KEFI (AIM: KEFI) has made recent significant progress at the company’s Tulu Kapi Gold Project in Ethiopia.
Following a thorough review of the Project on the back of updated supplier pricing, the company can confirm that Tulu Kapi’s estimated capital requirement (excluding the mining fleet provided by the contractor) has increased 7% to US$320 million from US$300 million to first production.
This is a direct result of cost inflation witnessed across the globe. The company has reported that several Project financing syndicate members, party to the Umbrella Agreement and associated documents have indicated a willingness to increase their investment, thereby ensuring that the Project will be funded under the previously reported financing structure.
In addition, the company reported that a historically key condition precedent has now been waived by the relevant syndicate member – in that it is no longer necessary to await that party’s agreement with the Government on a particular policy matter, because of the significant progress made and good relationship between parties.
Accordingly, the final proposed Project finance plan has now been circulated for formal sign off by all the syndicate members, who have been kept appraised throughout the process and continue to express their support.
Given the time taken to successfully resolve this situation between the individual syndicate member and the Government, the broader syndicate approval of the final finance plan is now expected mid-November 2022, rather than the previously reported end of October 2022.
In the meantime, Kefi has commenced working on satisfying the previously reported and normal conditions precedent to full project launch including key field activities with the community and completing formal documentation and Government procedures for funds drawdown in the normal sequence.
“I am pleased to report on the continued progress at Tulu Kapi. The fact that there have been increases to the ultimate capex figure required to first production should come as little surprise given the inflationary factors witnessed across the globe,” Executive Chairman, Harry Anagnostaras-Adams, said.
“That certain partners within the financing syndicate are looking to increase their participation to address this increase shows the spirit and goodwill within the financing syndicate to close on the funding.
“Tulu Kapi will be Ethiopia’s showcase 21st century mining project, designed to the highest international standards for social, environmental and governance performance. Tulu Kapi will likely be Ethiopia’s largest single export generator and generate direct and indirect employment for 5-10,000 people.
“The heightened capital figure of US$320 million includes financing costs, contingency, cost overrun and working capital provisions, which are not expected to be fully absorbed by the development of the Tulu Kapi open pit. Accordingly, subject to senior lenders’ approval in due course, some of these funds are likely to be able to be deployed in developing the Tulu Kapi underground mine once the open pit has started, ensuring earlier production from the underground and improved economics from the Project.
“The Ethiopian Government and specifically the Ministry of Mines have been appraised of all these developments and have reaffirmed their continued support for the full Project launch by the end of 2022, when all conditions precedent should have been satisfied. We look forward to making further announcements in due course.”
For further information please visit: https://www.kefi-minerals.com/
