JOHANNESBURG (miningweekly.com) – Aim-listed Kefi Minerals is continuing to advance project finance syndication for its 75%-owned Tulu Kapi project, in Ethiopia.

The company estimated the total capital requirement for the project to be $145-million, including financing costs and cost-overrun facilities.

Kefi is expecting to secure $65-million in senior secured debt from two banks and an export credit agency; $15-million in cost-overrun facilities and a 100 000 oz hedge facility from a specialist metals financier; and $40-million in product-linked gold finance from a specialist gold financier.

Around $25-million of the equity investment component was planned to have been invested prior to financial settlement of the project finance syndicate at the end the third quarter of this year. Kefi had already raised $5-million and the Ethiopian government, which owns a 25% interest in Tulu Kapi, had provided $20-million.

This was in addition to the $50-million invested prior to 2016.

Meanwhile, Kefi reported that production commissioning at Tulu Kapi remained on schedule for the second half of 2017.

The project would produce 115 000 oz/y over the core eight years of openpit production, with all-in sustaining costs estimated at $742/oz.  

Projected cash flows of $135-million in the first three years of production were expected to be sufficient to repay all project debts; allow Kefi to start paying dividends to shareholders; fund the development of the underground mine at Tulu Kapi; and fund the start-up of the initial heap leach operation at Jibal Qutman, in Saudi Arabia and the exploration programmes within the Arabian-Nubian Shield.

"Projected cash flows are robust, with the first three years of openpit production targeted to repay all debts, begin the payment of dividends and fund growth in the highly prospective Arabian-Nubian Shield. We look forward to soon finalising the project's integrated syndication package and proceeding with development," said Kefi executive chairperson Harry Anagnostaras-Adams. 

EXPANSION POTENTIAL
During the quarter ended March 31, Kefi had completed a preliminary economic assessment of Tulu Kapi's underground mining potential, below the currently planned openpit.

Combined production from the openpit and underground mine would reach about 150 000 oz/y.

The underground mine added an estimated $44-million to Tulu Kapi’s after-tax net present value (NPV) at a gold price of $1 250/oz, increasing the combined NPV to $200-million for 100% of the project.

Underground mine development would start after repayment of development finance was well advanced during the first three years of openpit operations.