Kefi Minerals has entered into a mandate letter and heads of terms with Oryx Management for $135m of project funding for the Tulu Kapi gold project in Ethiopia.

The funding will be used to finance and operate all on-site infrastructure at the firm’s Ethiopian gold project.

The planned financing package is also comprised of funding finance charges during a 30-month construction and production ramp-up period.

As per the previously announced and executed shareholders agreement, the Ethiopian government will fund the construction of all off-site infrastructure for the project.

Under a mine services agreement, Ausdrill will supply and operate all the mining equipment for the project.

According to Kefi, the overall arrangement with Oryx is analogous to a build, own, operate and transfer (BOOT) arrangement.

Lycopodium Minerals will construct the processing plant under an engineering, procurement and construction contract.

It will also involve in the development of accommodation village, earthworks, water dams and tailing storage facility under an engineering, procurement, construction and management contract.

Following a grant of a mining licence in April 2015, The Tulu Kapi gold project in western Ethiopia is being advanced for development.

Kefi is currently progressing contractual terms for project construction and operation, following completion of its definitive feasibility study for Tulu Kapi project.

Kefi executive chairman Harry Anagnostaras-Adams said: “KEFI has selected a development funding approach considered more appropriate for start-up purposes than bank debt due to its longer 9-year tenor and its repayments commencing 30 months after drawdown.”

“This Project has been designed in close collaboration with the selected project contractors, Ausdrill for mining and Lycopodium for processing, and in partnership with the Ethiopian Government.”