M a r k e t N e w s

Ethiopia: Gold Project Nears Take-Off Phase

Posted on : Thursday, 3rd November 2016

 Addis Ababa — The Ethiopia government has set up the Ethiopian Mines, Petroleum and Bio-Fuel Corporation, which will be the investing entity in the country's mineral, oil and gas industry.

 
KEFI Minerals plc, the gold exploration and development company with projects in the Kingdom of Saudi Arabia and the Federal Democratic Republic of Ethiopia, has already had talks with the government in respect of various aspects involved in formalising the agreements for the development of the Tulu Kapi Gold Project.
 
According to KEFI negotiations with the Development Bank of Ethiopia (DBE) are at an advanced stage and now await the appointment of the selected co-lender.
 
The DBE has previously confirmed its intention to provide US$40m of debt to the project. With respect to the finalisation of the resettlement plan and associated compensation, we note that this is a key timeline item for the project and that the company has indicated that it aims to commence resettlement in December 2016.
 
The government's recent policy directive requiring a maximum 50% debt gearing policy for new projects is considered consistent with KEFI's plans because clarifications received from the National Bank of Ethiopia (the regulator) indicate that historic spend on the project of approximately $60 million counts as equity in the calculation.
 
Concerning the resettlement of people in the proposed mining area, the Ethiopian government experts and the project's social licence advisers are ensuring that calculations and plans comply with Ethiopian law and International Finance Corporation (World Bank) principles. KEFI Minerals plc is playing a supporting role to the government's efforts and is committed to assist where it can.
 
With historical expenditures of $60m counting as equity and a further $20m in equity to be invested by the government, a maximum 50% debt-to-equity ratio would suggest that the DBE would be able to loan the project (together with co-lenders) up to $80m, plus an amount equivalent to any additional equity contribution by KEFI.
 
With respect to the finalisation of the resettlement plan and associated compensation, we note that this is a key timeline item for the project and that the company has indicated that it aims to commence resettlement in December 2016.

Source : allafrica.com
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