KEFI Minerals plc Q&A: Tulu Kapi Gold Project Funding Update (LON:KEFI)

KEFI Minerals

KEFI Minerals Plc (LON:KEFI) Executive Chairman Harry Agnanostara-Adams caught up with DirectorsTalk for an exclusive interview to discuss the project funding update for the Tulu Kapi gold project

 

Q1: Harry, you announced the signing of a deal of $135 million for funding for the Tulu Kapi gold project in Ethiopia. Can you outline the deal and tell us what it means for the project and KEFI Minerals?

A1: About a year ago, the conventional mining banks retracted from the space, not just from KEFI 7 Ethiopia and so we regrouped with the syndicate and we decided to focus on financing, developing and executing financings designed around our contracting relationships. We had three different contracting syndicates talking to us seriously about our financing but we’ve managed to put together the preferred plan with the contractors that we appointed a couple of years ago, that is Ausdrill which is a very large Australian mining group, and Lycopodium, perhaps the world’s leading gold plant builders.

So, the deal is colloquially referred generally as Build, Own, Operate, Transfer funding, designed around specific expertise, around the Lycopodium group specifically in the Oryx Management company. They’ll be funding the building, building with Lycopodium, operating under contract and then when we’ve fully paid for it, over a 9-year period, transfer back to us the infrastructure.

So, in a nutshell, we’ve got a government funding the off-site infrastructure, we’ve got a leading gold plant building group with its financing affiliate building and funding the on-site infrastructure and we’ve got a leading mining group funding and providing the mining equipment which lead to working capital and the community resettlement costs to us. So, a tightly formed syndicate providing both financing and operating commitments.

 

Q2: The deal has been signed with Oryx Management, can you tell us more about Oryx?

A2: Well, Oryx is basically a spin-off of the plant building expertise at Lycopodium, there’s a whole bunch of people who have been working in the sector from Perth, Australia, for decades, having built plants in Africa, Americas, Australia and so on. This group are Australian metallurgists and financiers who’ve developed from their base in England, a mining finance facility that runs alongside of Lycopodium as the contract builder.

It’s effectively an innovative reaction by the mining fraternity of Perth, Australia, and their affiliates in Europe, on the funding side, it’s their reaction to the fact that the mining banks have retracted from the space but the sector wants to keep moving forward and building the projects that are still required by the world. So, they’ve been quite innovative about doing all of this and we’re very pleased that they’re on board, the CEO of Oryx is in the UK but he hails from Perth.

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Q3: You’ve said that you expect development of the project to start before the end of this year, what still needs to happen for development to start?

A3: There’s a number of parallel timetables run by different people within the team, the detailed engineering so procurement can proceed is one set of things. In terms of the legal, the detailed term sheets that have been agreed with each syndicate member now need to be turned into execution detail legal documents to be approved by all counter parties and by the government regulators. The resettlement has to be triggered, they need 3 months to move off the plant site and the camp site so that work can start at the end of the year.

So, the handshakes are done, the terms have been agreed but KEFI Minerals need to now formally approve, and have government approval, of the syndicate documentation by all counter parties and move the community so that the construction can commence at the ned of the year.

 

Q4: Exciting times for KEFI Minerals plc and since your focus is not just on Tulu Kapi in Ethiopia, can you tell us what’s happening in your Saudi Arabian operations?

A4: It’s a go-slow type of situation really because the government announced last year, sometime, a complete overhaul of the regulatory regime there with a view to encouraging more investment in the mining sector. We haven’t really been comfortable, if you like, revving up in Saudi Arabia whilst the regulatory regime hasn’t been spelled out, I believe it will come out in the next few months based on what I’m hearing, in which case we would then be a position to check everything and discuss with our partner and then rev it all up again.

So, the concept is very legitimate, the commitment is very real and it quite possibly could be quite an opportune time for us whilst we’re developing at Tulu Kapi, we may be able to run at some quite exciting prospects in Saudi Arabia that we really have been held up on for some time now.

So, I think as a portfolio, they will come together very well, the timing of triggering construction as well as the timing of triggering the exploration in Saudi Arabia, that might be quite lucky.

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