ANS Mining Share Company (ANS), which is funding Aim-listed Kefi Minerals’ Tulu Kapi gold project, has confirmed that it has received its first project-equity instalment commitments of $11.4-million from investors.
The amount is higher than the previously anticipated $9-millon.
The subscription of this enlarged amount and release of funds into Tulu Kapi Gold Mines (TKGM) will be in the current quarter upon satisfaction of conditions.
The remainder of the $38-million ANS commitment will be subscribed at close of full development funding.
Following further discussions, stakeholders have agreed that one-third of the total commitment of $38-million will now be invested through Kefi subsidiary, Kefi Minerals Ethiopia (KME), so that ANS will be Kefi’s minority partner, through which KME controls TKGM and the exploration areas in the Tulu Kapi district.
The remaining two-thirds of the ANS investment will be directly into TKGM as previously proposed.
Benefits of this “optimised approach”, according to Kefi, comprise Kefi now having a strong partner at the KME table to consider new projects alongside Kefi and that, by virtue of the TKGM partners funding the early stages of the development programme before debt-style funding is used, TKGM now targets a longer production ramp-up period and cash/gold-in-ore-stock build up to over $100-million before repayments of debt-style finance start.
As a result, the implied net present value (NPV) of Kefi’s beneficial interest in TKGM after debt and after-tax NPV is £40-million on Monday, and £66-million at the start of production.
Once these closing requirements are confirmed to ANS, TKGM expects to receive the initial $11.4-million, which will place TKGM in the position that all three of its shareholders are contributing to the equity funds being used to kick off the two-year development programme.
The local government has approved the community compensation and TKGM is preparing to trigger the development programme in April.
According to Kefi MD Harry Anagnostaras-Adams, this complements the company’s focus on ensuring that TKGM is aligned with Ethiopian stakeholders in every possible sense, from community alignment to equity partnering.
“The commitments into ANS are a material development and should provide Kefi Minerals shareholders comfort that the proposed asset-level equity financing strategy is progressing as previously planned,” he assured.