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Highlights:
- Increased Loan Facility: KEFI secures preliminary approval to raise the Tulu Kapi project loan from $190 million to $240 million.
- Major Project Development Financing: Overall project finance package stands at $320 million, covering the necessary funding for Ethiopia's Tulu Kapi.
- High Value Potential: Project NPV for KEFI shareholders estimated at up to 10.5 pence per share, with significant growth expected upon production.
KEFI Gold and Copper PLC (LSE:KEFI) announced that it has secured initial committee approval from a second co-lending bank to fund its Tulu Kapi gold project in Ethiopia, a key step in advancing one of its flagship projects in East Africa. The project loan facility, originally set at $190 million, has now received approval to increase to $240 million, underscoring confidence from financing partners in the project’s potential. KEFI noted that it expects to complete the necessary final approvals and documentation for both co-lenders within the current quarter, solidifying the $240 million loan package.
The Tulu Kapi project has continued to gain momentum with KEFI’s diligent planning, bringing the total development finance package for the project to $320 million. With this financing now adequately arranged at the subsidiary level, KEFI’s beneficial interest in Tulu Kapi is expected to be approximately 80%.
Executive Chairman Harry Adams highlighted the significance of the expanded project financing. "Today's announcement that our project finance banks are looking to increase the Tulu Kapi project debt offering from $190 million to $240 million is testament to KEFI's focus, diligence, and tenacity," Adams stated.
The project's economics further strengthen the outlook, with KEFI estimating that Tulu Kapi’s high-grade gold resource and robust recovery rates could allow for the full repayment of project debt through net cash flows within the first year of production, assuming a gold price of $2,600/oz. In the longer term, Adams noted that at gold prices between $2,100/oz and $2,600/oz, the net present value (NPV) per KEFI share is estimated to range from 6.9 to 10.5 pence—equivalent to a valuation multiple of 12-17 times the company’s current share price, exclusive of KEFI’s other exploration assets.
KEFI’s strategic focus on the Tulu Kapi project and the successful progression of its financing plans indicate strong growth potential for the company. As it moves closer to production, KEFI’s advancements at Tulu Kapi mark a significant milestone in its mission to unlock value in one of East Africa's most promising gold resources.
