 43 101 compliant); and
  • Progressed our Nickel/Gold interests (with financial support from Votorantim) at Haneti and at Morogoro and also maintained our ownership interests at the Pinewood coal/uranium project.

Aggressive cost control is, and will always remain, a fundamental feature of the Kibo business model, however we will spend money where to do so is absolutely justifiable. Shareholders’ frustration with our share price decline is shared by the Board, particularly because we see the dramatic extent to which your business has moved forward. In fact the decline in the share price has been almost perfectly negatively correlated with the rising inherent value of your assets, particularly at Rukwa, Imweru and Haneti.

Be assured that we are determined to further increase our effort to communicate the value of your assets to market. In the coming weeks shareholders will begin to see real financial values being released in relation to your assets, based on independent Competent Persons’ reports. The value of your assets will no longer be a mere statement of our belief in the value of said assets but it can now be stated by independent professional reports. This in itself demonstrates the tremendous progress that has been made towards realizing value from Kibo’s asset portfolio.

Rukwa Coal to Power Project

We fully appreciate investor’s frustration with the time taken to finalise commercial partnerships in respect of the Rukwa Coal to Power Project (RCPP). In hindsight we were perhaps too optimistic with regard to the 2013 timescales over which these partnerships could be agreed. Moreover, it is only when you take an asset in early development out to potential partners that you fully appreciate the value it holds and the extent of information prospective partners require to attribute the value you consider is justified. Some further information gathering work was necessary which we have since undertaken.

The scale and complexity of the RCPP created some significant hurdles to concluding negotiations with potential partners. When they arose we navigated each hurdle that we encountered principally through the provision of more detailed project information. With each step the project increases in robustness, attractiveness and value as we move forward. The extent of interest in the RCPP transaction has been considerable and continues to grow by the day.

Too many ongoing discussions can of course slow progress so we continue to focus on the best prospective partners, with the keenest proposals, that deliver the best value for all partners including the Government and people of Tanzania, Kibo shareholders and our prospective partners themselves.

We are in the process of final discussions and financial completion could be achieved at any time going forward, considering the extent to which certain discussions have progressed. However to get to this point we have found it necessary to stand firm and not sacrifice fair value by accepting unreasonable terms.

The prospective partners are significant commercial businesses, from more than one region, who all recognise the immense opportunity afforded by investment in Tanzania and greatly appreciate the high quality project the RCPP represents.

Substantial interest in the RCPP stems from the considerable governmental and ministerial support for the project and the interest and support shown by local communities. For many resource projects the biggest hindrance is whether the government and people will support your work. In the case of the RCPP the support of all stakeholders is a significant advantage. That fact is not lost on prospective partners who are surprised and greatly reassured by the eagerness shown in-country to develop the RCPP.

Significant prospective partner interest also comes from the increasingly attractive project fundamentals, which are now evidently making a compelling case for the parties with whom we are engaged.

Whilst we negotiate we have continued with our technical work and so far each key information element we have released in relation to the RCPP has demonstrated an increasing value of the project. It therefore makes commercial sense to push on with this work as the positive progress adds considerably to the incentive for prospective partners to agree acceptable terms. That said we have great respect for each prospective partner and are making sure we diligently address questions, queries and areas of reasonable negotiation.

Other Projects

With the market’s justifiable focus on Rukwa it is easy to forget progress made on other operational assets. Kibo is determined to apply sensible risk management and ensure significant value is generated across multiple projects to avoid an over reliance on one project.

We undertook further resource drilling at our flagship gold project at Lake Victoria Goldfields, Imweru, with results announced earlier this year. The data received from that drill campaign enabled us to significantly improve the Imweru Central Mineralised Zone JORC compliant gold resource and its categorisation, with more ounces moving into the indicated category. This was significant because this higher quality resource is something we know can be added to with additional exploration, but our critical initial focus is moving the asset into producing status and doing so with a partner providing support and financing.

As with Rukwa we have seen the considerable value that can be added to a project when our work is formalised in independent Competent Persons’ reports and similar. This is reflected in our decision to move forward with a Definitive Mining Feasibility Study for Imweru. The first part of this, a Preliminary Economic Assessment, is due to be delivered in the near term.

Once again, in the near term, the market will have a specific value attributable to the Imweru project at its current stage of development. And this, combined with the value of the Rukwa coal resource and the RCPP partner commercialisation, will make Kibo Mining plc a considerable value proposition, particularly at its current very low market valuation.

We joined shareholders in disappointment when Votorantim took the decision to withdraw from the Haneti nickel/gold joint venture in late 2013. As we explained, this decision was strategic on their part and not related to the operational progress or results on the ground from their funding of the project in 2013.The compensation for us was a return to full 100% ownership and the benefit of all the technical data derived from the Votorantim funded work. And that was and is material in terms of inherent project value.

Haneti is a considerable opportunity with an 80km Itiso Ultramafic Complex and the numerous anomalies requiring exploration work within it. Our principal focus at this time is the nickel sulphide drill targets that the Votorantim funded work enabled us to define. As with all exploration the odds remains against you until the commercial discovery announcement, but the extent of prospectivity and potential for a nickel sulphide discovery make Haneti hugely exciting for Kibo. We would like to confirm another partner to fund the necessary exploration programme and we are working on that.

Haneti also contains significant gold mineralisation which our future work will target. We also want to examine in much further detail the Lithium prospectivity we have identified with a view to consideration of strategic metal and rare earth development opportunities.


We would like to reiterate to shareholders our opinion that the current share price and market capitalisation does not reflect the material progress of the Kibo business and its assets over recent years. Even accounting for a challenging natural resource market, we believe the value of Kibo’s assets now far outweighs the current market capitalisation. This is demonstrated by the broker report on the home page of our website, prepared earlier this year and before all the progress made in 2014, indicating a summary valuation of £15.7m which is nearly 4.4 times the current market capitalisation as we write.

We believe that the securing of commercial partners for both Rukwa and Imweru, together with third party reporting of the valuation of these projects, will further demonstrate their value.

Generally, across the business we are pushing forward, with announcements to come across various operational areas.
We would like to thank shareholders and our business colleagues for the commitment to Kibo. It has not been a pleasant time in the markets but your company is making large steps forward in building value. We are about to demonstrate that through near term market announcements.

Yours Faithfully

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