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Institute of Developing Economies>Data & Resources>AGE (African Growing Enterprises)
File>Company>Midroc Gold Mine Pvt Ltd. Co. - AGE (African Growing Enterprises) File
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Midroc Gold Mine Pvt Ltd. Co.

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

Ethiopia / Energy, Mining, Resources

 Company Profile and History In Country Location Services and Products Number of Employees Financial
Information Market Share Business Objective Business Model Ownership of Business Benefits Offered
and Relations with Government Product Development
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.

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