AIM-listed Kefi Minerals has signed a deal with a syndicate of Ethiopian investors who will purchase a significant, yet minority, stake in the company’s subsidiary, Tulu Kapi Gold Mines Share Company.
The Ethiopian investors intend to make their investment of US$30-35 million (Birr-equivalent), which will gain the syndicate between 30% and 35% shareholding, via Arabian Nubian Shield Resources (ANS Resources) – a company which is in the process of incorporation.
ANS Resources’ injection of the first installment of $9 million (Birr-equivalent) is subject to completion of remaining due diligence and execution of the binding share subscription agreement, which are expected this quarter.
ANS Resources’ injection of the balance is subject to full project finance closing proceeding, fully approved by the Ethiopian Government.
ANS Resources is being established as an investment vehicle to enable subscriptions by a number of identified Ethiopian financial institutions and family offices. It is the intention that no one syndicate member will hold more than 10% of ANS Resources or have any involvement in the gold mining business.
Given demand, recent refinements to the proposed transaction (since Kefi Minerals’ announcement of 11 June 2018) include the right for ANS Resources to subscribe in local currency alongside the Government of Ethiopia for up to $35 million (rather than the original $30 million) in new shares of Tulu Kapi Gold Mines Share Company.
The final investment sum of ANS Resources must not exceed that which preserves Kefi Minerals as majority shareholder of Tulu Kapi Gold Mines Share Company.
The requisite government consents are that:
- the historical equity capital investments in Tulu Kapi Gold Mines Share Company by Kefi’s subsidiary Kefi Minerals (Ethiopia) be registered so that final equity percentage ownership can be confirmed,
- that the planned subscription by ANS Resources be permitted by the government waiving its pre-emptive rights on any share issue by Tulu Kapi Gold Mines Share Company, and
- that ANS Resources be provided the right to appoint two non-executive directors to Tulu Kapi Gold Mines Share Company’s board of directors.
The initial subscription of $9 million will be set aside into a locked account, with settlement commencing 31 August 2018 and completed no later than 30 September 2018 along with commitment to the full amount being invested by year-end alongside full project-finance commitments.
The ANS Resources founders’ US$3 million subscription has already been committed.
Disbursement of the initial subscription funds is earmarked to commence any time from October 2018, to fund Tulu Kapi Gold Mines Share Company’s project finance closing costs and the first phase of the Tulu Kapi community resettlement, when triggered by the Regional Government of Oromia in consultation with Tulu Kapi Gold Mines Share Company.
TKGM plans to use these equity funds for the initial project expenditures, with debt drawdown to follow.
Project equity investor ANS Resources is being carefully structured to provide diversified local equity participation in Ethiopia’s first modern mine development for its exciting new gold sector. This approach also ensures clear Tulu Kapi gold project control by Kefi Minerals, as required by the planned non-equity financiers.
“ANS Resources represents a diversified group of financial investors assembled specifically for this transaction and its involvement will be a further significant milestone in unlocking the gold potential of the Tulu Kapi orebody and district,” says Kefi Minerals MD Harry Anagnostaras.