AMN - ETHIOPIA: Tulu Kapi project funding boost

KEFI Minerals will use up to £5.5 million (US$7.4 million) in placement funds to complete the assembling of project funding for the Tulu Kapi Gold Project in the Federal Democratic Republic of Ethiopia.

The company has conditionally raised £3 million (US$4 million), before expenses, through a placing of 120 million new ordinary shares to existing and new shareholders through Brandon Hill Capital Limited, Cantor Fitzgerald Europe and RFC Ambrian Limited.

The company is also intending to issue up to 100 million new ordinary shares to project contractors and other third parties as well as to certain directors and management for proceeds net of expenses of £2.5 million.

The proceeds will primarily be used to provide KEFI with the funds to enable the procedural and documentary closing of the US$260 million project financing of the Tulu Kapi project.

It is envisaged Tulu Kapi will be entirely funded at the project level.

Such costs include those associated with implementing the full project closing for construction, mining and finance, as well as legal and community resettlement costs associated with the project.

Earlier this month KEFI announced that it has now assembled the proposed full project funding consortium including contractors (around $50 million mining contractors’ equipment fleet), equity ($50 million) and non-equity capital ($160 million).

For the project to proceed, all stakeholders now rely on closing out the remaining Ethiopian Government processes and approvals, along with completion of due diligence and formal documentation.

Whilst not expected to be required, KEFI also has the option to access working capital from certain existing stakeholders for up to £1.5 million.

KEFI Minerals chairman Harry Adams said: “We are pleased to secure this funding and the support of our contractors and management.

"It is planned that the financing of the Tulu Kapi Gold Project will be entirely at the project level, with KEFI retaining a beneficial ownership interest in the order of 54% and the balance being held by the Ethiopian Government and other Ethiopian investors.

“The placing and subscription we have announced are expected to provide KEFI with the funds to enable it to close the Tulu Kapi project financing, subject to approvals by all stakeholders and formal documentation.”

The Tulu Kapi project in western Ethiopia is being progressed towards development, following a grant of a mining licence in April 2015.

Tulu Kapi's ore reserve estimate totals 15.4 million tonnes at 2.1 g/t gold, containing 1.1 million ounces.

www.kefi-minerals.com