KEFI Gold and Copper PLC (AIM:KEFI, OTC:KFFLF) executive chairman Harry Anagnostaras-Adams talked with Proactive about the latest financing progress for the Tulu Kapi Gold Project in Ethiopia.
The company has secured commitments from senior lenders, covering two-thirds of the development capital, and is now focused on aligning equity financing to finalise the deal.
Anagnostaras-Adams discussed KEFI’s efforts to "Ethiopianise" the project, involving local institutional investors through EthioBonds—a gold-linked investment designed to hedge against currency devaluation.
He confirmed that $30 million in expressions of interest have been received, with preparations underway for a listing on Ethiopia’s new stock exchange.
With gold prices nearing $3,000 per ounce, Anagnostaras-Adams highlighted the strong project economics, noting that Tulu Kapi’s first-year production of 160,000oz could generate over $400 million in revenue. He emphasized that free cash flow from early production could potentially repay KEFI’s debt.
Proactive: Joining me is KEFI Gold and Copper chairman Harry Anagnostaras-Adams. Harry, very good to speak with you. You are out with an update on financing for your Tulu Kapi project, and it looks like you're making very good progress.
Harry Anagnostaras-Adams: Yes, I know it appears to be a long, drawn-out process to everybody—well, it is a long process—but it feels pretty good. The key is having senior lenders putting up two-thirds of the capital for development and being comfortable to proceed, and we've achieved that. They made it clear in both their public and private statements at the African convention last week in Cape Town.
So, our focus has now turned to scrambling on the ground and working on the equity side to align everything for simultaneous closing. It has taken a lot of preparatory work to clear the pathway for this to happen, especially in a country that has faced unexpected challenges and is doing this for the first time in any industry. There have been a lot of regulatory changes, but that’s behind us now. Yes, we're very happy with how it’s going.
Proactive: Harry, you also mentioned the expressions of interest in the EthioBonds. Tell us about them and how they will form part of the project financing.
Harry Anagnostaras-Adams: From the outset, KEFI has emphasized its desire to ‘Ethiopianise’ ownership, financing, and management as much as possible. That started when we invited the government to become a shareholder, and now we are inviting Ethiopian institutional investors—mainly insurance companies and high-net-worth offices—to invest in gold-linked investments using local currency, the Ethiopian Birr.
This is a unique opportunity for them to hedge against currency devaluation. We've received expressions of interest for $30 million from local investors. Now, we are preparing to list these bonds on Ethiopia’s newly created stock exchange. This will be a private placement targeted at sophisticated investors, so it does not require a retail prospectus.
We’ve been working with advisors since last June to prepare the institutions for this type of investment. We also had advisors from London assisting the regulatory authorities in preparing for the new Ethiopian stock exchange.
Proactive: You mentioned that the EthioBonds are linked to the gold price, which must look attractive with gold hovering around $2,900 per ounce. That also benefits the Tulu Kapi project, correct?
Harry Anagnostaras-Adams: Yes. For local investors, the main appeal is the hedge against the Birr rather than the gold price itself. The key benefit is the US dollar link, but there is also upside if gold prices increase further. Ethiopian citizens and companies are typically not allowed to invest outside the country, so this offers them a secure, local investment that protects against devaluation, with a potential gold-linked kicker if prices rise.
For KEFI, the gold price is hugely important. Our first-year production is projected at 160,000oz. At around $3,000 per ounce, we are looking at $400 million in revenue. The free cash flow could theoretically repay all company debts at that stage. The timing couldn’t be better for us—let’s hope the gold price holds!
Proactive: Harry, I hope you’ll keep us posted on any additional progress at Tulu Kapi. Thank you very much for speaking with us today.