28th Sep 2015 09:00
LONDON (Alliance News) - Kefi Minerals PLC Monday said it is now expecting the substantial development funding for its Tulu Kapi gold project in Ethiopia to be secured at project level.
Earlier in September, Kefi said its board had approved the funding plans for the Tulu Kapi gold project, which was to include equity capital for the development being raised at project, rather than company level.
At that time, it also said it had reduced the peak funding requirement for the project to USD120.0 million from USD130.0 million estimate which had been made in its definitive feasibility study for the project.
On Monday, the miner said: "The company is pleased to report that, based on the negotiations with the short-listed project contractors and financiers and with the government of Ethiopia, the entire development funding for the Tulu Kapi gold project in Ethiopia of USD120 million is now expected to be covered at the project level."
A key component to the funding is the government's decision to up its stake in the project by funding USD20.0 million of infrastructure, including the development of a needed public road and electricity connection.
"We are pleased to have achieved this major milestone and, in particular, we welcome the government of Ethiopia's intention to increase its equity in the project," it said.
"Management is now focused on formally appointing and assembling, with finalised and complementary terms, the project syndicate comprising the contractors, debt financiers, gold streamer and the government of Ethiopia. This includes the contractor for building the plant on a fixed-price basis and the contractor for the mining operation on a price-per-cubic-metre-delivered basis over the life of the open pit mine," Kefi added.
The miner is hoping to announce the syndicate members in the first half of October as appointments occur.
The company will require further funds past the USD120.0 million to develop the project. Kefi said it still intends to source the other funding through a combination of debt, gold streaming and equity funding.
Earlier in September, Kefi upgraded the planned production at the Tulu Kapi project to 100,000 ounces of gold per year over ten years, up from 75,000 ounces over a 13-year period previously. That is forecast to cost USD780 per ounce of gold in operating costs, one of the lowest costs globally among gold producers, it said.
To put that into context, gold was trading at around USD1,137 per ounce on Monday.
In addition, Kefi reported a GBP1.6 million pretax loss in the first six months of 2015, narrowing from the GBP1.9 million reported a year ago. Kefi does not currently generate any revenue.
Kefi shares were trading flat at 0.500 pence per share on Monday.
By Joshua Warner; [email protected]; @JoshAlliance
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