KEFI Minerals has received confirmation that the Government of Ethiopia will invest $20m in the Tulu Kapi gold project.
This investment will provide the government with an equity interest in KEFI Minerals.
Ethiopia's investment will be used to fund the project's roads, power and certain other associated infrastructure and implies a project value of $100m at its existing stage of development.
KEFI Minerals executive chairman Harry Anagnostaras-Adams said: "This represents an important step towards formalising the finance syndicate, which remains on track for settlement in Q3-16, and we are honoured that the government is choosing to partner with KEFI.
"We look forward to reporting further progress as we continue to advance towards commencing construction of the processing plant in Q4-16 and production commissioning from Q4-17."
Mining licence for the Tulu Kapi gold project in Western Ethiopia was granted in April 2015.
All aspects of Tulu Kapi have been reported in compliance with the JORC Code (2012) and subjected to reviews by appropriate independent experts.
The Government of Ethiopia and KEFI formalised Tulu Kapi mining agreement in April 2015.
The terms include a mining licence for 20 years, full permits for development and operation of the Tulu Kapi project and a 5% government free-carried interest.
In June 2015, KEFI Minerals completed the Tulu Kapi definitive feasibility study evaluating a conventional open-pit mining operation and carbon-in leach processing plant.