JOHANNESBURG (miningweekly.com) – The final project models for Kefi Minerals’ Tulu Kapi project have now been agreed to by the government of Ethiopia, contractors Lycopodium and Ausdrill/African Mining Services and preferred project financiers.

"The models were uploaded into the formal financing data rooms. They show some improvements for shareholders, as compared with recent company guidance,” Kefi chairperson Harry Anagnostaras-Adams said in a statement on Thursday.

During the next two years, Tulu Kapi will be built into a 140 000 oz/y gold mine. At the current gold price of $1 300/oz, combined with any of the contemplated financing scenarios, Kefi shareholders' beneficial interest in the net free cash flow per annum exceeds the company's current market capitalisation.

"Our existing project pipeline in Ethiopia and Saudi Arabia provides the opportunity to build a production base of around 200 000 oz/y of gold during Tulu Kapi's first three production years,” Anagnostaras-Adams added.

The Tulu Kapi project contactors have also confirmed costings and schedules for the final project models which have been uploaded into the formal financing data rooms.

“It remains the case that additional project-level equity investment may reduce the dilution of Kefi shareholders' beneficial interests. A project-level transaction on the same terms as with the government would imply a project valuation of $100-million.

“Under that financing scenario, Kefi shareholders would expect to retain a beneficial ownership interest in the order of 55% in the project,” the company outlined, adding that in a 100% scenario, net cash flow for each year in the first three years, after debt service and tax would amount to $32-million, with a net present value (NPV) of $109-million at the start of construction in the second quarter.

Previously, NPV was estimated to be $74-million at the start of construction.

Meanwhile, Kefi highlighted that while planned funding remained unchanged, the structure has been streamlined. As such, the miner mutually agreed with Oryx Management to terminate their $135-million funding relationship.

Oryx would have financed and operated all the on-site infrastructure at the project.

“The structure for the development of Tulu Kapi project will otherwise remain the same, with the other existing consortium members still performing all the various required roles as previously outlined,” it added.