6th Jun 2019 13:16
LONDON (Alliance News) - KEFI Minerals PLC on Thursday said formal approval for its Tulu Kapi gold project finance package has been granted by Ethiopia's central bank.
Shares in KEFI were up 29% to 1.84 pence in early afternoon trade.
KEFI has now received the final federal government consent to finance and develop Tulu Kapi from the National Bank of Ethiopia, which previously previously held back on confirming the funding until it had "approved a policy directive for general public application".
Terms of the full finance package include a debt to equity ratio of 70 to 30, the right to use leasing as a form of finance, and the recognition of historical expenditure when calculating the capital ratio. Also, included in the terms is the right to use gold price hedging and to apply market-based long-term fixed interest rates.
These approvals will allow KEFI's parters to subscribe to shares in Tulu Kapi Gold Mines Share Co for a combined USD58 million equity investment plus USD160 million of infrastructure financing.
Two other third party approvals have also been obtained. KEFI's secured working capital financier, Sanderson Capital Partners Ltd, has consented to security sharing arrangements with ANS Mining Share Co - KEFI's private-sector project equity partner in Tulu Kapi Gold Mines
KEFI's government sector project partner, the Ethiopian Ministry of Finance, also agreed to undertakings requested by ANS Mining. As a result, once the subscription documents from all three partners in Tulu Kapi Gold Mines - KEFI, ANS Mining, and the Ministry of Finance - are executed, settlement of the first ANS Mining equity instalment of USD11.4 million can go ahead.
"KEFI would like to express its appreciation of the enormous efforts by the Ministry of Finance, the Ethiopian central bank and other authorities to establish regulatory frameworks to oversee and support policies and actions being dealt with for the first time, as the Tulu Kapi gold project is the first-mover in modern Ethiopian mining," the company said.
"Likewise, we would like to thank the consortium members for their patience and support as we work through the compliance requirements of the various jurisdictions for this [over] US$200 million funding package assembled at the project level."
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