KEFI (AIM: KEFI) restarts Tulu Kapi gold project after September suspension in Ethiopia

KEFI Gold and Copper plc (AIM: KEFI), a UK-listed gold and copper exploration and development company with interests in Ethiopia and Saudi Arabia, announced on 12 October 2026 that development activities were recommencing at its Tulu Kapi Gold Project in western Ethiopia. The decision follows the lifting of a suspension imposed on 7 September after a serious security incident on 4 September that resulted in multiple fatalities, including a company employee. Management said consultations with local communities, regional authorities, contractors and lenders had supported a phased restart focused initially on electricity infrastructure and access roads. The development restores activity at a major gold project, although the timetable for full construction, financing drawdowns and eventual production remains dependent on further operational progress.

The announcement is particularly consequential because Tulu Kapi had entered full development earlier in 2026 after KEFI assembled a substantial financing package. The company previously disclosed US$240 million in senior project debt, US$60 million in mining fleet financing and more than US$100 million in equity-risk capital. Those arrangements provide the financial framework for development, but the interruption and revised sequencing illustrate the importance of community relationships, security arrangements and contractor coordination to the project’s execution.

How will KEFI’s phased restart affect construction at the Tulu Kapi gold mine in Ethiopia?

KEFI said the recommencement would begin with electricity connections and remobilisation for new access roads. Community resettlement arrangements, including replacement housing and land, are expected to follow before initial construction activities advance within the mining licence area. Subsequent work is planned to include security infrastructure, bulk earthworks for the processing facilities and permanent workforce accommodation.

The sequencing reflects an effort to rebuild development momentum while incorporating the outcomes of consultations following the September incident. Infrastructure and resettlement activities are essential prerequisites for larger-scale mine construction, meaning the restart is meaningful even though it does not immediately restore the project to its previous full development schedule. Progress will need to be measured through completed works and contractor mobilisation rather than the announcement of recommencement alone.

The company also intends to place greater emphasis on local participation in construction and field activities. Management said it would prioritise qualified local contractors with relevant regional experience alongside international mining specialists. This approach could improve local economic participation and strengthen stakeholder engagement, although contractor capability, safety oversight and delivery standards will remain central to execution.

Tulu Kapi is expected to support substantial employment and wider economic activity once operational. KEFI has indicated that the project could directly employ approximately 1,000 people from the local community during production, while generating demand for infrastructure, supplies and supporting services. These are prospective benefits rather than outcomes already delivered, and their realisation depends on the mine reaching commercial operations.

What does the September security incident mean for Tulu Kapi’s development risks?

The suspension followed a serious incident that KEFI reported involved fatalities, including a company employee. Management subsequently undertook consultations with local community representatives and the Ethiopian and Oromia governments. The company said the discussions addressed community relationships, localisation and security arrangements before the decision was taken to resume development.

The restart confirms that KEFI considers a phased return appropriate following those consultations, but it should not be interpreted as eliminating future operational or security risks. Mining projects with significant infrastructure footprints require sustained coordination with communities, government agencies and contractors throughout construction. The effectiveness of revised arrangements will be demonstrated by the safe and continuous execution of field activities.

Community resettlement is another essential component of the development programme. Where mining activities require people to move from an operating area, replacement land, housing, livelihoods and associated infrastructure can affect both project schedules and long-term stakeholder relationships. KEFI’s decision to sequence resettlement before certain construction works places these requirements directly within the project’s development path.

Management has stated that its environmental and social arrangements are intended to meet relevant international and local standards. Such statements describe the company’s commitments rather than independent confirmation that every requirement has been fully implemented. Continuing evidence of consultation, compliance and practical delivery will therefore remain important as construction advances.

How does KEFI’s US$400 million development financing framework support the gold project?

KEFI’s previously disclosed Tulu Kapi development financing package comprises several distinct components. The US$240 million senior secured project debt facility involves Africa Finance Corporation and the Eastern and Southern African Trade and Development Bank. The project also has US$60 million of mining fleet financing through contractor BCM Group Limited and more than US$100 million in equity-risk capital from several sources.

The financing structure was assembled to support the project during its development phase, but the amounts should not be interpreted as cash already drawn in full. The equity-risk component includes preference-share arrangements, royalties, Ethiopian government participation and a March 2026 equity fundraising of approximately £35.6 million. The company also previously disclosed a US$20 million royalty transaction with Chancery Royalty, of which US$10 million had been drawn as reported in its September interim results.

The distinction between committed financing arrangements and actual drawdowns is especially relevant following the suspension. KEFI said lenders remained supportive and discussions were continuing regarding changes to development sequencing and associated funding drawdowns. Revised construction schedules can affect when capital is needed and how lenders assess completion milestones.

The company also signed a mining services agreement with BCM Group Limited in June 2026, with an indicated value exceeding US$400 million over the project’s initial nine-year mine life. That figure represents the value of a mining services arrangement over its stated term, not the amount of new financing available to KEFI. It also does not represent revenue attributable to KEFI shareholders.

The company’s position therefore depends on coordinating several financial and operating relationships. Senior lenders, fleet financing providers, contractors, royalty counterparties and project equity participants have different economic interests and contractual responsibilities. Maintaining alignment as the construction programme resumes will influence both liquidity management and the efficiency of project delivery.

What do Tulu Kapi’s gold economics mean for KEFI shareholders after the restart?

KEFI’s earlier economic scenarios indicated substantial potential operating earnings under selected gold-price assumptions. In its September interim disclosure, the company cited average annual EBITDA estimates of approximately US$355 million to US$697 million over the first three years of production at assumed gold prices ranging from US$3,000 to US$5,000 per ounce. These figures are company projections, not realised earnings, and depend on construction completion, mine performance, operating costs and the gold price.

The company also presented all-in sustaining cost assumptions ranging from US$1,114 to US$1,254 per ounce within those scenarios. Such projected economics can make the development financially attractive at higher gold prices, but they do not remove the potential effects of cost inflation, schedule changes, funding terms and production variability. A delayed project may also face additional financing costs before generating operating cash flow.

KEFI expects to retain an approximately 86% beneficial interest in Tulu Kapi through its Ethiopian project structure, with the Ethiopian government holding the balance. The ownership framework matters when assessing how future project cash generation might ultimately translate into economic value for KEFI shareholders. Project-level obligations, financing costs and any applicable royalty arrangements must be considered before interpreting projected EBITDA as distributable group earnings.

The company is also involved in Saudi Arabian exploration through Gold & Minerals Company Limited, in which its shareholding had diluted to approximately 13% during 2025. KEFI has prioritised capital allocation toward Tulu Kapi, making the Ethiopian project’s development and production pathway especially important to its near-term strategic direction. The Saudi Arabian interests provide additional portfolio exposure, but they do not replace the immediate need to deliver the Ethiopian development.

What milestones will show whether the Tulu Kapi restart is restoring project momentum?

The first meaningful indicators will be progress on electricity infrastructure, access roads and community resettlement, followed by the commencement of more substantial on-site construction. KEFI has not yet provided a complete revised schedule establishing the precise effect of the September suspension on each construction milestone. As a result, it would be premature to assume that the restart restores all previous completion expectations.

Updated financing drawdown arrangements will also be important. Evidence that lenders and contractors have agreed workable schedules, and that construction is proceeding against those schedules, would strengthen confidence in the project’s execution. Further delays, higher costs or renewed operational interruptions would have the opposite effect.

The 12 October announcement reopens an important development pathway for KEFI after a serious interruption. However, shareholder value remains linked to converting its financing framework and mineral assets into a safely constructed, commissioned and cash-generating gold operation. The next evidence should come from demonstrable construction progress, completed community arrangements and a clearer revised project timetable.

KEFI Gold and Copper Tulu Kapi restart in Ethiopia: Key takeaways for investors

• KEFI recommenced development at Tulu Kapi on 12 October 2026.
• Activities had been suspended following a serious September security incident.
• Electricity infrastructure and access roads are initial restart priorities.
• Community resettlement will precede certain mining-area construction activities.
• The project has a disclosed US$240 million senior debt financing arrangement.
• Additional financing includes mining fleet facilities and equity-risk capital.
• Lenders remain supportive, according to the company’s latest announcement.
• Projected mining economics remain conditional on successful development.
• Revised construction milestones and financing drawdowns are the next measurable tests.