Kefi Gold & Copper Company Research (KEFI)

Yesterday evening KEFI announced the successful conclusion of US$240m in senior project debt capital for its Tulu Kapi project in Ethiopia (accounting for 70% of the total). Focus will now shift to closing the US$100m equity risk portion of project funding outstanding. At least US$40m of this has already been accounted for by KEFI itself and the Ethiopian government, with the balance of US$60m reported as being oversubscribed, with non-binding offers which the company can now finalise. Detailed documentation for the whole integrated package of equity, debt and insurance can now also be finalised and the company will convene general meetings of KEFI and its subsidiaries in November in order to approve those elements of the finance package requiring shareholder consent. KEFI will then also publish details of the finalised equity risk capital instruments employed, albeit they are already known to include a non-convertible preference share, a subordinated equity risk note structured as a ‘gold prepayment’ or ‘stream’ and ordinary equity at one or other Ethiopian subsidiary level to leave KEFI with a c 80% beneficial interest in Tulu Kapi. In the meantime, community resettlement continues apace at the same time as new all-weather access roads are constructed to site and the project is connected to Ethiopia’s electricity grid.