TIDMKEFI
RNS Number : 9833G
Kefi Gold and Copper PLC
21 November 2022
21 November 2022
KEFI Gold and Copper plc
("KEFI" or the "Company")
Agreement of Tulu Kapi Gold Project Finance Plan
KEFI (AIM: KEFI), the gold exploration and development company
with projects in the Federal Democratic Republic of Ethiopia and
the Kingdom of Saudi Arabia, is pleased to announce that the
updated US$320 million Tulu Kapi Gold Project ("Tulu Kapi" or the
"Project") costings and finance plan has now been agreed by all the
Tulu Kapi syndicate lead contractors, investors and lenders. It is
currently being processed for final reviews and entry into
definitive documentation to be signed as soon as possible, with the
expectation to achieve this next month.
It remains that financing is to be almost entirely at the
project or subsidiary level and remains consistent with previous
guidance (see 2021 Annual Report, page 6). The detailed breakdown
of the sources and uses of the US$320 million Project funding will
be announced at the time of signing definitive documentation.
Harry Anagnostaras-Adams, Executive Chairman of KEFI, commented:
"The Tulu Kapi Gold Project is designed to world-leading standards
technically, socially, environmentally and in terms of financing
arrangements acceptable to international capital markets.
"Today's important milestone of the debt and equity leads
approving the finalised finance plan allows all the respective
Boards to formally approve the definitive documentation. I am
pleased to report the Project is now up and away.
"Ethiopia's readiness for foreign direct investment has
continued to improve since early 2022 and recent well-publicised
positive developments have only served to reinforce that. The
Company is confident that we can lift the work programmes to full
construction in the new year and be in full production from the
open pit in 2025 and from the combined open pit-underground
operation a few years later.
"We have been long-standing and resilient supporters of the
Ethiopian Government's efforts to develop its minerals sector and
we feel a great sense of responsibility and honour to now be able
to push forward at a time which is particularly important for all
stakeholders."
Tulu Kapi Background
Now Focusing on Increased Production and Longer Mine Life at
Tulu Kapi
The Company is pleased to report that the plans now contemplate
an enlarged Tulu Kapi operation, integrating both an open pit and
underground mine, with consequential increases in planned gold
exports to US$300 million per annum (at current gold prices when
both mines are in production) and with combined mine production
extended from 8 to 10 years starting in 2025. KEFI will also
request permission from the Ethiopian Ministry of Mines to
recommence district exploration during construction to further
extend the mine life to well over 10 years for the benefit of all
stakeholders.
Initial Project development activities have already started and
include camp upgrading for construction, local recruitment,
community resettlement, plant procurement engineering and
work-programmes and legal formalities to satisfy the many standard
conditions precedent for finance drawdowns. An official Project
launch is planned for early 2023, the timing to be determined with
the Ministry of Mines.
Conditionality of Project Plans
Since signing the syndicate Umbrella Agreement in June 2022, we
have updated all Project costings with international fabricators
and other suppliers, updated contract documentation, had both of
our banks confirm there are no more policy impediments to their
participation, adjusted intra-syndicate finance contributions and
started assembling completed documentation for lender review before
execution.
As with any project financings standard conditions must be
satisfied before and after signing of definitive agreements by all
parties, including completion/registration of documents with the
various Government agencies, opening international project bank
accounts in collaboration with the National Bank of Ethiopia,
placing insurances internationally through the Ethiopian agents,
registering loan-security, receiving confirmations of tenure for
mining and exploration and the independent experts' confirmation
that conditions on the ground remain conducive to the planned
operations.
Economic Benefits of the Tulu Kapi Gold Project include:
* Showcase project as first mover in a high-priority
sector
* A business enterprise that will be the single largest
Ethiopian exporter, starting at c. US$250 million per
annum ("pa") and rising over the first four years to
US$300 million pa, at current gold prices
* Direct employment of 1,000 people and indirect
employment 5-10 times that number in a high
unemployment area of rural West Welega
* Emphasis on local procurement for production inputs,
with annual operating expenses exceeding US$140
million which will have a huge impact on local
economic opportunity
* Emphasis on creation of micro-enterprise in
collaboration with appropriate experts, such as the
Ethiopian Evangelical Church of Mekane Yesus
("EECMY")
* A showcase project in all respects, backed by leading
African development banks and encouraging other
minerals developers to proceed in Ethiopia.
