ethiopiaMidroc Gold Mine Pvt Ltd. Co.

All data are collected in the Fiscal Year of 2008-2009.

Company Profile and History

MIDROC Gold Mine Pvt Ltd. Co. (MGOLD), a member of the MIDROC Ethiopia Technology Group, is engaged in Mining and Exploration activities in Ethiopia. MIDROC Gold Mine PLC is organized under the Office of the Chief Executive Officer of MIDROC Ethiopia. The company has four Operation Units: Mine Operations, Heavy/Light Duty Maintenance Operations Metallurgy Operations, Exploration; and seven service units.

MIDROC Gold was established in the late 1990's by Sheik Mohammed Hussein Ali Al-Amoudi, his wife Sofia Salah Al-Amoudi and the government of Ethiopia with an initial capital of US$ 51.6 million. MIDROC Gold was created a few years after National Mining Corporation (NMC), another subsidiary company of MIDROC Ethiopia, took the 20-year concession of Lege Dembi Gold Mine from the government in March 1998 for US$172 million.

MIDROC Gold Mine PLC owns and operates the Legadembi Gold Mine, which is located 500km south of Addis Ababa, Ethiopia. MIDROC Gold is actively involved in exploration projects, which are located near the mine (Adola-Legadembi Exploration License - ALEL), and in another area some 600km northwest of Addis Ababa (Metekel Exploration License - MEL).

The Legadembi Gold Mine is an open pit operation with annual production of 1.6 million tonnes of ore. Yearly average production is about 4500kg of gold-silver doré (fine gold production is in the order of 3,500kg). The average fitness is 78% for gold and 21% for silver; the remaining 1% accounts for other elements of no commercial interest. The gold doré bars are shipped to Argor Heraus refinery in Switzerland; the gold is then refined and sold to Commerzbank in Zurich Switzerland.

In Country Location

Nefas Silk Lafto Sub-City, Kebele 04, Midroc Ethiopia Technology-Group Corporate Center (Mechare Meda Campus), Addis Ababa, Ethiopia; Telephone: 251-011-372 82 18, 19, 20, 21; Fax: 251-011-372 8227

Services and Products

The company is actively involved in mining gold exploration activities

Number of Employees

1,272 employees

Financial Information

In October 2009 the National Bank of Ethiopia said that Ethiopia earned US$ 540.5 million from nearly 48 tonnes of gold exports in the last 10 years. Approximately 47.9 tonnes, worth US$520.5 million, was produced by the Lege Dembi mine, run by Midroc.
The balance of 693.3 kg worth US$20 million was produced by artisanal miners.

Market Share

Midroc gold is currently the only industrial scale gold mining company in Ethiopia.

Business Objective

“Midroc gold was established to accomplish the following business purposes: to engage in mining, exploration, prospecting of gold and other minerals; to engage in the development, production and processing of economic minerals and by-products; to enter into business transaction in the selling and buying of the products both within the local and foreign markets; to perform both field and laboratory studies on all useful minerals so as to determine and ensure the reserve and the extent of the deposit; to engage in shallow and deep drilling operations so as to determine and ensure the reserve quality and depth extent of the deposit; to engage in wholesale or retail selling of gold and other minerals both to foreign and local markets; to engage in the production and importation of equipment consumables and spare parts related to the above operations; to enter into hedging and similar contracts; to construct building and alter buried assets related to mining and exploration activities; and to engage in any other business activities which the Company may think relevant to enhance the above mentioned business purposes of the Company”

Business Model

“The company's 5-Year Strategic Exploration Plan has already been put in place and is being implemented. If the exploration programs are proven successful, the strategic plan envisages development of two new mining operations each with a mine life of around 10 years, commencing in the year 2010/11. The underground mine resources are planned to be developed and mined between 2007/08 and 2018”

Ownership of Business

Sheik Mohammed Hussein Ali Al-Amoudi owns 98 percent of MIDROC Gold and the government 2 percent

Benefits Offered and Relations with Government

Since 1991, the Government of Ethiopia has instituted policies designed to improve the political, social and economic sectors of the country. One of the most important parts of the new economic policy is that it permits the full participation of the private investment in the mining sector. The government has enacted a very competitive legal and fiscal regime that attracted international mining companies to participate in the development of Ethiopia's mineral resources. Also, the government has been making progressive amendments to the Mining Laws in order to make it more competitive.

The new Mining and Mining Income Tax Proclamations were issued in June 1993. The Mining Regulations came into effect in April 1994. The Mining Proclamation No. 52/1993 and the Mining Income Tax Proclamation No. 53/1993 were amended in favour of investors in 1996. The following are highlights of the laws: invite private investment in all kinds of mineral operation; provide one year exclusive prospecting license; provide three year exclusive exploration license with two renewal of one year each; provide exclusive mining license for twenty years with unlimited renewals; require adequate health, safety and environmental protection; provide for inclusion of minerals which were not originally specified in the license as they are discovered; guarantee the licensee's right to sell the minerals locally or abroad; provide for exemptions from custom duties and taxes on equipment, machinery, vehicles and spare parts necessary for mineral operations; guarantee the opening and operation of a foreign currency account in a bank in Ethiopia; retention of a portion of foreign currency earning; and remittances of profits, dividends, principal and interest on foreign loans etc. out of Ethiopia; provide for 2% government free equity in mining operations; require environmental impact study; and provide for dispute settlement through negotiation and international arbitration.

The Mining Income Tax Proclamation 53/1993 and Mining Income Tax (Amendment) Proclamation No. 23/1996 provide for: generous deductions and calculations of expenditure; ten year loss carry forward; write-off of investment within four consecutive years; 35% tax on taxable income generated from mining operation; 10% dividend tax; 2% optional state free equity; and up to 5% royalty on an ad valorem basis.

Product Development

In 2009 Midroc announced that it discovered a new deposit estimated at 18 tonnes at East Sakaro in the Lege-Dembi gold belt. Exploration carried out at East Sakaro has outlined an inferred resource of about 2 million tonnes of ore grading at 9.8g/t, giving a gold content of about 20,000kg (645,000 ounces)-6,683Kg of the find is proven by exploration, and drilling will take place from 2009 to 2012. The remaining 10,567Kg will need further ongoing optimisation work in order to extract the gold from 2013 to 2017.

The reserve in East Sakaro was first discovered in 1975 by gold prospectors who mined the Sakaro Valley. The reserve was confirmed after a geological survey was submitted in the second half of 1979, a time in which visible gold was found northeast of the Sakaro area.