HomeEast AfricaKEFI Minerals funding for Tulu Kapi gold project reduced to US$24 million

KEFI Minerals funding for Tulu Kapi gold project reduced to US$24 million

This reduction for KEFI Minerals is based on refinements to planned capital expenditure and contingency provisions.

KEFI Minerals is now focusing on sourcing part of this residual requirement from a separate finance facility against ore stockpiles which are estimated to include US$15 million of contained gold at start-up of production and part of the remaining requirement from project-level equity, negotiations for which have commenced.

It remains KEFI Minerals’ preference to retain majority ownership and control of the project.

KEFI Minerals intends to optimise the finance mix in consultation with the project syndicate, in particular the Government of Ethiopia and principal financier Oryx Management, as it approaches closing – targeted for Q4 2017.

With a probable ore reserve of 1.05 million oz and mineral resources totalling 1.72 million oz of gold, KEFI Minerals is advancing the Tulu Kapi gold project in Western Ethiopia towards development.

The Tulu Kapi Mining Agreement between the Ethiopian Government and KEFI Minerals was formalised in April 2015. The terms include a 20-year mining licence, a 5% government free-carried interest and full permits for the development and operation of Tulu Kapi.

In June 2015, KEFI Minerals completed the 2015 Definitive Feasibility Study (DFS) which evaluated a conventional open-pit mining operation and carbon-in leach processing plant at Tulu Kapi.

In May 2017, KEFI Minerals completed the 2017 DFS Update which incorporated due diligence and refinements since the 2015 DFS and provided increased confidence in the company’s plans to develop Tulu Kapi.

Key points of the 2017 DFS update are:

  • Process plant capacity increased from 1.2 Mtpa to 1.5-1.7 Mtpa.
  • Forecast open-pit gold production is 980,000 oz over ten years.
  • All-in Sustaining Costs of less than $800/oz.

For the first eight years of production:

  • Gold production averages c. 115,000 oz pa; and
  • Net operating cash flow averages US$55M pa at a gold price of $1,250/oz

Initial capital expenditure estimated at $145 million on a contract-mining basis.

Feature image credit: Wikimedia