The major participant in the latest fundraising from KEFI Minerals plc (LON:KEFI) is Lanstead Capital, which is coming in for £4.6 mln. Directors, employees, and the contractor Lycopodium will put in a combined additional £400,000, while broker Brandon Hill has raised £600,000 more.
The grand total thus stands at just over £5.6 mln, although not all of that will be delivered immediately.
Instead, as is often characteristic of funding packages that involve Lanstead, much of the new money will be delivered in staged payments.
“It is,” says KEFI chairman Harry Anagnostaras-Adams, “worked out using a very specific formula that rewards performance month by month. In this deal Lanstead is neither a lender that can call in its loan, and nor can it get any more shares.”
Instead, each month, Lanstead has to come in for a fixed amount of shares, under the following conditions.
If the shares have risen above a benchmarked 0.44p share price then Lanstead will have to pay that premium to secure its shares. Equally, if the shares have dropped, then Lanstead will effectively be coming in at a discount.
“The exact term is 18 months,” explains Anagnostaras-Adams.
“It’s an exact amount of money every month, adjusted up or down if the share price is up or down. But when you’re pregnant with a lot of milestones like we are, it suits us.”
The newsflow he’s talking about is the financing package for the development of KEFI’s Tulu Kapi gold project in Ethiopia.
“We now have two cornerstone investors in Odey and Lanstead, who’ve been side by side before in other things,” says Anagnostaras-Adams.
“And we have two contractors who’ve committed to putting in equity.”
All told that’s a greater part of the equity component already in place.
The debt funding has been some time coming, but the Ethiopian government has been making positive noises and talks with likely syndicate members remain ongoing, particularly in regard to project-level funding.
The recent strengthening of the gold price provides a slightly more benign context too, as does the improving political situation in Ethiopia.
One way or another it looks like 2017 will be a crucial year for KEFI.