Ethiopia's mining sector is on the cusp of a significant boost as Kefi Gold and Copper's landmark Tulu Kapi gold project moves decisively towards launch. The London-listed company announced that it has secured a substantial $240 million expanded project finance loan, paving the way for major construction works to commence at the site in western Ethiopia.
According to Kefi, critical approvals from both international banks involved in the co-lending agreement have been granted, marking a major milestone for the project. Final terms and conditions for the financing package are now set, and Ethiopia's endorsement of the second co-lending bank's membership is undergoing final ratification.
Internal board approvals are currently underway in conjunction with other formal procedures necessary for the official signing of the financing agreement. These steps include the payment of success and commitment fees and the issuance of notices to proceed to the various contractors and service providers who will be instrumental in bringing the Tulu Kapi mine to life.
Behind the scenes, administrative processes are running in parallel, with definitive agreements being meticulously finalized and expected to be ready by March 31st. Simultaneously, preparations for equity capital at the subsidiary level are advancing in sync with this ambitious timeline. Crucially, the Ethiopian government's investment commitment to the project remains firmly on track, signaling strong national support for this venture.
Adding another layer of financial innovation, Kefi is preparing to launch a unique investment product aimed at sophisticated African investors. This will be a preference share offering, denominated in local Ethiopian currency, but designed to provide investors with crucial dollar-linked protection for both their initial investment and returns. The offering also includes an attractive "gold-upside kicker," allowing investors to benefit from gold prices exceeding the spot price at the time of issuance.
Harry Anagnostaras-Adams, Kefi's founder and Executive Chairperson, expressed strong optimism about the project's trajectory. "The Tulu Kapi gold project is progressing as anticipated, with bank approvals and widespread government backing secured," he stated. "We are on track to have detailed documentation ready by March 31, 2025, enabling a full launch as soon as practically possible."
He further emphasized the opportune timing of the project, coinciding with record-high gold prices, the recent floating of the Ethiopian Birr, and a renewed surge in economic growth within the country. "It is fortuitous that current timing coincides with gold being at record highs, the recent floating of the local Ethiopian currency and the consequential investor interest in protection against further devaluation, alongside the sharp resurgence of economic growth in Ethiopia and the inception of major economic reforms, including the recent launch of the Ethiopian Securities Exchange," Anagnostaras-Adams explained.
Acknowledging the pioneering nature of the project, Mr. Anagnostaras-Adams highlighted the complexities involved in establishing the regulatory framework for what is a first-of-its-kind transaction in Ethiopia. "The development of Tulu Kapi's regulatory framework and procedural detail have needed continual refinement for this first such transaction in Ethiopia. Be that as it may, we have succeeded in bringing Tulu Kapi to the starting block with a bespoke project syndicate of government, leading African banks, contractors and sophisticated investors," he noted.
Looking ahead, Kefi is confident that the robust syndicate assembled for the Tulu Kapi project will provide long-term stability and optimize its potential. The company is now focused on finalizing all definitive documentation by the end of March, paving the way for swift drawdowns and the commencement of major works at the Tulu Kapi gold mine, a project poised to become a cornerstone of Ethiopia's burgeoning mining sector.
(Source: Based on information from Mining Weekly)