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Akobo says production start-up date in Ethiopia uncertain

2nd May 2024

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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Scandinavian gold exploration and mining company Akobo Minerals has informed shareholders of the progress it is making in solving recent challenges with nationwide fuel supply disruptions and new customs procedures, finally enabling full site activity at its Segele mine, in Ethiopia.

Production startup is, however, still uncertain, but has been delayed to July or August.

The unforeseen nationwide diesel shortages and customs changes for duty-free imports significantly impacted on the company’s operations in recent months. Contingency plans were made, but the rapidly evolving situation proved more challenging than anticipated. With government support, these issues have been resolved for now, the company explains.

The commissioning of the main plant has begun in some areas, with plans being made for Universal Power’s arrival to commission generators. The remaining electrical cables are ready for connection, with progress being made on finalising diesel infrastructure and tailings storage facility membrane.

Efforts continue to finalise the processing plant and access the orebody.

The arrival of critical mining equipment after a prolonged customs delay will enable full ramp-up of mining activities at site.

The company has actively reduced site activity to minimise cash burn rate in the delay period.

As production increases and positive cash flow is achieved, Akobo says it will refocus on exploration to maximise project value.

The company also informs about strategic initiatives started to evaluate ways of increasing efficiency in production and further reducing operational risk, in addition to strengthening local management capacity.

Debt obligations, with respect to the gold bond financing, have been restructured with Monetary Metals. All former convertible debt has been converted to equity, resulting in only long-term debt to Monetary Metals remaining.

Funding has been secured and strategic discussions and evaluations are underway with key industry players to mitigate risks and improve production efficiency to capture the significant short-term potential seen in the updated mine plan.

Seasoned local management consultant Wondwossen Zeleke, with experience in the Ethiopian mining and oil industry, has joined the team.

A fuel supply agreement has been signed with the Ethiopian National Oil Company for direct sourcing and improved reliability; Akobo is awaiting the final licence from the Ethiopian Petroleum and Energy Authority.

Collaboration with Leeder Industrial and Airland Logistics is said to build supply chain resilience. Organisational changes have allowed for an increased focus on finding local suppliers that can meet price and performance requirements, the company avers.

The updated mine plan shows significant enhancements, it highlights.

Favourable gold price trends have significantly increased the value of the Segele resource compared to previous financial estimates. 

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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