Aug 7 , 2021

A London listed company prospecting for gold in Tulu Kepi, Oromia Regional State, has been saved from financial woes after securing additional financing from Africa-based financial institutions and support from the federal government in the form of infrastructure provision.

The Trade & Development Bank (TDB) has committed 70 million dollars in loans, while a similar financial pledge has been made by the Africa Finance Corporation (AFC), according to Harry Adams, executive chairman of Kefi Gold.

The Tullu Kaapi Gold Mine Share Company, a subsidiary of the UK Kefi, raised 300 million dollars from the Ethiopian government, banks, and investors for its bid to explore gold in the region, a relief for its management, which has been working under a tight liquidity crunch with 60 million dollars invested thus far. Along with its operations in Saudi Arabia through its investment wing, ARTAR, Kefi registered 56.6 million dollars in losses last year, according to the company's consolidated financial report.

For nearly five years, prospective investors have been reluctant due to security concerns in the area.

Dissatisfied by its progress, the Ministry of Mines & Petroleum warned the company over the delay of the gold exploration project, a series of setbacks Kefi's management attributed to security concerns and the consecutive declarations of a state of emergency in the country since 2016. Two years ago, Tullu Kaapi faced an attack by an unidentified armed group that raided the camp, forcing it to halt operations until security issues were cleared.

The main cause of delay for mining projects like Kefi is a lack of coordination between the federal and regional authorities, Begosew Abate (PhD), a mining expert with three decades of experience in the sector, serving various companies as a consultant, said.

Directions given by the federal authorities are often not translated in the regions, according to Begosew.

Though the financial institutions were hesitant to disburse the funding following a series of conflicts in the country, the management of Tullu Kaapi hopes to see the loans released soon.

"They've approved it, and the paperwork is underway," said Adams, admitting that multinational lenders were first frightened to disburse the funding because of security concerns.

Out of the additional financing the mining company has secured, 140 million dollars has been raised from local and foreign investors, according to Adams, though he declined to disclose the identities of the investors. Through agreements with the National Bank of Ethiopia (NBE), Kefi has been permitted to open an international correspondent trust account in London used to service its commitments and make payments to banks, investors and contractors.

The government has pledged 20 million dollars in the form of infrastructural investment, including road construction and electric supply – not in hard currency, according to officials at the Ministry of Mines & Petroleum. The federal government has a 17pc stake in the company, half of which is owned by the Oromia Regional State.

The exploration in Tulu Kepi, Wollega Zone, 360Km from Addis Abeba, began over a decade ago after Kefi acquired an Australian firm, Nyota Minerals Limited, for 5.2 million pounds sterling (7.2 million dollars at current exchange rates). When Kefi took over, 70 million dollars had already been spent on the venture. The exploration area, which covers over 2,000ht, is estimated to hold deposits of close to 50,000Kg of gold. Extraction is expected to begin in less than two years, increasing hope it would significantly improve Ethiopia's exports of gold.

Gold generated 600 million dollars in export last year, a staggering jump from 29 million dollars in 2019.

With over 5,000 shareholders, the company has 15-year concession rights and is expected to complete the construction of its production facility in two years, requiring the resettlement of 350 households, the Chairman disclosed.

PUBLISHED ON Aug 07,2021 [ VOL 22 , NO 1110]

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