Development resumes in phases

KEFI Gold and Copper (LSE:KEFI) announced on 12 October 2026 that development work was recommencing at its Tulu Kapi gold project in western Ethiopia, more than a month after activity was suspended. Work stopped on 7 September 2026 following a serious security incident at the project on 4 September. In its interim results published on 29 September, the company said the incident involved multiple fatalities, including a company employee.

The restart is sequenced. The first phase covers electricity connection infrastructure and new access roads, where construction is restarting. The second covers resettlement of housing and land for community members living within the Mining licence area. The third involves initial construction on the licence area itself, including planned security infrastructure, bulk earthworks for the processing plant and permanent workforce accommodation. KEFI said field works are being localised to regional firms with established track records. The shares were about 0.618p at the close of the 2 November session.

The financing structure

Tulu Kapi's development finance has several components, as set out in the interim results. These include US$240m of senior secured project Debt from Africa Finance Corporation and the Trade and Development Bank, US$60m of mining fleet financing through BCM Group, and more than US$100m of risk Capital from sources including Ethiopian preference shares, royalties, a Government of Ethiopia shareholding at the project company level and a share placing of about £35.6m in March 2026. The company said it had invested well over US$150m in the project to date.

Following the incident, drawdown of project financing was deferred. In the October announcement, KEFI said lenders had continued to show support during discussions on updating the development sequence and the associated drawdown of funds, but it did not give revised amounts or dates.

The Balance Sheet and going concern

At 30 June 2026, KEFI (LSE:KEFI) reported cash of £18.25m, up from £8.77m at the end of 2025, and a comprehensive loss of £4.56m for the half-year. Net Assets stood at £87.4m. The directors reported a material uncertainty over going concern, while saying they expect activities to resume safely and funding to be secured. The interim report noted that lenders' commitments would normally be cancelled if financial close has not occurred by 31 March 2027, unless extended.

Why it matters, and the risks

Tulu Kapi is KEFI's principal asset, and its economics, as presented by the company, depend heavily on gold prices: the interim report presented average annual EBITDA of about US$355m to US$697m over the first three years, across gold price assumptions of US$3,000 to US$5,000 per ounce. These are company estimates, not independent forecasts or assured outcomes. Before the incident, the board planned to start production in 2028. The restart is a necessary step, but it does not by itself confirm that timetable, and the October announcement did not restate a date for first gold.

Security in the region is the most immediate risk, alongside the community resettlement process. Delays could increase costs, and the 31 March 2027 financial close deadline means timing matters for the debt package. Shareholders also face potential dilution if additional funding is needed. The company said the financial effect of the incident could not yet be estimated.

What to watch next

KEFI said it would make further announcements as details are finalised. Key markers include confirmation of the revised development sequence, the timing of first drawdown under the debt facilities, progress on resettlement and any update on the production schedule. The company has also said it plans to move its listing from AIM to the Main Market. Separately, on 27 October it announced conditional approval for development of the Jibal Qutman project in Saudi Arabia, in which it holds an interest through GMCO.