KEFI Minerals and the Government of Ethiopia have formalized the structure for the company that will develop the Tulu Kapi gold mine in the country.

KEFI will own 75% of Tulu Kapi Gold Mines Share Company Limited (TKM) while the Ethiopian government will own the remainder 25%. This includes the government’s $20m investment for a 20% stake along with an additional 5% free carry.

According to the terms of the agreement, the exploration projects outside the Tulu Kapi Mining Lease area will not be a part of TKM. Such exploration projects will continue to be 100% owned by KEFI.

The composition of the board of directors of TKM along with its corporate governance mechanisms will be based on the respective ownership levels held by KEFI and the government.

TKM is expected to start development activities at the Tulu Kapi project from the second half of the year. It will be after financing and community resettlement are reached for the gold mine development.

As per KEFI, the estimated annual gold production at the Tuku Kapi gold mine for a 10-year period is 100,000oz. The ore reserve has been estimated at 15.4Mt at 2.12g/t gold, containing 1.05Moz according to KEFI.

Development of the Tuku Kapi gold mine project is expected to bring in 500 jobs. The gold mine has been estimated to generate over $1bn from just initial open pit operations alone.