Akobo Minerals addresses operational challenges and advances towards production

Akobo Minerals, one of the leading gold exploration and mining companys based in Scandinavia with operations in Ethiopia, provided an operational update highlighting important progress made in solving recent challenges with nationwide fuel supply disruptions and new customs procedures, finally enabling full site activity. Production start-up is as such delayed to July/August, but with the latest mine plan showing a significant revenue potential of 20 MUSD in the first few months of full production. The company informed about strategic initiatives started to evaluate ways of increasing efficiency in production and further reduce operational risk, in addition to strengthening local management capacity.

  © Akobo

Key highlights

• Successful restructuring of debt obligations: Debt obligations, with respect to the gold bond financing, restructured with Monetary Metals. All former convertible debt converted to equity, resulting in only long-term debt to Monetary Metals remaining
• Successful funding and strategic evaluation: Funding secured and strategic discussions and evaluations underway with key industry players to mitigate risks and improve production efficiency to capture the significant short-term potential seen in the updated mine plan
• Strategic hiring: Seasoned local management consultant Wondwossen Zeleke with experience in Ethiopian mining and oil industry, including 15 years of leadership at Lundin's Africa Oil in Ethiopia and highly relevant experience from the Midroc Legadembi gold mine, joins the team
• Fuel supply agreement Fuel supply agreement signed with Ethiopian National Oil Company for direct sourcing and improved reliability; awaiting final license from Ethiopian Petroleum and Energy Authority
• Sourcing and logistics agreements: Collaboration with Leeder Industrial and Airland Logistics builds supply chain resilience. Organisational changes have allowed for an increased focus on finding local suppliers that can meet price and performance requirements
• Updated mine plan: The updated mine plan shows significant enhancements, including a 9 MUSD EBITDA improvement in the first 12 months of mining, and a revenue potential of 20mUSD (approx. 10.000 oz) the first few months of full production
• Beneficial gold price trends: Favourable gold price trends have significantly increased the value of the Segele resource compared to previous financial estimates

Operational update

The unforeseen nationwide diesel shortages and customs changes for duty free imports significantly impacted operations in recent months. Contingency plans were made, but the rapidly evolving situation proved more challenging than anticipated. With government support, these issues have been resolved for now.

The commissioning of the main plant has begun in some areas, with plans being made for Universal Power's arrival to commission generators. The remaining electrical cables are ready for connection, with progress being made on finalising diesel infrastructure and TSF membrane.

Production start-up timing is still uncertain but expected pushed to July/August. Efforts continue to finalize the processing plant and access the ore body. The arrival of critical mining equipment after a prolonged customs delay enables full ramp up of mining activities at site. The company has actively reduced site activity to minimize cash burn rate in the delay period.

As production increases and positive cash flow is achieved, Akobo Minerals will refocus on exploration to maximize project value.

www.akobominerals.com