16th May 2016 08:06
LONDON (Alliance News) - KEFI Minerals PLC shares rose on Monday after it said the government of Ethiopia has finally confirmed it plans to invest USD20.0 million to take a stake in the company's Tulu Kapi gold project.
KEFI shares were up 4.0% to 0.530 pence per share on Monday morning.
The government had said it would invest in the project as far back as November last year, but there had been no formal commitment until Monday when the state pledged to invest USD20.0 million in order to take a 20% stake in the gold project.
Notably, the government already had a 5.0% free carried-interest, meaning it will hold an overall 25% stake once it has injected that cash.
KEFI plans to use the funds to build the roads, power and other infrastructure for the operation.
The investment Monday values the present day asset at USD100.0 million, which is roughly what has been invested into the asset to date.
Based on a gold price of USd1,250 per ounce, the Tulu Kapi open pit and underground operations have a net present value of USD200.0 million, once fully funded.
"This represents an important step towards formalising the finance syndicate, which remains on track for settlement in the third quarter of 2016, and we are honoured that the government is choosing to partner with KEFI," said Harry Anagnostaras-Adams, executive chairman of KEFI.
We look forward to reporting further progress as we continue to advance towards commencing construction of the processing plant in fourth quarter of 2016 and production commissioning from the fourth quarter of 2017," he added.
By Joshua Warner; [email protected]; @JoshAlliance
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