KEFI Minerals has signed a binding project equity investment agreement for the subscription of new equity capital into Tulu Kapi gold project company Tulu Kapi Gold Mines (TKGM) for a minimum of US$30 million, which would earn an interest in TKGM of 23%.
The agreement is with ANS Mining Share (ANS) and gives it the flexibility to invest further funds to increase its interest to 29% with the proviso that its shareholding, when aggregated with that of the Government of Ethiopia, does not exceed 49.9% of TKGM thus ensuring that KEFI Minerals remains the majority shareholder of TKGM.
The final aggregate subscription amount of up to US$38 million will be set by TKGM upon the receipt of all remaining Government and other financier approvals.
Final details will then be confirmed by all consortium members. ANS has confirmed to KEFI Minerals that institutional demand has exceeded this enlarged US$38 million figure.
Allocations will be carefully managed as to suit the best long-term interests of TKGM.
KEFI Minerals has maintained a close dialogue with the Government of Ethiopia and believes the few remaining administrative approvals will be received punctually.
Upon release to TKGM of the $9 million first installment by ANS for its initial 7% of the share capital of TKGM, TKGM may apply these funds to initial community resettlement compensation and other costs associated with implementing the full funding and the project .
“The signing of the binding Agreement for project-level equity is a watershed moment for KEFI,” comments John Leach, finance director of KEFI Minerals.
“We have successfully assembled all the equity development capital at the project level, based on significant local financial institutional support for project equity investment.
“KEFI Minerals’ majority interest in the Project gives the company an implied valuation of US$66 million based on these transaction metrics, whilst not including any value for the Tulu Kapi underground deposit or the exploration prospects in Ethiopia and Saudi Arabia, the largest countries within the highly prospective Arabian Nubian Shield where KEFI Minerals is focused,” he adds.
“KEFI is greatly honoured by the commitments already made by the Government in Ethiopia and now by this commitment of equity investment by ANS on behalf of Ethiopian financial institutions,” comments Harry Anagnostaras-Adams, MD of KEFI Minerals.
“It is also an honour to be working in Ethiopia at this exhilarating moment in the country’s history.
“Notwithstanding the challenges of the recently unleashed progressive reforms across many fronts throughout the country, the atmosphere in Ethiopia is overwhelmingly positive. All within the consortium are working hard to trigger the development of Tulu Kapi at the end of this year.
“The project, which is designed to comply with national and international environmental and social standards will be directly employing and training over 1,000 people by the end of 2019 if all goes according to plan, and would generate significant indirect benefits to local and regional stakeholders for the long term, in addition to export revenues of approximately US$200 million per annum,” he continues.