ADDIS ABABA – KEFI Gold and Copper has signed today a final umbrella agreement for the project financing of its Tulu Kapi Gold project in Ethiopia.
The London-listed company signed the agreement with its subsidiaries – PW Mining and Lycopodium on the sidelines of the Invest Ethiopia 2023 Forum, taking place in Addis Ababa.
Government officials attended the signing ceremony, along with representatives of the Project’s participants and financing parties.
The agreement sets out all syndicate roles and finance conditions, and conditions precedent to final formal approval being granted, KEFI says in a statement disclosing the signing of agreement, expected to resolve the wrangle over equity capital.
KEFI is pushing to begin construction on the project, held under a local subsidiary Tulu Kapi Gold Mines SC, in the fourth quarter of 2023.
It says the agreement lays out the development sequence for Tulu Kapi as laid out for the Ethiopian Ministry of Mines and signed by Project contractors PW Mining (PWM), British earthmoving construction firm, and Lycopodium, Australian process plant construction company.
Under their respective contracts, PWM will provide mining services and Lycopodium will offer engineering, procurement, and construction management supply and labor hire services.
The signing of the Agreement follows the further refining of the Project financing plans with the Project’s principal bankers, led by Eastern and Southern African Trade and Development Bank (TBD).
According to KEFI, the recent refinement of the proposed financing terms reflects the support being shown by TDB and co-lender Africa Finance Corporation (AFC) who signed the Initial Umbrella Agreement in June 2022.
The proposed c.US$320 million Project development financing now provides for an up to c.US$245 million package from the co-lenders.
The package is composed of US$140 million senior debt, US$50 million mezzanine debt and up to US$55 million equity-risk ranking notes. .
At the current gold price of c.US$2,000/oz, the debt is projected to be capable of repayment within two years of production cash flows commencing.
The company has already provided equity investment of c.$95 million in the development of the Project to date.
KEFI chair: ‘We’re moving forward successfully’
KEFI expects to call a general meeting in June 2023 for its shareholders to approve the final funding proposal and syndicate as laid out in the Final Umbrella Agreement.
KEFI’s Executive chairman Harry Anagnostaras-Adams states that Tulu Kapi Gold Project is now on a right track after challenging period.
“We move forward successfully despite the complexities of such syndications and, in particular, being the first to do so against the backdrop of a fast-changing Ethiopia.”
“We push for construction in Q4 2023 following procurement and community preparations,” he continued.
“In the meantime”, he said, “we await progress from the Government on the remaining financial regulatory, security and community preparations and to which we lend our unwavering support.”
“The Tulu Kapi Gold Project will be delivered to the highest international standards including World Bank IFC Performance Principles,” the chairman added.
The Tulu Kapi project, located approximately 360 kilometers southwest of Addis Ababa, includes an ore reserve of over 1.1 million ounces and mineral resources totaling 1.7 million ounces of gold.
Kefi says the Project is Ethiopia’s only ‘ready-to-start’ industrial mining project, making it the country’s first large-scale mining project for some 30 years.
The mining firm expects the project to generate over $250 million in annual export revenue, employing approximately 1,000 local people in 12 months.