Lycopodium secures $118 million contract to deliver Ethiopia’s Tulu Kapi Gold Project
Lycopodium Limited (ASX: LYL) has been awarded the Engineering, Supply and Labour Hire (ESLH) contract for KEFI Gold and Copper’s Tulu Kapi Gold Project in Ethiopia. The full contract is valued at approximately A$118 million, with a limited notice to proceed for approximately A$30.1 million already issued by KEFI. Delivery of services has commenced, with full gold production anticipated mid-2028.
The Tulu Kapi Gold Project is located in the Oromia Region of Western Ethiopia, approximately 360 kilometres west of Addis Ababa. The project represents KEFI’s flagship development and one of Ethiopia’s first modern, industrial-scale gold mining operations. Execution of the final contract, already fully agreed, is anticipated within the next few weeks following closure of documentation with the broader project syndicate members.
This contract win provides significant revenue visibility for Lycopodium through to 2028 and demonstrates the company’s ability to convert early-stage feasibility work into full project delivery mandates.
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What is an ESLH contract and why does it matter for engineering firms?
ESLH contracts, or Engineering, Supply and Labour Hire arrangements, represent comprehensive project delivery models where the contractor provides end-to-end services rather than standalone engineering work. For the Tulu Kapi Gold Project, this scope includes the full suite of engineering and procurement, project services and project management, as well as the supply of equipment and materials.
The contract covers delivery of a 2 Mtpa greenfield gold plant and associated non-process infrastructure. This integrated approach allows Lycopodium to manage all technical, procurement and labour aspects of the project under a single commercial framework.
ESLH contracts typically generate higher margins than traditional engineering-only mandates because they involve greater scope, responsibility and value creation. They also strengthen client relationships by positioning the engineering firm as a strategic partner capable of delivering complete solutions rather than individual services. For investors, ESLH wins signal a company’s technical capability, project management expertise and capacity to handle complex, multidisciplinary work across multiple geographies.
The contract structure creates recurring revenue opportunities and deepens client engagement, often leading to follow-on work for expansions, optimisation or additional projects within a client’s portfolio.
Lycopodium’s longstanding involvement with Tulu Kapi
Lycopodium’s relationship with the Tulu Kapi Gold Project extends back several years, providing the foundation for this ESLH contract award. The company delivered the original Feasibility Study for the project and completed a Feasibility Study update in 2024, establishing itself as the technical partner with the deepest knowledge of the deposit’s characteristics and development requirements.
This progression from feasibility work to full project delivery represents the natural evolution of an established client relationship. By demonstrating technical competency and commercial reliability during the feasibility phase, Lycopodium positioned itself as the preferred partner for project execution.
The timeline of Lycopodium’s involvement demonstrates strategic value creation:
- Original Feasibility Study delivery
- 2024 Feasibility Study update
- ESLH contract award (current)
Final contract execution is anticipated within the next few weeks following closure of documentation with broader project syndicate members. The limited notice to proceed has already been issued, allowing work to commence whilst final commercial terms are formalised across the project funding consortium.
The strategic significance of Tulu Kapi for Ethiopia
Tulu Kapi represents one of Ethiopia’s first modern, industrial-scale gold mines and is positioned as a pivotal growth driver for the nation’s mining sector. The project will establish new benchmarks for technical standards, environmental management and operational performance in Ethiopian gold production.
The deposit will initially be mined using conventional open-pit mining methods, with the intent to add underground production as soon as practically possible. This phased approach allows for earlier cash flow generation whilst preserving optionality to access deeper mineralisation through underground development in future years.
Peter De Leo, Managing Director and CEO, Lycopodium Limited
“Tulu Kapi represents one of Ethiopia’s first modern, industrial-scale gold mines that will be a pivotal growth driver for the nation, and we are extremely pleased to be given this opportunity to support its development.”
For Lycopodium, delivering a flagship project in an emerging mining jurisdiction demonstrates the company’s capability to operate in frontier markets and navigate complex regulatory, logistical and technical environments. Success at Tulu Kapi could open doors to additional opportunities across East Africa’s expanding resources sector.
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Contract details and project timeline
The contract structure provides clear commercial visibility whilst allowing flexibility for the broader project syndicate to finalise funding documentation. KEFI has issued a limited notice to proceed valued at approximately A$30.1 million, representing roughly 25% of the total contract value and enabling critical early-stage work to commence immediately.
| Metric | Detail |
|---|---|
| Full contract value | ~A$118 million |
| Limited notice to proceed | ~A$30.1 million |
| Plant capacity | 2 Mtpa |
| Target production | Mid-2028 |
| Project owner | KEFI Gold and Copper |
The contract is already fully agreed between Lycopodium and KEFI, with final execution dependent on closure of the full package of documentation with project syndicate members. This structure is common in large-scale mining developments where multiple funding parties require coordinated commercial close.
What this means for Lycopodium’s pipeline
The Tulu Kapi contract reinforces Lycopodium’s position as a preferred partner for major gold developments and highlights the company’s ability to deliver integrated engineering, project, construction and asset management solutions across challenging geographies. The win adds substantial revenue visibility to the company’s order book and demonstrates capability to convert feasibility study work into full ESLH mandates.
Lycopodium operates across the Resources, Rail Infrastructure and Industrial Processes industries, offering expertise to deliver complex, multidisciplinary projects from feasibility through to execution. The company maintains a global footprint with offices in Australia, Canada, USA, Argentina, Brazil, Peru, South Africa, Namibia, Botswana, Ghana and the Philippines.
This geographic reach positions Lycopodium to capture opportunities across multiple mining jurisdictions, particularly in emerging markets where technical expertise and project delivery capability command premium pricing. The Tulu Kapi win validates the company’s strategy of building long-term client relationships through early-stage technical work, then capturing larger ESLH contracts as projects advance to development.
For investors, the contract demonstrates Lycopodium’s competitive positioning in the gold sector and its ability to secure work in frontier markets where technical complexity and execution risk create barriers to entry for less experienced competitors. The mid-2028 production target provides a clear timeline for project completion and revenue recognition across the contract period.
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