Aim-listed Kefi Gold and Copper has achieved further positive developments at its high-grade Tulu Kapi gold project in Ethiopia, as it prepares for full launch in the first half of this year.

As previously reported, all of the required development budget of $320-million has been sourced at the subsidiary level.

Following the final approvals from the lead bank, all other parties triggered their formal approval processes which are now all advancing, notably including progress with both the co-lending bank and the local equity investors.

A positive development is that recent regulatory changes have facilitated the improvement to the equity funding structure which has lowered overall finance costs, Kefi highlights.

The regulatory changes of note were the foreign exchange exemptions, the increase in the maximum permissible ratio of debt to equity and the re-investment of the local currency (Ethiopian birr) retained earnings of multinational corporations (MNCs) into new business sectors.

Within the development capital budget of $320-million, $100-million was to be provided through the issuance of two types of equity risk notes (ERNs), one type for MNCs with no operations in Ethiopia and another lower-cost ERN for those with accumulated retained earnings in Ethiopian operations.

Kefi reports that it can now focus on the lower-cost ERN – fixed at 12% yearly.

The company has confirmed a longstanding and large MNC investor in the ERN has now received initial board approvals.

All syndicate members have agreed a schedule for all remaining pre-launch tasks including their respective formal approvals ahead of full financial close mid-2024.

“I am delighted to report the initial board approval of a major local equity-capital provider. And it is especially pleasing that the instrument designed for this transaction, the ERN, has been streamlined under the lower-cost approach.

“Our modelling and production profile for this high-grade openpit gold mine, based on a gold price of $1 864/oz (versus current spot of $2 170/oz), shows sufficient cash will have been generated at the proposed time of repayment to repay these ERN in cash at the time they fall due,” says Kefi executive chairperson Harry Anagnostaras-Adams.

“When combined with the credit committee approved $95-million debt from lead bank Eastern and Southern Trade and Development Bank and the Ethiopian Federal and Regional Governments’ $20-million commitment, with the potential to increase to $40-million, this accounts for $215-million to $235-million.

“I can also advise the company has received confirmation from the co-lender Africa Finance Corporation that its approval processes are underway and progressing well for its intended $95-million investment, which would provide the balance of the required funding for project launch,” he adds.