----ADDS BROKER COMMENT AND SHARE PRICE---
The country’s minister for mines, Tolassa Shagi Moti, and KEFI chairman Harry Anagnostaras-Adams will put pen to paper in Addis Ababa at 2pm London time.
The licence allows the AIM-listed group to operate for the next 20 years, but also fires the starting pistol on the financing and construction phase.
The mine, which will produce 86,000 ounces of gold in its first year, is scheduled to be up and running by the end of 2016 at a cost of around US$120mln, US$100mln of which will be project debt.
The balance will be found from “a number of possible sources”, including financing from contractors and equity at the project or parent company level.
Tulu Kapi is a 1.7mln-ounce deposit at 2.65 gram per tonne with a 1mln-ounce reserve at 2.4 grams.
There is also a small, high grade underground resource and, as City broker Numis points out, it has “untapped exploration potential”.
All-in sustaining costs are at the lower end of the curve at less than US$800 an ounce thanks to cheap access to power.
“Tulu Kapi is arguably the highest profile mining venture in Ethiopia at present and KEFI has broken new ground which sets a precedent and prepares the way for broader mining investment into the under-explored country,” said Numis in a note to clients.
“KEFI will now apply for other ancillary licences, including power and transport authorisations.
“With the mining agreement under its belt, we expect KEFI will now be proceeding full steam ahead to update the DFS [definitive feasibility study] due in mid-2015 and put a financing package together.”
At 11.30 am the shares were changing hands for 1.15p for a rise of 6.98%. The company is valued at £18.2mln.
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