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Nyota Minerals says World Bank’s IFC set to invest £3.4m for 10% stake in company

World Bank Group’s International Finance Corporation (IFC) is looking to make an investment into Nyota Minerals (AIM & ASX: NYO) and is currently seeking IFC board approval to take a placement for a 10% stake in the African focused nickel and gold exploration and development junior. 

Investors liked the news, sending the shares up more than 7 percent by midday London trade.

The move would put the company in a very strong position to secure debt financing from the IFC for its flagship Tulu Kapi project in Ethiopia , ii required, Nyota said in a statement.

With the placement price of £0.116 per share, the total investment is valued at £3.43 million. Nyota said that apart from the increased funding, the project will benefit from IFC’s “world class expertise” supporting mining projects in developing countries.

The company has already signed a letter agreement with IFC, which is now contingent on regulatory and internal approvals, including those from the IFC board and Nyota shareholders and the Australian Foreign Investment Review Board.

“As a board and senior management team, we have carefully considered the merits of making a placement of this nature at this stage in the company's growth and decided that the short term support the IFC can provide to us in Ethiopia is significant.  Importantly, we also believe that engaging with the IFC at this point in time places the company in a very strong position to secure debt financing from them for the construction of a mine at Tulu Kapi, if required,” said Chief Executive of Nyota Minerals Melissa Sturgess.

Nyota also plans to give IFC the option to participate in each such placement in order for it to maintain its shareholding at the same level.

IFC will also receive options to subscribe for three additional Nyota shares for every four Nyota shares it should receive in the first investment, exercisable within four years at a price being 150% of the initial entry price.

The total value of these options stands at £3.86 million.

IFC, a member of the World Bank Group, has dished out US$14.5 billion in investments into developing countries in fiscal 2009.

Nyota is currently looking to increase the current JORC resource at Tulu Kapi of 0.69 Moz (million ounces) of gold to 1 Moz and upgrading part of that resource to the measured and indicated category. A resource update and upgrade is expected in Q2 this year. Late last month, the company reported positive assay results from the first 18 RC (reverse circulation) holes of an ongoing drill programme at the project. The most notable results showed 16 intersections above 8.9 grams per tonne (gpt) gold ranging between 1m and 8m, 11 of are in excess 11gpt.

Disclosure: The author holds no positions in the company