KEFI Minerals PLC (LON:KEFI) has announced that it has made “considerable progress” in finalising the US$140m infrastructure lease facility for the development of Tulu Kapi in Ethiopia. The announcement follows the release of KEFI’s updated financial projections for Tulu Kapi in late October, based (for the first time) on a c 25% increase in ore processing capacity to 1.9-2.1Mtpa. It has also reconfirmed the project’s timeline, with construction anticipated in FY18-19 and commissioning at the end of 2019, and a residual equity/mezzanine requirement of US$20m (in line with our expectations).
Advancing methodically
KEFI will now be in a position in which it is permanently analysing and finessing the application and source of funds required to develop Tulu Kapi, but will not necessarily be at liberty to comment on its findings publicly. However, draft finance documentation has been lodged with the Ethiopian government for approval so that issuance of the listed bonds can proceed. Reading between the lines, the placing of the listed bonds to finance Oryx (and thereby Tulu Kapi) will commence once documentation has been approved by Ethiopia’s central bank, with drawdown expected about three months later, around the end of Q118. The drawdown timetable is timed to coincide with community and contractor preparations, but cannot start until the central bank approves it. Significantly, stimulation of mining activity was made a specific aim of the government’s 2015-20 Growth & Transformation Plan II and the minister of finance and economic development is understood to have recently formalised budget approval for the government to proceed with its construction and investment role in the project – beginning with infrastructure development and community resettlement.