Legend says that Ethiopia was the source of a large part of Ancient Egypt’s golden riches, with significant precious metal riches associated with the historic Asosa Zone.
Considered by some to be the location of one of the world’s oldest gold mines, Asosa has been providing riches for the region for some 6,000 years.
Ethiopia’s legend has lured miners for thousands of years as they combed the African nation’s countryside in search of the fabled golden riches.
The Ethiopian Mining Ministry says that despite a long mining history, dating back millennia, commercial and large-scale mining is still in its early stages and the mining industry is a sector with significant potential for the economy.
The Ministry says Ethiopia’s virtually untapped, diverse and vast mineral resources offer huge potential opportunities for exploration and development. These include gold, tantalum, potash, gemstones, iron ore and various industrial, energy and construction minerals, and many more.
This potential coupled with improving government policies and regulations means Ethiopia is fast becoming a destination of choice for international mining investors and developers.
Now, after a period in the doldrums when the county was affected by civil war and famine, Ethiopia is now achieving a golden resurgence with the influx of some new discoveries and some new players.
Recent reports found that gold production has increased by 12% this year, with the nation producing 6,947kg of gold during the first nine months of 2021/2022 fiscal year.
The United Nations Economic Commission For Africa (UNECA) believes that Ethiopia’s mining sector has potential to stimulate economic growth and poverty reduction.
UNECA says with considerable gold reserves, and a rapidly-developing governance structure in place, Ethiopia could be one of the most attractive investment destinations for the global mining industry, especially for foreign firms looking for a stake in the gold sector. According to the Extractive Industries Transparency Initiative (EITI), Ethiopia boasts around 200 tons of gold, and with a further 360M tons of coal and 69M tons of iron, there is every reason to be optimistic about the country’s mineral future.
KEFI’s big plans
A major player in the resurgence of interest in Ethiopia is London-listed KEFI Gold and Copper (AIM: KEFI) which is fast-tracking the development of the Tulu Kapi Gold Mine.
KEFI says no other mining project of this scale in Ethiopia has been brought to Tulu Kapi’s stage of advancement during recent years and Tulu Kapi will be the first industrial scale mine development in Ethiopia in over 30 years.
“It has taken years of extensive technical redesign of the project, years of overhaul by the Ethiopian authorities of financial policies which previously hindered mining project finance, and the patient and cautious traversing by the company of recent well-publicized events within the country,” executive chairman, Harry Anagnostaras-Adams, said.
“The project has imposed many demands on a regulatory system which the Ethiopian government continues to upgrade, determined to build a modern minerals sector. KEFI is honoured to play its part in this process and has assembled a first-tier syndicate of international industry expert management, contractors, banks and investors.
“The Tulu Kapi Gold Project has been designed to the highest international regulatory standards and has had historical investment of approximately US$80M. The project has assembled a first-class management team backed by a first-tier syndicate of African experienced specialist organizations and funders,” Mr Anagnostaras-Adams said.
“We are taking all measures to drive the project safely forward, respect the national priority to develop Ethiopia’s mining sector and place the highest importance on social licence in the very supportive Tulu Kapi community. We are pleased that the minister of mines and other Ethiopian government officials have expressed their continued support.
“The deposit was discovered some 15 years ago, and KEFI itself was invited in some eight years ago to remedy the project’s technical defects, which took about two years. We then collaboratively reviewed, with government agencies, the financial regulations prevailing in Ethiopia that hindered modern mining project finance and assembled a first-class international syndicate which all signed terms sheets in 2019.
“Since then, the syndicate has completed technical and legal due diligence whilst the company ensured the project could proceed on the ground, traversing previously reported challenges. The decision to trigger financing and project launch procedures was confirmed within the syndicate last month, some three months after the Ethiopian government lifted its national state of emergency.
We very much appreciate the collaboration and mutual trust with our federal and regional government co-shareholders in the operating subsidiary TKGM and the multitude of government agencies with whom we deal daily.”
KEFI recently provided an update on activities it has undertaken as its focuses on full project launch in the Ethiopian dry season starting in October 2022.
The recent milestones include the signing of project financing Umbrella Agreement in Q2 2022 with the associated documentation assembled with the project’s lead lenders and equity investors.
Working in collaboration with the regulatory agencies at all four levels of the Ethiopian government, KEFI said notable progress during Q2-2022 included:
- Initial community youth employment programmes being established which support the project, such as those covering road maintenance and expansion of revegetation nurseries
- The ministry of mines has now audited and endorsed the historical project costs incurred up to 2020 of c.US$80M and can now report this to the Ethiopian central bank
- The central bank has now permitted that both development banks be allowed to lend on the same terms and formal ratification is awaited from the government., pre-conditioned on the security situation being independently assessed as completely ready and the few remaining regulatory administrative tasks being completed
Tulu Kapi is located in the Oromia region of Western Ethiopia, approximately 360km due west of Ethiopia’s capital, Addis Ababa.
The planned Tulu Kapi open pit gold mine and processing facility is typical of many such “open-pit-CIL-gold-projects” around the world and uses standard technology and the latest industry practices.
KEFI has partnered with the Ethiopian government for its jointly owned Ethiopian project company, Tulu Kapi Gold Mines Share Company (TKGM).
Tulu Kapi’s Ore Reserve estimate totals 15.4M tonnes at 2.12 g/t gold, containing 1.05M ounces (all in the Probable category).
