KEFI Gold & Copper (KEFI ) has held detailed consultations with community representatives, leaders at all levels of the Ethiopian and Oromia governments and their relevant agencies, along with other stakeholders in Ethiopia, following the security incident involving the development of its Tulu Kapi gold mine earlier this week.
The company said that the discussions involved the unanimous reiteration of the strategic importance of the project at all levels of Ethiopian society and all parties' full support for both the project and what KEFI called its “careful and considered approach” to determining the appropriate conditions for the safe and orderly resumption of development activities.
All employees who were affected by the incident have been accounted for and there have been no further fatalities or injuries sustained. The colleague who lost his life in the incident has now been laid to rest.
The company remains in close communication with its principal contractors, lenders and the local investors, who remain supportive.
Lycopodium, the lead design and construction contractor for the process plant and all on-site infrastructure, has its project oversight team in Ethiopia working closely with the wider project team and strong local contractors as the situation is assessed, with plans being reviewed and refined as appropriate.
As part of the project's established financing strategy, KEFI has this week received renewed and increased indications of interest from Ethiopian institutions and high net worth family offices for Ethiopian redeemable preference shares at the subsidiary level.
This continued strong local financial support would be non-dilutive to KEFI shareholders and would provide further financial flexibility and additional mitigation of funding risk, should it be required.
Even so, the company will not resume development activities until it has completed a full investigation, and appropriate measures have been established to provide a safe and secure operating environment for its personnel and the surrounding communities.
"Our hearts go out to our deceased employee's family and the families of the other people killed in the invasion and destruction of our security force's bush camp and the company's old exploration camp,” said Harry Anagnostaras-Adams, executive chairman of KEFI Gold and Copper.
"The company as a whole is also now hugely relieved that all our other employees have now been accounted for. I and a number of colleagues travelled to Ethiopia immediately upon hearing of the incident to be on the ground with our local team and to engage directly with the government, community representatives and our other stakeholders to work carefully and sensitively through the issues. The government has committed to do whatever it can to overcome this serious setback. The company will further strengthen and expedite the momentum towards the Ethiopianisation of the project at all levels: community participation, alliancing between the foreign industry-specialist contractors and strong locals, including contractors entering the industry and through local participation in the funding syndicate."
View from Vox
This incident was a serious setback for KEFI, and caused its shares to lose around 50% of their value. That could look like a good entry point to some investors, given that the economics of Tulu Kapi continue to look compelling, and the government of the country remains very supportive. However, there is still considerable uncertainty around timing of any re-start, and although the financial situation of the company seems secure, there will undoubtedly be a lot of caution in the market for some time to come.