Social Benefits of the Tulu Kapi Gold Project include:
* A full spectrum of social programmes in compliance
with International Finance Corporation (World Bank)
Performance Standards
* Education, training and employment starting some
years ago with the construction of the local school
and now expanding into local technical college
courses in collaboration with a leading mining
colleges and universities in global mining centres
* Local infrastructure which started some years ago
with provision of local fresh water and expansion to
include an all-weather road to the highway, mains
electricity to site with extra capacity for local
reticulation by the authorities for appropriate
applications, health clinics and an airstrip
* Tulu Kapi Charitable Foundation started and is in
operation
The Environmental impact:
* The Tulu Kapi Gold Project has been designed in
accordance with the highest international standards
and will involve monitoring by global leading experts
* The site itself was chosen by KEFI because of its
environmental and social characteristics, as much as
its mineralisation and potential to generate wealth
* The site has no interest to artisanal miners because
of the depth and nature of the gold particles, i.e.,
unrecoverable by artisanal techniques and only by
industrial-scale processes
* No sulphide mineralisation which therefore avoids the
issue of managing potential acid mine drainage
* The Environmental Impact and Assessment Report has
been widely reviewed and the Company is not aware of
any negative comment
Market Abuse Regulation (MAR) Disclosure
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
Enquiries
KEFI Gold and Copper plc
Harry Anagnostaras-Adams (Executive Chairman) +357 99457843
John Leach (Finance Director) +357 99208130
SP Angel Corporate Finance LLP (Nominated
Adviser and Joint Broker) +44 (0) 20 3470 0470
Jeff Keating, Adam Cowl
Tavira Securities Limited (Joint Broker) +44 (0) 20 7100 5100
Oliver Stansfield, Jonathan Evans
WH Ireland Limited (Joint Broker) +44 (0) 20 7220 1666
Katy Mitchell, Andrew de Andrade
IFC Advisory Ltd (Financial PR and IR) +44 (0) 20 3934 6630
Tim Metcalfe, Florence Chandler
KEFI Gold and Copper plc
KEFI is focused primarily on the advancement of its three
development projects in Ethiopia and Saudi Arabia, plus its
pipeline of highly prospective exploration projects in these two
large jurisdictions of the under-explored Arabian-Nubian
Shield.
KEFI targets that production at Tulu Kapi in Ethiopia and Jibal
Qutman in Saudi Arabia will, between them, generate cash flows for
capital repayments, further organic growth and, ultimately,
dividends to shareholders.
Both TKGM and G&M are technically guided and supported by
KEFI so that each of these operating joint venture companies as
soon as possible builds the local organisational structure suitable
for long term production as well as exploration and future
development opportunities.
KEFI Gold and Copper in Ethiopia
Ethiopia is currently undergoing a remarkable transformation
both politically and economically.
The Tulu Kapi gold project in western Ethiopia is being
progressed towards development, following a grant of a Mining
Licence in April 2015. No other mining project of this scale in
Ethiopia has been brought to Tulu Kapi's stage of advancement
during recent years and Tulu Kapi will be the first industrial
scale mine development in Ethiopia in over 30 years. It has taken
years of extensive technical re-design of the project, years of
overhaul by the Ethiopian authorities of financial policies which
previously hindered mining project finance and the patient and
cautious traversing by the Company of recent well-publicised events
within the country. The project has imposed many demands on a
regulatory system which the Ethiopian Government continues to
upgrade, determined to build a modern minerals sector. KEFI is
honored to play its part in this process and has assembled a
first-tier syndicate of international industry expert management,
contractors, banks and investors.
The Company has now refined contractual terms for construction
and operation of the open pit mine. Management has also developed
preliminary plans to develop the underground mine once open-pit
production has started and to produce.
All aspects of the Tulu Kapi (open pit) gold project have been
reported in compliance with the JORC Code (2012) and subjected to
reviews by appropriate independent experts. The underground project
is defined based on internal PEA-level analyses which have yet to
be subjected to DFS-level investigation and independent review,
which is planned to be carried out during the construction of the
open pit.
KEFI remains keen to re-commence its exploration of the
additional prospects it has successfully identified within the Tulu
Kapi district exploration area from within which the mining licence
was duly excised as a result of the successful discovery of the
Tulu Kapi deposit. Whilst most historical drilling was naturally of
the Tulu Kapi deposit, there was significant work done on many
further prospects which await follow-up.
Whilst awaiting regulatory permission to re-activate the
Company's Ethiopian exploration, which is critical for long term
planning for all stakeholders in the community as well as the
Company, the exploration focus has been successfully switched to
Saudi Arabia.
KEFI Gold and Copper in the Kingdom of Saudi Arabia
In 2009, KEFI formed Gold & Minerals Limited ("G&M") in
Saudi Arabia with local Saudi partner, ARTAR, to explore for gold
and associated metals in the Arabian-Nubian Shield. KEFI has a c.
30% interest in G&M.
ARTAR, on behalf of G&M, and G&M directly held over 16
Exploration Licence (EL) applications pending the introduction of
the new Mining Law. These new regulations have recently been
proclaimed and G&M has had ten new licences issued in the past
twelve months - more licence grants than in the previous 14 years
and all highly prospective and strategically important for G&M,
ELs are renewable for up to five years and bestow the exclusive
right to explore and to obtain a 30-year exploitation (mining)
licence within the area.
In addition, G&M has a Mining Licence Application over the
Jibal Qutman Gold Project which recent informal indications by the
authorities provide some confidence that the licence will be
granted shortly.
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