KEFI Minerals PLC (LON:KEFI) is raising £1.75mln through a placing of shares at 0.35p each to some big names in mining finance.
The raise comes ahead of a full project finance package for the company’s Tulu Kapi gold project in Ethiopia, which is currently in the works and expected to be finalised within the next few months.
In the meantime, the new money comes from existing backers Odey Asset Management, a well-known mining fund, and Ausdrill (ASX:ASL), one of Australia’s biggest mining services companies.
Ausdrill has already been lined up by KEFI as the preferred contractor at Tulu Kapi and has a clear interest in making sure KEFI is fully supported up to the time of the full raise.
It’s estimated the project will require around US$120mln, with around US$60mln coming from preferred senior lenders and the rest coming from a mixture of streaming and an equity contribution from the Ethiopian government.
The environment for the funding has become more favourable over the past few months as the gold price has strengthened considerably and sentiment has taken a turn for the better.
Assuming a US$1,250 gold price, Tulu Kapi has a net present value of US$155 mln post tax and at a discount rate of eight per cent. According to company calculations, every US$100 increase in the gold price adds US$45 million in value to the project.
Chairman Harry Anagnostaras-Adams struck an upbeat note following news of the latest raise.
“The board remains very positive on the outlook for the company as we advance towards becoming an operating company by the end of 2017,” he said.