Taung Gold

KEFI Minerals has received the last federal government consent for the financing and development of its Tulu Kapi Gold Project from the National Bank of Ethiopia.

The National Bank of Ethiopia has now provided its formal approval of the terms of the proposed full Project finance package.

KEFI and Tulu Kapi Gold Mines Share Company (TKGM) Chairman, Harry Anagnostaras-Adams, says:

“KEFI would like to express its appreciation of the enormous efforts by the Ministry of Finance, the Ethiopian central bank and other authorities to establish regulatory frameworks to oversee and support policies and actions being dealt with for the first time, as the Tulu Kapi Gold Project is the first-mover in modern Ethiopian mining.

“Likewise, we would like to thank the consortium members for their patience and support as we work through the compliance requirements of the various jurisdictions for this +US$200 million funding package assembled at the Project level.”

As background:

  • the Ethiopian central bank held back this long-anticipated formal confirmation until it had also simultaneously approved a policy directive for general public application;
  • the approvals now received as regards the terms of the proposed full Project finance package include the right to use leasing as a form of finance, a debt/equity capital ratio of up to 70/30, recognition of historical expenditure in the calculation of the capital ratio, the right to use gold price hedging and the application of market-based long-term fixed interest rates;
  • this set of central bank and other approvals clears the way for KEFI’s Project-level partners to subscrible to TKGM shares for their combined US$58 million (Ethiopian Birr equivalent) equity investment and also for the mandated US$160 million infrastructure financing. 

Whilst waiting for this central bank confirmation letter and policy directive, KEFI has already obtained the two other third party approvals required by the various interlinked arrangements:

  • KEFI’s secured working capital financier, Sanderson Capital Partners Limited, has agreed to security sharing arrangements with ANS Mining Share Company (ANS Mining), KEFI’s private-sector Project equity partner in TKGM. Such short term security arrangements fall away on the closing of full TKGM Project financing and, in the meantime, facilitate KEFI’s working capital arrangements and the Project equity funding of the first part of the 24 month Project development programme; and
  • KEFI’s Government-sector Project partner in TKGM, the Ethiopian Ministry of Finance, has also agreed to the undertakings requested by ANS Mining. Consequently, upon the execution of subscription documents by all three partners in TKGM (KEFI, ANS Mining and Ministry of Finance), reflecting the previously agreed terms, this will allow execution and settlement of the first ANS Mining equity instalment of US$11.4 million (Ethiopian Birr equivalent) in June 2019, as outlined in the Company’s announcement on 8 April 2019.

Implementation of financing can now flow between the consortium members and the Project can also proceed on the ground with the community and local authorities.

The publicly guided development schedule provides for a cautious build-up of site activities, whilst site security, detailed engineering and the first small community resettlement are carefully dealt with.