KEFI Minerals (LSE:KEFI) provides an update regarding its Tulu Kapi Gold Project in Ethiopia this morning. The company reports that progress at the project is moving at a significant pace with a newly recruited construction manager and senior site risk manager relocating to the site next week. They join around 100 locally recruited personnel hired for land clearing and the drilling rigs required to complete the geotechnical surveys. Kefi bought the mine from Nyota Minerals in 2014 and plans to pour first gold in the second half of 2020. The company estimates output from the mine will include open-pit gold production of around 140k ounces (oz) per annum over a 7-year period at an all-in sustain cost (AISC) of $800 per oz. Ore reserve estimates for the project is 15.4Mt at a grade of 2.1g/t gold, containing a total of 1.1Moz.

There are still a few remaining regulatory consents required from Ethiopian government agencies which are expected over the coming weeks ahead of triggering the project. These include the approvals of the final community resettlement plans, Project financing details and the updated works program. The final design of the foundations for the processing infrastructure and dam walls will follow the geotechnical surveys. Upon receipt of the remaining Government consents, project-equity investor ANS Mining Share Company (ANS) will release US$9m of equity funds into the company's project subsidiary Tulu Kapi Gold Mines Share Company (TKGM) for funding the planned activities in Q1 2019 – these include the first phase of community resettlement and ongoing project financing and planning costs.

An additional US$9m of funding is expected at the end of Q1 2019 to fund the planned Q2 2019 project development. This will allow TKGM to proceed with activities prior to the closing of the US$160m bond/lease of non-equity capital project financing. The remaining balance of ANS's planned US$30-38 million equity investment is expected to coincide with full project finance close as soon as the non-equity component is accessed.

Managing Director of KEFI, Mr Harry Anagnostaras-Adams, said: "It certainly is an interesting period in Ethiopia, with many changes taking place, including far-reaching transformation on many levels.  Our Tulu Kapi Gold Mine Project has remained a high priority for all stakeholders throughout this period and I am pleased with both the speed and level of progress being made. I would like to take this opportunity to thank all our partners and in particular the Ethiopian government at many levels for their continued support.  All the pieces of the Project are coming together and we look forward to providing further updates as matters progress."

Author: Stuart Langelaan
Disclosure: The author does not own shares in the company mentioned above