JOHANNESBURG (miningweekly.com) – Emerging gold miner Kefi Minerals has reactivated the mining licence application (MLA) for its Tulu Kapi gold project, in Ethiopia, after it was suspended by the project’s previous owner in 2013.

Kefi said on Monday that Ethiopian Mines Minister Tolassa Shagi Moti had confirmed the government's intention to expedite the processing of the MLA, with construction on the mine to start in early 2015.

The MLA included a plan for the 11-year openpit mine, together with plans to test the feasibility of heap leach processing of the lower-grade material to be stockpiled during openpit operations.

The application also outlined the establishment of an underground mine beneath the openpit, where indicated resources had already been reported and the orebody remained open at depth.

Kefi chairperson Harry Anagnostaras-Adams said the reactivation of the MLA marked an inflection point in the company’s history.

“With the recent verifications of our plans and analysis, as well as the headline indicative terms for project financing, we can see a clear path towards becoming a gold developer.

“We have the right team and, in Tulu Kapi, the right project to achieve this aim,” he commented.

PROJECT FINANCE
The company had, meanwhile, received headline indicative terms for the financing of the project from several financial institutions, all of which were familiar with the project and had undertaken initial due diligence.

The project finance plan was intended to be implemented in parallel with the project development timetable, and would comprise a $10-million initial development programme, including the first phase of community resettlement and initial construction works, such as roads, surface water drainage and catchments.

This phase, dubbed Stage 1, would likely start in the first quarter of 2015 and was intended to be funded by early-stage secured loan finance.

The finance plan would further comprise a between $120-million and $150-million major works programme for mine, process plant and infrastructure to start in the fourth quarter of 2015, with the cost depending on whether Kefi deployed contract mining and used a second-hand plant or whether it proceeded as an owner-operator with new plant and equipment.

This phase – Stage 2 – was intended to be funded through senior secured debt of some $100-million.

Kefi also planned to secure non-senior debt funding in mid-2015 of up to $30-million, which was expected to comprise a mix of equity and mezzanine finance, such as second-ranking high-yield debt, to further fund development.

The anticipated early-stage finance was expected to take the form of a senior short-term secured loan of no less than $10-million, repayable upon drawdown of the project finance facility of $100-million, which would have a tenor of up to eight years with an initial two-year grace period.

The headline terms had been tabled to the financial regulatory authorities as part of the MLA process and its facilitation was included in the draft mining agreement being discussed between Kefi and the Ethiopian government and their respective banking and legal advisers.

MINE PLAN
Following independent verification of Kefi’s overhaul of the project, the company was now focusing on completing a full update to the definitive feasibility study (DFS) for review with the financiers.

The update would include plans to optimise the mine design with refined geotechnical due diligence, as well as more detailed engineering and scheduling across a range of topics.

“The goal is to reduce the error band of planning estimates and to reduce capital and operating costs,” the company said in a statement.

Meanwhile, the company said it would now expand and reorganise its management team to ensure that planned development of the project and the successful pursuit of related growth opportunities in Ethiopia and in Saudi Arabia, occurred on time and within budget.

As such, Anagnostaras-Adams had been appointed executive chairperson with a particular focus on permitting, financing and teambuilding, including the appointment of an African-experienced mine builder and operator as MD, as well as the assembly of teams for construction and operations.

Jeff Rayner would be the exploration director, with a particular focus on identifying the company's value-adding stages beyond the construction and start-up of the Tulu Kapi openpit.

This continued on from the work Rayner has undertaken to date, including successfully identifying the Tulu Kapi opportunity, scoping its economic targets and overseeing the independent affirmation thereof.