KEFI Gold and Copper PLC (AIM:KEFI, OTC:KFFLF) earlier this week confirmed a significant step forward for its Tulu Kapi gold project in Ethiopia with the addition of BCM Group as a syndicate member and preferred mining contractor.
The company said BCM, originally from Western Australia and active in West Africa for three decades, would contribute 23.00 million dollars to pre-production costs.
It highlighted that the project’s development budget is now effectively covered, subject to final certification of resettlement and other minor costs.
The company also discussed its position regarding its Saudi Arabian assets. It said that, following the BCM agreement, there was no longer pressure to dispose of its interests there.
Executive chairman Harry Anagnostaras-Adams joined us to talk through the recent developments.
Proactive:
Harry, good to speak with you today. You've announced a new syndicate member for your Tulu Kapi project in Ethiopia. That's BCM Group. And they're also the preferred mining contractor. Tell us more about them.
Harry Anagnostaras-Adams:
Well, I suppose over the course of our journey in Ethiopia, because it's been some years, we've actually changed mining contractor a number of times over a ten-year period. There's ebb and flow in the industry, people's circumstances change, competitive tension changes for different reasons. To cut a long story short, when we felt that the banking was coming together quite reliably at the beginning of this year, we made it clear that we would start focusing on the finalization of costs and terms for all our deals. Particularly on the CapEx side of things, we worked to minimize any movement and optimize the equity. That was really our priority this year.
In doing so, we had the opportunity to consider an alternative proposition on the mining side. The predecessor was a very good organization and BCM is likewise. Specifically, BCM was originally a West Australian company that moved to West Africa about 30 years ago, helping trigger mining development there. Now they're very keen on Ethiopia and other jurisdictions. They're also keen to have an equity stake and to be like owners and partners, which suits us. We're happy all around, and I think we've ended up in a better position for the company.
Proactive:
So they're contributing $23 million of pre-production costs. And that means your project development budget is now covered, Harry?
Harry Anagnostaras-Adams:
Yes. It's basically done. We have to wait until Lycopodium and others finalize the resettlement committee and the community resettlement costings. There might be some minor movement, maybe even positive, but across all fronts on all costings, we're nearly there. I mentioned earlier that at the beginning of this year we felt we were there or thereabouts on the banking. Now, we're into the fine details and documentation, and I can say the same about the equity.
Proactive:
So the next steps then for the project, Harry?
Harry Anagnostaras-Adams:
The loose ends are now procedural. We know who the syndicate members are, what the debt component is, and the core of the equity mix. We just need to complete certification of costs, field preparations, and close the deals. In essence, we're done, but we have a couple of months of formalities to work through. If we were paying for everything ourselves, we could move at our own pace, but as the first banked project in the country, documentation is complex and detailed. However, we've moved from solving problems to executing plans.
Proactive:
Harry, you also said following BCM’s inclusion, you're no longer motivated to dispose of your interests in Saudi Arabia. Is this something you're still considering?
Harry Anagnostaras-Adams:
Yes, but without the pressure from Tulu Kapi influencing the decision. We're proud of what we've achieved in Saudi Arabia and have an excellent relationship with our partner. Although parting ways would be sad, our partner understands that we have built an organization there and made discoveries. However, we have serious responsibilities in Ethiopia, where we are the majority owner. Previously, Saudi Arabia would have ranked second for capital allocation, but that's no longer a pressure point. We can now focus on optimizing our position there. It's progressing rapidly with more ground secured and a major joint venture formed with Hankook. We refreshed management last year, and now have strong leadership. We're also in discussions with several third parties and will make a decision in the best interests of shareholders.
Proactive:
Harry, I hope you'll continue to keep us updated on any progress.