KEFI Minerals plc (LON:KEFI) is now targeting the start of construction at its Tulu Kapi gold mine in Ethiopia for next year with final commissioning at the end of 2019.
A US$135mln debt finance package with infrastructure firm Oryx was agreed in July, which left KEFI to find the final US$24mln through equity funding.
READ: KEFI Minerals targeting higher returns through Tulu Kapi production expansion
Today, KEFI said that after talks with investors the placing of the bonds is now expected to commence during the first quarter of 2018, with drawdown expected soon thereafter conditional on equity capital subscription.
“The residual equity requirement will then be triggered and may comprise, in order of preference, equity issues at one or more of the intermediate, project, or parent company levels.” said the statement.
KEFI added that since July it had achieved a number of major milestones including the lodging of documents for approval with the Ethiopian government.
The Ethiopian finance ministry, meanwhile, has formalised budget approval for the country’s construction and investment roles at Tulu Kapi.
READ: KEFI Minerals raises output projections for the Tulu Kapi gold project
The mine is expected to produce on average 145,000 ounces per year with a three year payback at a gold price of US$1,250 per ounce.
In late afternoon trading, KEFI shares were 21%, or 0.88p lower at 3.25p reflecting the bond issue plans.
In a note to clients, analysts at Beaufort Securities said: “Bond issues such as Tulu Kapi's are unusual in the junior mining space, however we understand there is significant demand from Africa focused funds who are lacking product. Ethiopia is also a sought after investment destination due to (amongst other advantages) its strong growth rate."
Beaufort reiterated a ‘speculative buy’ recommendation on KEFI Minerals.
-- Adds share price, analyst comment --