JOHANNESBURG (miningweekly.com) – Aim-listed Kefi Minerals on Tuesday said progress is being made in ongoing discussions with Ethiopia’s government and development bank as work advanced on its flagship Tulu Kapi gold project.

Negotiations with the Development Bank of Ethiopia, which this year completed an evaluation process of the emerging gold project, for senior secured debt are at an advanced stage, with the parties now awaiting the appointment of a co-lender.

The estimated funding requirement, including contingencies and provisions, is between $150-million and $160-million, with a $20-million committed equity investment from the government of Ethiopia as it increases its ownership in the project to 30%.

In line with this, the government had established an investing entity, the Ethiopian Mines, Petroleum and Bio-Fuel Corporation, Kefi pointed out in an update to shareholders on Tuesday.

“The government's recent policy directive requiring a maximum 50% debt gearing policy for new projects is considered consistent with Kefi's plans, because clarifications received from the National Bank of Ethiopia (the regulator) indicate that historic spend on the project of approximately $60-million counts as equity in the calculation,” the company told investors.

The gold exploration and development company is also continuing its support role in the community resettlement, livelihood restoration and community development programmes that are under way.

“The Ethiopian government experts and the project's social licence advisers are ensuring that calculations and plans comply with Ethiopian law and International Finance Corporation/World Bank principles. Kefi is playing a supporting role to the government's efforts and is committed to assist where it can,” Kefi assured.

The first phase of the community resettlement programme is expected to start by the end of the year, triggering minor works at Tulu Kapi, with major works to commence in the second quarter of 2017.