KEFI Gold and Copper (AIM: KEFI) has signed a mining services contract worth more than US$400 million with BCM Group for the Tulu Kapi gold project in Ethiopia, covering operations across the first nine years of the mine's life. It is the project's largest operational contract and a further step towards production.
BCM will provide the mining fleet, train and manage local staff, and carry out operations under KEFI's Ethiopian subsidiary, Tulu Kapi Gold Mines (TKGM). It is already on site with bulk earthworks and drilling and can now order the Caterpillar fleet for full-scale work. The contract was signed in London, at the first Ethio-British Investment Forum.
Tulu Kapi is among Africa's largest undeveloped gold deposits moving towards production, with reserves of 1.05 million ounces, total resources of 1.72 million ounces, and annual output targeted at around 175,000 ounces in the early-to-mid mine life.
The Cyprus connection
KEFI's announcements to the London Stock Exchange show that Cyprus-based Mithril Royalties secured a US$10 million gold royalty at the TKGM level, a right to a share of Tulu Kapi's future production, on the same terms as the US$20 million royalty held by Chancery Royalty, for half the amount of gold. The royalty ranks at the same risk level as equity and is paid from distributable cash, alongside distributions made by TKGM, without adding default risk for lenders or shareholders.
For Mithril, this means direct exposure to the project's revenues. Every step that takes risk out of Tulu Kapi strengthens the value of the position it already holds.
“With the royalty model, you gain exposure to good assets at exactly the point where their risk falls and they move towards production. The progress at Tulu Kapi confirms that, and shows that Europe, with Cyprus at the front, can support a serious precious-metals financing platform,” said John Costaschuk, founder and CEO of Mithril Royalties.
About Mithril Royalties
Mithril Royalties Limited is a Cyprus-based precious-metals royalty and streaming company, presented as the first of its kind in Europe. Unlike mining companies, royalty and streaming firms do not explore for, build or operate mines. They provide capital to producers in exchange for a share of future production or revenue, giving investors exposure to precious metals with lower operational complexity.
