Extraction / Mining Mapping
On February 18, 2026, a groundbreaking ceremony took place at the Tulu Kapi gold project in western Ethiopia, attended by Prime Minister Abiy Ahmed and the President of the Oromia Regional State. The ceremony formally marked the start of construction on what is set to become Ethiopia’s largest modern gold mine. Field teams and contractors are now mobilised on site. Lycopodium is advancing the process plant and on-site infrastructure under a fixed-price lump sum engineering and procurement contract. BCM is preparing for bulk earthworks and mining. The Ethiopian Electric Power Company is working on the grid connection. The Ethiopian Roads Authority is progressing new access roads. Dashen is constructing resettlement housing. This is no longer a development-stage project waiting for a trigger. It is a construction site.
The trigger was financing. Tulu Kapi spent more than a decade moving through feasibility, permitting, security disruptions and funding cycles without reaching financial close. The original construction timeline was 2015. Successive resets pushed that date through 2023, 2024 and into 2025. What changed was a convergence of three conditions. In May 2025, the Ethiopian parliament ratified the country membership of the project’s second development bank, the Africa Finance Corporation, removing the last major legal precondition for the debt facility. In October 2025, the $240 million loan facility was formally committed, led by AFC and the Eastern and Southern African Trade and Development Bank (TDB). In December 2025, the $100 million equity component was assembled, including Ethiopian government participation and local preference share instruments.
By February 2026, KEFI Gold and Copper, the London-listed developer, declared the $340 million financing package effectively covered. The final piece was a $20 million equity-ranking gold royalty signed with Chancery Royalty Limited, structured to rank alongside shareholder distributions. An additional $30 million in equity-risk capital was being finalised in the same month, comprising $10 million in development costs settled in KEFI shares and $20 million in additional equity-ranking royalties from two further investors. By March 2026, KEFI reported $310 million in received commitments against the approved project budget, with the remaining agreements progressing through standard compliance steps across several jurisdictions.
The project sits 360 kilometres west of Addis Ababa in the Oromia Region. It holds 1.72 million ounces of gold resources and 1.05 million ounces of probable ore reserves, with a simple mineralogy featuring gold, silver, pyrite and base metal sulphides. The open-pit mine is designed to produce approximately 140,000 to 164,000 ounces of gold annually during its first seven years. Commissioning is targeted for late 2027, with full production in 2028. The all-in break-even after capital servicing is approximately $1,400 per ounce. At gold prices between $3,000 and $5,000 per ounce, KEFI estimates the NPV (5%) for its planned 83% beneficial interest at $700 million to $1.5 billion at construction start, rising to $847 million to $1.9 billion at production start. At current prices, the margin is substantial.
The financing structure is worth examining for what it reveals about how mine development is being funded in frontier jurisdictions. The $240 million debt is provided by African development lenders, not commercial banks. The equity side is a composite of KEFI shareholders, Ethiopian government participation (17% total, combining 12% new investment with 5% free-carried interest), local preference shares denominated in birr and linked to both US dollar and gold price, and equity-ranking royalties. This is not a conventional project finance arrangement. It is a layered structure designed to distribute risk across sovereign, institutional, royalty and equity investors, while keeping the project’s debt service manageable at low gold prices.
The Ethiopian government’s involvement is structured to align incentives. Its share investment is contingent on infrastructure completion, synchronising public and private capital deployment. The preference shares provide local investors with currency and commodity price protection. KEFI’s “Ethiopianisation” policy extends to workforce and supply chain: the company has indicated that optional additional fundraising above the development budget would be directed toward cost-overrun reserves, exploration and social development projects designed with local authorities.
The delays that preceded this point were not primarily technical. The geology and metallurgy were established early. The main obstacles were security conditions in the region, regulatory adjustments during Ethiopia’s political transition, the time required to secure AFC’s country membership through parliamentary ratification, and the challenge of assembling a multi-source financing package for a first-mover project in a jurisdiction without an established mining track record. Each of these factors added years to the timeline. The fact that the project is now in construction does not erase those delays. But it does indicate that the conditions that caused them have been resolved, at least to the satisfaction of the lenders and the government.
The broader context is Ethiopia’s effort to develop its mining sector as a source of foreign exchange and economic diversification. The country’s gold production has historically been dominated by artisanal mining. Tulu Kapi, if it delivers to plan, would be a step change in scale and formality. KEFI also holds interests in Saudi Arabia through its subsidiary GMCO, a joint venture with ARTAR and Hancock Prospecting, advancing gold and base metals deposits in the Arabian-Nubian Shield. The geological belt that hosts Tulu Kapi extends across the region, and the project’s success or failure will influence how the investment community assesses risk in Ethiopia’s mining sector more broadly.
The construction schedule calls for a two-year build. The principal contractors are in place: Lycopodium for the process plant, BCM for mining services, with the mining fleet to be supplied under an industry-standard schedule of rates arrangement. The community resettlement programme, a condition of both the financing and the environmental and social impact assessment (approved by the Ministry of Mines and compliant with World Bank IFC Performance Standards), is underway. The first phase of compensation payments has been largely completed. Replacement lands have been confirmed in the district around the mining licence, and the house construction contractor is on site.
The question now is execution. Tulu Kapi has spent years proving that it could be financed. The next two years will determine whether it can be built on time, on budget, and in a context where Ethiopia’s investment climate, security conditions and regulatory environment hold steady. The financing is closed. The contractors are mobilised. The gold price provides margin well above break-even. What remains is the construction itself, and the institutional stability required to see it through.