Kefi Minerals (LON:KEFI) has confirmed the Ethiopian government is to take a 20-25% stake its Tulu Kapi gold project in return for an investment of between US$15-20mln.
This is in addition to the government’s existing 5% carried interest, the company said.
The government cash will be used to fund the roads, power and other infrastructure for the project, which is scheduled to get underway by the end of the year.
Kefi added the investment implies a project value of approximately US$75mln and reflects the aggregate of equity capital invested into KME, the on-the ground subsidiary.
Harry Anagnostaras-Adams, executive chairman, said the investment demonstrated the Ethiopians' confidence and commitment to the project.
Meanwhile, tweaks from its preferred contractor have further reduced the estimated costs at Tulu Kapi.
At average gold production of between 95,000 -115,000 ounces annually for the first eight years, all-in-sustaining cost are forecast between US$731 -752 per ounce.
That would all see debts repaid by the end of the third or second year of production respectively.
The next step is the financing process is to finalise the loan syndicate and to move into full syndicate documentation for approval. The proposed loan facilities will be four to eight years and based on a gold price below the current spot price.