# KEFI Minerals Project Equity Investment Agreement with ANS

- Link: https://www.directorstalkinterviews.com/kefi-minerals-project-equity-investment-agreement-with-ans/412759249
- Published: 2018-09-28T14:03:18+01:00
- Author: Charlotte Edwards

**KEFI Minerals** ([AIM: KEFI](https://www.directorstalkinterviews.com/company/kefi-gold-and-copper/kefi.l)),
the gold and copper exploration and development company with projects in the Kingdom
of Saudi Arabia and the Federal Democratic Republic of Ethiopia,  confirmed that,
further to the announcement of 24 August 2018, ANS Mining Share Company has now 
signed a binding Project Equity Investment Agreement  for its subscription of new
equity capital into Tulu Kapi Gold Project company Tulu Kapi Gold Mines Limited 
for a minimum of US$30 million, which would earn an interest in TKGM of 23%.

The Agreement also gives ANS the flexibility to invest further funds (up to $38 
million in total) to increase its interest to 29% with the proviso that its shareholding,
when aggregated with that of the Government of Ethiopia, does not exceed 49.9% of
TKGM thus ensuring that KEFI remains the majority shareholder of TKGM.

The release by ANS of the subscription to TKGM is planned in two instalments:

· The first instalment of US$9M (Ethiopian Birr equivalent) is to be subscribed 
to TKGM in the next quarter for a 7% shareholding in TKGM, following receipt of (
a) Government administrative approvals, including for the ANS subscription to TKGM
and; (b) reasonable assurances of the full funding proceeding from the secured financing
providers. The disbursement of these funds by TKGM does not need to await the closing
of full funding.

· The second instalment of US$21-29M (Ethiopian Birr equivalent) to be subscribed
to TKGM at, or before full financial close of all development funding which is targeted
upon completion of the first community resettlements in early 2019.

The final aggregate subscription amount of up to US$38 million (Ethiopian Birr equivalent)
will be set by TKGM upon the receipt of all remaining Government and other financier
approvals. Final details will then be confirmed by all consortium members. ANS has
confirmed to KEFI that institutional (banks and insurance companies) demand has 
exceeded this enlarged US$38 million figure. Allocations will be carefully managed
as to suit the best long-term interests of TKGM.

KEFI has maintained a close dialogue with the Government of Ethiopia and believes
the few remaining administrative approvals will be received punctually. Upon release
to TKGM of the $9 million (Ethiopian Birr equivalent) first instalment by ANS for
its initial 7% of the share capital of TKGM, TKGM may apply these funds to initial
community resettlement compensation and other costs associated with implementing
the full funding and the project .

The signing of this binding Agreement is a material milestone in the ultimate development
of the Tulu Kapi project and specifically the structure of this arrangement carries
a number of additional advantages, including:

· Enabling the first stage US$9 million of development funding from the ANS to be
released prior to the close of the full funding package, recognising that KEFI’s
subsidiary KEFI Minerals Ethiopia has already funded the pre-development costs in
the order of $60 million.

· Allowing ANS to increase its total investment up to US$38 million via its second
instalment subscription and to fulfil some of the surplus demand for investment 
currently witnessed by the local market.

· Serving to support and expedite the intended project schedule recently set out
with the project contractors and regional and federal authorities commencing at 
end-2018 and commissioning gold production end-2020.

· Reducing financing costs by drawing on equity capital (at asset level) first and
the secured financiers’ funds second, thus maximising the production ramp-up period
available between first gold pour and when TKGM’s finance-servicing begins.

> **Mr John Leach, Finance Director of KEFI said,** “The signing of the binding 
> Agreement for project-level equity is a watershed moment for KEFI. We have successfully
> assembled all the equity development capital at the project level, based on significant
> local financial institutional support for project equity investment.
> “KEFI’s majority interest in the Project gives the Company an implied valuation
> of US$66 million based on these transaction metrics, whilst not including any 
> value for the Tulu Kapi underground deposit or the exploration prospects in Ethiopia
> and Saudi Arabia, the largest countries within the highly prospective Arabian 
> Nubian Shield where KEFI is focused.”
> **Speaking from Addis Ababa, Mr Harry Anagnostaras-Adams, Managing Director of
> KEFI said,** “KEFI is greatly honoured by the commitments already made by the 
> Government in Ethiopia and now by this commitment of equity investment by ANS 
> on behalf of Ethiopian financial institutions.
> “It is also an honour to be working in Ethiopia at this exhilarating moment in
> the country’s history. Notwithstanding the challenges of the recently unleashed
> progressive reforms across many fronts throughout the country, the atmosphere 
> in Ethiopia is overwhelmingly positive. All within the consortium are working 
> hard to trigger the development of Tulu Kapi at the end of this year.
> “The Project, which is designed to comply with national and international environmental
> and social standards (in particular Equator Principles and World Bank IFC Standards),
> will be directly employing and training over 1,000 people by the end of 2019 if
> all goes according to plan, and would generate significant indirect benefits to
> local and regional stakeholders for the long term, in addition to export revenues
> of approximately US$200 million per annum.”

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