The British gold exploration and development company engaged in gold mine development project in the Oromia Regional State, KEFI Minerals PLC, is holding talks with the Development Bank of Ethiopia (DBE) over loans to be used to finance the Tulu Kapi Gold Mine Development Project.
KEFI Minerals has asked DBE to provide a loan to the gold project which it is planning to develop at a cost of 140 million dollars. The company has presented its loan proposal to the bank. In a statement sent to The Reporter KEFI Minerals stated that DBE has completed the loan evaluation. KEFI did not reveal the amount of loan it requested.
DBE has confirmed to The Reporter that KEFI has submitted a loan application. President of the bank, Esayas Bahire, told The Reporter that the loan application is under appraisal.
KEFI said that the total cost of the project is estimated at 140 million dollars adding that it anticipates securing 85 million dollars loan. The company should get a clearance from the National Bank of Ethiopia (NBE) for the proposed debt gearing of 85 million dollars.
The company said it held encouraging dialogue with a number of lenders as possible participants in the syndicate alongside the DBE.
The Tulu Kapi gold mine is located in the Oromia Regional State in Western Wellega. The gold mine, which is under development at a cost of 140 million dollars, will have the capacity to produce 28,875kg of gold in the coming ten years.
After completing the feasibility study KEFI Minerals signed large scale mineral development agreement in April 2015 with the Ministry of Mines, Petroleum and Natural Gas. Under Ethiopia’s mining law the government of Ethiopia is entitled to a five percent free carried interest on Tulu Kapi mine.
The government has shown an interest in investing on the gold project. Up on the request made by KEFI Minerals the Ministry of Finance and Economic Cooperation (MoFEC) has agreed to invest 20 million dollars on the gold project.
Minister of Mines, Petroleum and Natural Gas, Tolosa Shagi told The Reporter that the government agreed to invest up to 20 million dollars on infrastructure near the Tulu Kapi gold mine and increase its stake on the gold mine project. Tolossa said the infrastructure development project may include road construction and electrification.
KEFI said it has raised 3.8 million pounds primarily for the scheduled development activities of the Tulu Kapi Gold Project, notably resettlement of the Tulu Kapi community and project finance syndication closure cost. The company said its Social Performance Team in collaboration with the Government at all levels, is preparing for the community resettlement, livelihood restoration and community development programs.
“Verification of the compensation claims is now being arranged to ensure regulatory compliance. Procurement, detailed engineering and contractual documentation are being conducted in parallel with the community resettlement schedule,” the company said.
So far MIDROC Gold is the sole company engaged in large scale gold production. Ezana Mining and KEFI Minerals have secured large scale mining licenses from the Ministry of Mines, Petroleum and Natural Gas and are in the process of setting up the gold mines in the Oromia and Tigrai regional states.