Kefi looks forward to high shareholder returns as Tulu Kapi construction advances

The company expects to commission the project in late 2027 and reach full production in 2028.

Chief among the achievements in the past month are the finalisation of final project contracting packages covering all capital expenditure and 50% of seven-year operational expenditure.

As the lead design and construction contractor for the Tulu Kapi processing plant and all on-site infrastructure, Lycopodium has ramped up its field activities.

At gold prices of between $3 000/oz and $5 000/oz, the net present value of Tulu Kapi as at the start of construction is between $710-million and $1.6-billion.

The financial closure process for the project was in preparation for many years, with $240-million in debt having been secured, $100-million in equity investment, $60-million for mining fleet investment through a mining services agreement and $30-million in non-dilutive capital for contingencies and growth in Ethiopia, as well as Saudi Arabia.

The company has advised that it will update stakeholders on the status of its Saudi Arabia projects in a few weeks’ time, particularly after Kefi allowed its shareholding in the GMCO joint venture to dilute to 13% to focus capital spending on Tulu Kapi.

Owing to the endeavour being a first-mover transaction for Ethiopia and because the project's secured lenders are providing about 70% of the $340-million development capital, all detailed definitive documentation has had to be approved by these major African development banks – one being well-embedded in Ethiopia and the other being Africa's leading mining financier.

The total project cost is about $500-million after taking into account that the mining contractor finances the mining fleet of $60-million and historical expenditure was more than $100-million.

Kefi founder and executive chairperson Harry Anagnostaras-Adams says the successful funding of the high-grade and high-recovery Tulu Kapi project has taken many years of intense effort as the first-mover in the country – against a changing and often challenging geopolitical landscape.

He adds that Kefi’s strong African-experienced development and start-up team is now well embedded in Ethiopia, while specialist development contractors are mobilising.

The current development phase is focused on community resettlement and plant procurement, which will be followed by earthworks and installation of infrastructure. Openpit mining will start six months before commissioning of the processing plant.

“We are fortunate to have successfully launched this multibillion-dollar cash flow generator at Tulu Kapu, but also target a potentially equally valuable minority share in producing assets developed from Kefi’s discoveries in Saudi Arabia, which are now independently managed by the joint venture company GMCO.

“This is a great time for Kefi to have triggered its development phase, deliberately structured within such tight alliances with powerful strategic partners and financiers,” Anagnostaras-Adams concludes.

Once in production, Tulu Kapi is set to generate between $1.9-billion and $3.6-billion of net operating capital over seven years, or between $284-million and $526-million a year. This equates to an internal rate of return of between 112% and 200%.