Kefi Minerals PLC (LON:KEFI) has upgraded the value of its Tulu Kapi project in Ethiopia.
The junior, though, has ended its relationship with infrastructure group Oryx, which had previously agreed to provide US$135mln of project finance to build and operate the gold mine.
WATCH: KEFI Minerals targeting higher returns through Tulu Kapi production expansion
Kefi said the structure for the development of Tulu Kapi would remain the same even with Oryx’s exit with the other existing consortium members still in place.
At a gold price of US$1,300 per ounce, Tulu Kapi’s net present value has risen to US$109mln pre-construction from US$92mln and to US$175mln (US$151mln) post-construction.
READ: KEFI Minerals expects to start work at Tulu Kapi next year
"The final Tulu Kapi project models were agreed within the consortium and uploaded into the formal financing data rooms,” said Harry Anagnostaras-Adams, executive chairman.
“They show some improvements for shareholders, as compared with recent company guidance," he added.
“During the next two years Tulu Kapi is to be built as a 140,000 oz pa gold producer and, at the current gold price of $1,300/oz combined with any of the contemplated financing scenarios, KEFI shareholders' beneficial interest in the net free cash flow per annum (after debt service and tax) exceeds the company's current market capitalisation.”
“A project-level transaction on the same terms as with the Government would imply a project valuation of c.US$100 million (100%) and, under that financing scenario, KEFI shareholders would expect to retain a beneficial ownership interest in the order of 55% in the project.”
Building work is scheduled to start in the second quarter of 2018 once community resettlement is complete and financing signed off.
In Saudi Arabia where it has a joint venture with G&M, Kefi said it is waiting for final clarification of the country's new minerals policy, which is designed to make mining into a new economic pillar for the kingdom.
Shares rose 10% to 3.55p.