It was thought a deal for the Marseille striker would not materialise when his club said they were only interested in a permanent switch to England.
However, it seems the French club are now prepared to part with the 21-year-old on loan - but only after they have brought in a replacement for Didier Drogba after his £24m departure for Chelsea.
And despite having four senior strikers, Keegan is keen to add another before the season kicks-off in order to give fifth-choice Bradley Wright Phillips more time to develop.
"It's difficult because at this stage of the season teams want to hang onto players and have them in their plans," Keegan told Sky Sports News.
"So sometimes when gems pop up, like Mido, you have to make an effort, but we are no further forward with it," accepted the City boss.
He added: ""If we have to go in with Bradley as fifth striker, we will. But I would prefer to get one more in, as I'd like to give him more time, and that is what I will try to do."