KEFI Gold and Copper plc (LON:KEFI), the gold and copper exploration and development company with projects in the Federal Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, has announced that on the 30 June 2022 the Tulu Kapi Gold Mines Share Company project finance syndicate signed a funding ‘Umbrella Agreement’ as outlined in the Company’s announcement on 15 June 2022.
The Umbrella Agreement sets out the role and contribution of each finance syndicate member in relation to the Company’s Tulu Kapi Gold Project and, whilst reflecting the conditionality of the plan and intended flexibility within the syndicate, it sets out a full funding package, covering historical and budgeted future expenditure.
In addition, at a meeting this week between the Ethiopian Minister of Mines and the Company and TKGM’s senior management, the Minister confirmed that the media reports of licence cancellation were inaccurate, that the Tulu Kapi mining licence is not cancelled and that regular progress reviews would continue so as to ensure the earliest possible Project launch.
The funding structure has been designed in strict compliance with the policies and guidance of the National Bank of Ethiopia (the central bank). The plan has also been approved unanimously by the Board of Directors of TKGM, which comprises KEFI and Ethiopian Government representatives and it remains consistent with previous Company guidance as notified on 23 August 2021.
The Project action plan now includes the following key steps:
· The Company has completed the assembly of the information requested by the Ministry of Mines and has started conducting meetings with the Minister and his team to clarify any aspects. The Minister has agreed to a progress review at the end of July 2022 to ensure a satisfactory outcome;
· to formalise the outcome of successful meetings last week with the principal Government agencies which administer financing policy whereby a key condition precedent was satisfied in-principle – that both of the Company’s longstanding banking groups have the right to invest and lend on the same terms;
· to document the positive outcome of a successful inspection last week by independent security experts and to finalise with security authorities the requirements for Project launch at the start of the Ethiopian dry season in October 2022;
· to finalise the individual definitive agreements for the Project financing and the contracting services for Project implementation; and
· to arrange execution of Project insurances.
Harry Anagnostaras-Adams, Executive Chairman of KEFI, commented:
“The Tulu Kapi Gold Project has been designed to the highest international regulatory standards and has had historical investment of approximately US$80 million. The Project has assembled a first-class management team backed by a first-tier syndicate of African experienced specialist organisations and funders.
“No other mining project of this scale in Ethiopia has been brought to this stage of advancement during recent years and Tulu Kapi will be the first industrial scale mine development in Ethiopia in over 30 years. It has taken extensive technical re-design of the Project, overhaul by the Ethiopian authorities of financial policies which previously hindered mining project finance and the patient and cautious traversing of recent well publicised events in the country.
“We are taking all measures to drive the Project safely forward, respect the national priority to develop Ethiopia’s mining sector and place the highest importance on social licence in the very supportive Tulu Kapi community. We are pleased that the Minister of Mines and other Ethiopian government officials have expressed their continued support.
“The deposit was discovered some 15 years ago, and KEFI itself was invited in some eight years ago to remedy the Project’s technical defects, which took about two years. We then collaboratively reviewed, with Government agencies, the financial regulations prevailing in Ethiopia that hindered modern mining project finance and assembled a first-class international syndicate which all signed terms sheets in 2019.
“Since then, the syndicate has completed technical and legal due diligence whilst the Company ensured the Project could proceed on the ground, traversing previously reported challenges. The decision to trigger financing and Project launch procedures was confirmed within the syndicate last month, some three months after the Ethiopian Government lifted its national State of Emergency. We very much appreciate the collaboration and mutual trust with our Federal and Regional Government co-shareholders in the operating subsidiary TKGM and the multitude of government agencies with whom we deal daily.
“The signing of the Umbrella Agreement is a very important step and we look forward to completing the outstanding matters that will allow for full Project construction to commence in the Ethiopian dry season starting in October 2022.”
