LONDON (ShareCast) - (Sharecast News) - Gold exploration and development company KEFI Minerals has now signed the detailed heads of agreement (HoA) with Ethiopian investors, it announced on Friday, as it originally outlined on 11 June.
The AIM-traded firm said the Ethiopian investors intended to make their investment of between $30m and $35m in the local currency equivalent via Arabian Nubian Shield Resources (ANS Resources), a company which was in the process of incorporation.

ANS Resources' injection of the first instalment of $9m remained subject to completion of remaining due diligence and execution of the binding share subscription agreement, which were expected this quarter.

KEFI said the injection of the balance from ANS Resources was subject to full project finance closing proceeding, fully approved by the Ethiopian Government.

ANS Resources was being established as an investment vehicle to enable subscriptions by a number of identified Ethiopian financial institutions and family offices.

It was the intention that no single syndicate member would hold more than 10% of ANS Resources, or have any involvement in the gold mining business.

Given demand, recent refinements to the proposed transaction since KEFI's announcement on 11 June included the right for ANS Resources to subscribe in local currency alongside the Government of Ethiopia for up to $35m, rather than the original $30m, in new shares of Tulu Kapi Gold Mines Share Company.

KEFI said the final investment sum of ANS could not exceed that which preserved KEFI as majority shareholder of TKGM.

The requisite government consents were that the historical equity capital investments in TKGM by KEFI's subsidiary KEFI Minerals Ethiopia be registered so that final equity percentage ownership could be confirmed; that the planned subscription by ANS Resources be permitted by the government waiving its pre-emptive rights on any share issue by TKGM; and that ANS Resources be provided the right to appoint two non-executive directors to TKGM's board of directors.

The initial subscription of $9m would be set aside into a locked account, with settlement beginning 31 August and completed no later than 30 September, along with commitment to the full amount being invested by year-end alongside full project-finance commitments.

KEFI said the ANS Resources founders' $3m subscription had already been committed.

Disbursement of the initial subscription funds was earmarked to begin any time from October, to fund TKGM's project finance closing costs and the first phase of the Tulu Kapi community resettlement, when triggered by the Regional Government of Oromia in consultation with TKGM.

TKGM planned to use those equity funds for the initial project expenditures, with debt drawdown to follow.

"Project equity investor ANS Resources is being carefully structured to provide diversified local equity participation in Ethiopia's first modern mine development for its exciting new gold sector," said managing director Harry Anagnostaras-Adams.

"This approach also ensures clear Tulu Kapi Gold Project control by KEFI, as required by the planned non-equity financiers.

"ANS Resources represents a diversified group of financial investors assembled specifically for this transaction and its involvement will be a further significant milestone in unlocking the gold potential of the Tulu Kapi orebody and district."

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