KEFI Minerals plc (LON:KEFI) is raising £5.62mln to fund its significant work programme this year.
This includes more exploration on its asset in Saudi Arabia and, most importantly, the finalisation of the financing of Tulu Kapi, its gold development in Ethiopia.
The bulk of the new money will be provided via a sharing agreement with Lanstead Capital. Brandon Hill Capital has raised £600,000 and the directors and employees are putting in £400,000.
The shares, which are expected to be consolidated, are being issued at a modest discount to the current price.
“We have continued to advance the Tulu Kapi gold project in Ethiopia and are now at a pivotal stage of the company's development,” said chairman Harry Anagnostaras-Adams.
“The proceeds of the fundraising will underpin the activities for the whole of 2017 as we look to start development of this quality project during the year.”
The AIM-listed mine developer has previously said the US$120mln needed to get the operation up and running will be financed at the project level.
KEFI can do this because the Ethiopian government has said it will fund up to US$20mln-worth of infrastructure in return for an increased share in the project. It currently has a 5% free carried interest.
The company said Tulu Kapi will now be financed using debt, gold streaming and equity. A deal is inching closer.
Once up and running, output will be 100,000-ounce a year at an all-sustaining costs of US$780 an ounce.
This would make the operation one of the most economic gold mines in the world. It is host to just over 1mln ounces of the gold.