JOHANNESBURG (miningweekly.com) – Gold and copper exploration and development company Kefi Minerals on Thursday announced that it would acquire East African gold exploration and development company Nyota Minerals’ remaining 25% direct interest in the Tulu Kapi gold project, in Ethiopia, for an aggregate consideration of £1.5-million, made up of £750 000 in cash and 50-million new ordinary shares in Kefi.

Nyota's direct 25% interest in Tulu Kapi was held through its 25% shareholding in Kefi Minerals Ethiopia, which owned 100% of Tulu Kapi. The sale valued Kefi Ethiopia at £6-million, corresponding with the value in December 2013, when Nyota sold 75% of Kefi Ethiopia – then named Nyota Minerals Ethiopia – to Kefi for £4.5-million. 

Nyota said in a statement that it had decided to sell its remaining 25% in Tulu Kapi following a new mineral estimation in March, which now required Nyota to contribute to the funding of Kefi Ethiopia pro rata to its shareholding, or suffer dilution of its shareholding.

“A new budget was approved by Kefi Ethiopia in mid-April and the first cash call, with respect to the period from March 12 to June 30, was due on May 2, 2014. Nyota's 25% share of this cash call is £325 492, which it is currently unable to fund,” the company explained.

Nyota stated that financing options available to the company were insufficient to fund 25% of Kefi Ethiopia and, therefore, in light of the difficulties in raising finance in the current equity markets, the company’s board believed a decision to sell the remaining 25% interest in Tulu Kapi – thereby, removing any requirement to fund the ongoing costs of the project – was in Nyota’s best interest.

Nyota also pointed out that its shareholders would have the opportunity, should they so choose, to maintain an interest in Tulu Kapi through a distribution of Nyota’s entire shareholding in Kefi to its shareholders.

"We have [seized] the opportunity to take full control over the Tulu Kapi project and funding flexibility. This is important as our work, since the acquisition of our controlling 75% interest, indicates that the project will be bigger and last longer than had initially been assumed,” Kefi MD Jeff Rayner said, adding that the company appreciated Nyota's agreement to distribute its Kefi shareholding to its own shareholders.

Meanwhile, in addition to the acquisition, Kefi had also conditionally raised £2.125-million through the placing of 141.6-million new ordinary shares at 1.5p a share.

“The placing means that funding is now in place to complete the acquisition to solely fund the revision of the Tulu Kapi feasibility study, in accordance with Kefi's development plan, to assemble the project finance syndicate and terms, and to reactivate the application for the mining licence at Tulu Kapi towards the end of 2014,” Kefi said.