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(Sharecast News) - Kefi Gold and Copper updated the market on the Tulu Kapi Gold Project in Ethiopia on Monday, announcing that all outstanding major financing conditions precedent requiring Ethiopian government input had been met.
The AIM-traded firm said the completion of the financing conditions enabled individual syndicate members associated with the project to proceed with the final committee and board reviews and approvals for the $390m project finance package.
Of the total finance package, $370m had already been secured through arrangements with first-tier banks, contractors, and investors, including the Ethiopian government at both the federal and regional levels.
The remaining $20m of the financing had been allocated to specific parties, and was expected to be finalised and structured over the coming months, subject to the completion of standard procedural conditions precedent.
It said those conditions included the Ethiopian government's formalisation of the agreement details reached and the compensation packages for households being resettled, in accordance with the requirements of the law and World Bank IFC performance standards.
Previously outstanding conditions precedent had meanwhile now been resolved by Kefi.
The first condition involved granting the same rights and protections to the two banks in the funding syndicate within Ethiopia, which was accomplished in March when the African Finance Corporation was granted country membership by Ethiopia.
Kefi said the second condition required the establishment of a permanent security force to ensure uninterrupted construction and progress of the Tulu Kapi Gold Project.
In April, the relevant government agencies triggered escalated security measures in the areas surrounding Tulu Kapi, successfully meeting the condition.
The final condition involved the Ethiopian Central Bank clarifying specific procedures for the project, and agreeing to rights for international bank accounts.
That clarification was obtained last week, bringing resolution to the last major condition precedent.
In addition to meeting the financing conditions precedent, the Ethiopian government and its agencies had shown further support for the development of the Tulu Kapi Gold Project through several recent initiatives.
The board said the Ethiopian Electricity Production Corporation had procured the major components required for the project's connection to the main power grid, ensuring compliance with the scheduled commissioning of the plant in 2025.
It added that the Ethiopian Roads Authority had reaffirmed the delivery schedule for the new all-weather access road, which would enhance accessibility to the project site.
Furthermore, a memorandum of understanding had been signed with the regional government, increasing the aggregate government equity investment in the project from $20m to $30m.
That reflected the government's desire to maintain an equity interest of approximately 25%, alongside Kefi's 75% stake.
Additionally, the minister of mines had shared draft legislative reforms with stakeholders, aiming to encourage exploration and mining in Ethiopia.
"Today's announced progress with the Ethiopian central bank is the third significant breakthrough in as many months," said executive chairman Harry Anagnostaras-Adams.
"This set of supportive government initiatives clears the way for the launch of Tulu Kapi and reinforces the recent turnaround of the working environment in Ethiopia.
"Kefi has assembled a first-class international project finance syndicate which is now focused on final definitive documentation for this US$390 million transaction."
Anagnostaras-Adams said the firm's take-off in Ethiopia coincided with that in Saudi Arabia.
"These are the two largest jurisdictions in the highly prospective Arabian Nubian Shield.
"Both countries are now proactively supportive and these continuing positive developments help to vindicate our longstanding focus there since 2008 and our tenacity to have successfully assembled three advanced projects and a world-class pipeline for future exploration.
"Also, having just effected a capital raising to extinguish all liabilities, we have cleared the way for us to implement the $390m project finance package for our shovel-ready 140,000 ounces per annum Ethiopian gold project."
At 1051 BST, shares in Kefi Gold and Copper were up 2.13% at 0.62p.
Reporting by Josh White for Sharecast.com.
