KEFI Minerals plc (LON:KEFI) have told the market that they have seen approval for their Tulu Kapi subscription agreement in an update on Monday morning.
Partner firm, ANS Mining have given the go ahead for the subscription to take place and this has seen shares in green.
The Tulu Kapi project is based in Ethiopia with a Probable Ore Reserve of 1.0 million ounces and Mineral Resources totaling 1.7 million ounces.
KEFI said that the Ethiopia Government would be investing $20 million into this project, with ANS adding a substantial $38 million.
The firm said the company operating the project, Tulu Kapi Gold Mines Share Co, will now receive the first tranche of ANS Mining funding of $9.5 million.
“Kefi greatly appreciates the confidence and commitment demonstrated by ANS Mining, its board of Ethiopian business leaders and its underlying shareholders, which comprise a broad syndicate of strong organisations in the local banking, insurance and investment sectors,” the company said.
Executive Chair Harry Anagnostaras-Adams added: “I am delighted to confirm the signed subscriptions of ANS Mining into the project company. Whilst we have been working closely with ANS Mining for some time and developed an excellent relationship, I am now pleased to be able to welcome them formally as partners.
“Following first funds flow this month we will commence phase one of the community resettlement, trigger debt implementation and detail the final procurement and contractual arrangements with the principal project contractors. These are exciting times and I look forward to updating shareholders over the coming weeks and months as we move forward with the development of Tulu Kapi.”
The development of Tulu Kapi
At the end of November, KEFI were reportedly considering their finance options to fund their Tulu Kapi Project.
The firm said the company operating the project, Tulu Kapi Gold Mines Share Co, has recently been offered a bank-based project finance proposal, which would be an alternative to bond-based financing.
However, it seems that the combination of ANS and governmental funding has given KEFI exactly what they needed to get the operations up and running.
Harry Anagnostaras-Adams, executive chair of both KEFI and TKGM, said: “I am delighted the project has reached this stage, after so many delays and setbacks as the country and the sector were going through quite an amazing change. We have shared the frustrations of our shareholders and our partners, but I now believe the project has encouraging momentum.
“As first mover for modern mining in Ethiopia, we have done the heavy lifting with the authorities and the community and we can now all share the benefits as we advance. It is especially pleasing to see the strengthening of capital market interest and support from capital providers both inside and outside the Ethiopia for the project.”
Finally, the green light was officially given in the first week of December, which saw shares surge.
The firm said that the The first six months of work will be funded by project partners, including the Ethiopian government. KEFI would then plan to draw the bank loan mid-2020.
“We have been very well supported by the bond-lease proposal and now we also have an attractive bank-loan based alternative because capital market support for our project has recently improved markedly, both inside and outside Ethiopia,” said KEFI Finance Director John Leach.
“The expected savings from the preferred bank-based infrastructure finance proposal provide our project subsidiary, Tulu Kapi Gold Mines, with the opportunity to develop and further explore the underground Tulu Kapi deposit and significantly increase value for shareholders, without reducing net cash flows available for other purposes,” he added.
It seems that shareholders of KEFI should remain optimistic on the update provided today.
Share Price
Shares in KEFI trade at 1.57p (+13.60%). 6/12/19 10:47BST.
