Aim-listed Kefi Minerals made progress with preparations for the development of its Tulu Kapi project, in Ethiopia, in the third quarter ended September 30.

Project development funding has been secured through the Ethiopian government, which committed $20-million over 2019 and 2020 to fund construction of offsite infrastructure.

Additionally, funding has been secured through ANS Mining Share Company, which committed between $30-million and $38-million to be released in increments – $9-million in December and $21-million to $29-million at the closure of full development funding in early 2019.

Kefi has also secured bonds to the tune of $160-million, of which $110-million will be used to fund construction of on-site infrastructure and the balance set aside for financing costs during the construction period and reserves.

The company has a working capital line through a stockpile financing facility for up to $20-million.

During the third quarter, Tulu Kapi received approval of its development, operational, environmental and social plans; investment and shareholders agreement for jointly-owned project company Tulu Kapi Gold Mines (TKGM); capital ratios, hedging and bank account arrangements for TKGM; and community resettlement dates and planned actions.

Outstanding consents or permits include registration of equity subscriptions, of which most has been endorsed by the Ministry of Mines already, endorsement of updated project plans, and approval of finance documentation and underlying security arrangements by the National Bank of Ethiopia.

Kefi will start its community resettlement programme in the first quarter of 2019, along with detailed engineering and procurement, to be carried out over three months.

Construction of Tulu Kapi is expected to start early in 2019 and commissioning is anticipated for the second half of 2020.

The financial model base case – assuming a gold price of $1 300/oz – indicates a payback of about three years; earnings before interest, taxes, depreciation and amortisation of more than $73-million a year; and a post-debt net present value of $115-million at construction start and $192-million at production start.

Projected gold production costs for Tulu Kapi are $700/oz, all-in sustaining costs are estimated at $800/oz and total costs, including depreciation and amortisation, are estimated at $1 000/oz.

Tulu Kapi is expected to produce around 140 000 oz/y of gold over a seven-year period.