ETHIOPIA – Akobo Minerals, a Scandinavian gold exploration and boutique mining company, has secured a convertible loan of NKr49.18-million (US$5 million), to fund the first phase of the Segele mining operation in Ethiopia.
The remaining US$7 million for the final phase of the project is contemplated to be financed from additional debt and or equity.
Akobo says it is currently progressing its assessment of several financing alternatives.
“This convertible loan provides us with sufficient flexibility to explore the optimal financial structure for the overall project, benefitting the company and all of our shareholders,” said CEO Jørgen Evjen
“Supported by our major shareholders, in addition to a few new faces, I feel comfortable that we will reach a very good solution to see this project through to cash flow generation. In parallel to the financing, we continue to deliver on plan with work at site on schedule.
“The processing plant design and supply phases are well underway, and we expect major parts to arrive in Ethiopia within a short period. Contract mining negotiations are very advanced, and we expect to break ground in October.”
The contribution of said amount, primarily from major shareholders, is structured as a short-term loan, maturing 12 months after the date of disbursement, which will be converted into shares in Akobo subject to certain conditions being met
In May this year, Akobo Minerals reached an agreement with Solo Resources for the delivery of a processing plant to produce gold at the Segele Mine by 2023.
Akobo Minerals the gold exploration company, with ongoing exploration and mine development in the Gambela region and Dima Woreda, Ethiopia has established itself as one of the leading gold exploration companies through more than 12 years of on-the-ground activity.
With a processing capacity of 10 tons of mass per hour, the plant will be tailored to process the highly gold-rich Segele Mine ore with an Inferred and Indicated Mineral Resource Estimate of 69 kOz gold at 22.7 grams per tonne.
The current dimensions will be able to process 4,000 ounces of gold per month with an all-in production cost of US$243 per ounce which may lead the company to generate a significant cash flow.
The concluded agreement is said to be a fixed-price contract that will provide protection against continued uncertainty in the world economy. Akobo admits that entering a fixed-price contract has in itself led to some cost increase in relation to the Scoping study.
In addition, there are also other moderate cost increases due to higher prices for steel, fuel, and other raw materials. Nevertheless, the company says it does not expect that the total investments associated with the start-up of the mining activities will be significantly higher than estimated in the scoping study.