Despite the need to adjust and reschedule many tasks owing to Covid-19, Aim-listed Kefi Minerals remains focused on the preparations and finance milestones to enable major site activities to start at the Tulu Kapi gold project, in Ethiopia, from October.

In terms of health and safety, which the company highlights as its biggest priority, the greatest impact of Covid-19 and the restrictions imposed, has been the overhaul of procedures and teams to engage with the significant numbers of households and people surrounding Tulu Kapi.

Other Covid-19-related initiatives include the company offering beds and bedding to a regional isolation centre.

As at April 23, Ethiopia has reported 9 771 Covid-19 tests and 116 confirmed cases, which has resulted in three deaths.

There have been no reported cases of Covid-19 at Tulu Kapi.

In terms of project equity, Tulu Kapi Gold Mines' (TKGM's) longstanding partners, Kefi and the government, are coordinating with private sector partner ANS Mining Share Company to maintain the planned structure of the public-private partnership, despite the local liquidity strains experienced this year and other effects of the Covid-19 pandemic.

To that end, ANS Mining, which is the investment vehicle for a syndicate of leading Ethiopian banking, insurance and investment organisations, has re-affirmed its commitment to the project following the government's injection of significant liquidity into the local financial markets during the past two weeks.

Also, the government is now collaborating directly with ANS Mining and its shareholders to reinforce project momentum.

In addition, as an important new development, the government has now also advised both Kefi and ANS Mining that it will this quarter look to arrange either direct or indirect funding into TKGM from its investment institutions for the required amounts if there is any further delay in investment via ANS Mining. 

Moreover, in the event this investment is provided by entities outside of ANS Mining, there will be a proportionate adjustment to the TKGM shareholding. Kefi's interest in TKGM will remain unaltered.

Lastly, as a proactive move, the project partners are updating the shareholder agreement, to account for any specific changes in schedule and budget as a result of Covid-19, providing greater flexibility and to avoid any potential holdup in the overall project timetable.

In terms of project contractors and lenders, the two project contractors and the two project lenders are regularly liaising with TKGM and adjusting their joint plans to take account of the various Covid-19 protocols.

With regard to the timetable, the directors of TKGM and Kefi have resolved to, notwithstanding Covid-19, remain focused on using every reasonable effort to preserve the overall scheduled target of starting full gold production at Tulu Kapi in 2022 and remain focused on full financial close of the project funding in October.

Off-site infrastructure construction programmes are continuing for road and electricity connections.

Covid-19 has to date had no discernible impact on project costs.

However, the gold price outlook for the project now appears significantly higher than the $1 098/oz assumed for determining ore reserves or the $1 300/oz assumed in base case financial studies.

Kefi executive chairperson Harry Anagnostaras-Adams says the unprecedented scale of the stimulus packages announced by various governments globally, combined with low or negative interest rates, will provide welcome relief to society and also reinforce the probability that the gold price will continue to strengthen and thus bolster the Tulu Kapi investment case.

"Our longstanding and planned new Ethiopian partners are also working hard and remain keen for Tulu Kapi to commence development as soon as possible, as the project will not only generate substantial local employment in these difficult times, but will also generate substantial tax revenue and export income.

"As an important development, the government has advised that it will look to source funding directly into TKGM via its local financial institutions if there is any delay to the anticipated investment via ANS Mining.”