KEFI Minerals announces reduction of residual funding

Close on the heels of the lifting of the state of emergency in Ethiopia, KEFI Minerals said it had reduced its residual funding requirement for the company's Tulu Kapi gold project and had begun talks to eliminate it altogether.

The gold exploration and development company with projects in the Kingdom of Saudi Arabia and the Federal Democratic Republic of Ethiopia said its funding needs had been reduced to $24m based on refinements to planned capital expenditure and contingency provisions from $32m.

The company said that it would now focus on sourcing part of this residual requirement from a separate finance facility against ore stockpiles which were estimated to include $15m of contained gold at start-up of production.

Part of its remaining financial requirements would be met via project-level equity with negotiations having already begun.

However, the AIM-listed company stressed that its preference remained to retain majority ownership and control of the project, despite the change.

Thursday's announcement followed a separate $135m project funding agreement with Oryx Management disclosed on 17 July 2017 which, if one ignored historic investment of roughly $60m, had allowed KEFI to cut its fundings needs down to their current level from $289m in 2014.

The agreement with Oryx entailed financing and operating all the on-site infrastructure at the company's Tulu Kapi Gold Project in Ethiopia.

KEFI also intended to consult with the project syndicate, in particular the Government of Ethiopia and principal financier Oryx, on optimising its funding structure.

Closing of financing was targeted in the fourth quarter of 2017.

Commenting on the announcement, ShoreCap said the recent lifting of the state of emergency in Ethiopia should help management in its efforts.

The company's shares were up 6.80% to 5.50p by 11:05 BST.