KEFI (AIM: KEFI) has signed a US$20M equity‑ranking royalty with Chancery Royalty Limited for the Tulu Kapi Gold Project in Ethiopia, marking a key final element of the US$340M project financing package. The royalty is structured to rank with equity risk and is payable alongside distributions made by Tulu Kapi Gold Mines S.C. (TKGM) to its shareholders.
The company said the residual US$30M of equity‑risk capital is in the process of being finalised this month—comprising US$10M of development costs to be settled in KEFI shares as costs fall due over the two‑year build, and a further US$20M in equity‑risk ranking TKGM gold royalties issued to two additional royalty investors on the same terms as Chancery Royalty. With these components, KEFI considers the US$340M package effectively covered and has triggered full project implementation, with field teams and contractors mobilised and a groundbreaking ceremony scheduled this month.
As an optional, separate initiative, KEFI continues to consider raising funds in excess of the development budget via Birr‑denominated, non‑convertible redeemable preference shares to be issued by wholly owned KME Holdings. This optional local participation aligns with the company’s “Ethiopianisation” policy, with proceeds earmarked for cost‑overrun reserves, exploration, and discretionary social development projects designed with the authorities.
Contracting and execution update
Project contracts tied to the financing are either closed or due to close by the end of February 2026. Offsite infrastructure agreements with government agencies are being implemented in the field. The house construction contractor has been mobilised to site. Lycopodium’s package of full construction agreements—anchored by a fixed‑price, lump‑sum engineering and procurement contract following early works already under way—will be executed in February as the contractor continues mobilisation for the two‑year build. A mining services agreement with BCM, including fleet supply under a schedule‑of‑rates arrangement, has been awarded following a re‑tender; contractor equity participation originally contemplated is no longer included.
Community resettlement
The first phase of resettlement compensation—scheduled within the development timetable—has largely been paid, with remaining settlements progressing. Replacement lands have been confirmed in districts around the mining licence, the housing contractor is mobilised, and bulk earthworks have commenced on the licence area. All financial and contractual arrangements remain subject to lender approvals and ongoing monitoring.
Key economics and financing structure
KEFI outlined updated project economics based on the financing now in place, incorporating servicing of secured debt, the maximum potential servicing of equity‑ranking royalties, and any preference shares:
- Schedule and throughput: Initial production from 2028, based on open‑pit mining with initial underground contribution and plant throughput tuned up by 15% in the first three years (per KEFI’s “2025 Business Plan”).
- AISC: US$1,004–US$1,144/oz.
- Break‑even after all capital: c.US$1,400/oz after servicing secured debt and equity‑ranking instruments; royalties and any preference shares are payable only from distributable cash, thereby avoiding added default risk.
- NPV (5%) for KEFI’s planned 83% beneficial interest: US$700M–US$1.5B at construction start and US$847M–US$1.9B at production start, across a gold price range of US$3,000–US$5,000/oz.
- Saudi portfolio (GMCO): Initial preliminary valuation of US$148M for KEFI’s 13% interest in GMCO, reflecting 3.8Moz Au‑eq JORC resources advancing through parallel DFS programmes (Jibal Qutman and Hawiah).
Harry Anagnostaras‑Adams, founder and executive chairman of KEFI, commented, “It is an exciting time to launch Tulu Kapi, one of Africa’s highest‑margin new gold mine developments. Already bank‑backed, Tulu Kapi has been engineered both physically and financially to be robust for the long term—it is designed to pay all costs and service all debt at an all‑in break‑even gold price of c.US$1,400/oz. We have also raised significant equity capital at the subsidiary level in a way that minimises dilution for TKGM and KEFI shareholders while maintaining the project’s low break‑even. With the gold price environment supportive, we are now focused on disciplined execution at Tulu Kapi and advancing our pipeline in Ethiopia and Saudi Arabia.”
Jeremy Gray, founder and managing director of Chancery Royalty, added that Chancery is joining a “syndicate of world‑class backers” for a high‑grade, high‑recovery project it views as a leading undeveloped gold asset in Africa.
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