Income from two new Ethiopian gold discoveries could total $1.7bn/y

British and Saudi companies have each reported finding important gold deposits in Ethiopia raisin government hopes of significant income from gold mining.

ADDIS ABABA (Reuters) - 

Two mining companies have discovered gold deposits in Ethiopia that could yield up to 41 tonnes, a top government mining official said on Friday.

Gebre Egziabher Mekonen, head of the Mineral Operation Department in the Ministry of Mines and Energy, told Reuters the Golden Prospecting Mining Co., a British firm, had found a deposit of about 23 tonnes in western Ethiopia.

"Discoveries by the British firm indicated that there is a viable prospect for gold mine development in the area. But it takes up to $200 million further investment to exploit the resources roughly within the next five to 10 years," he said.

Sakaro, a mining company operating under Midroc Gold Co., owned by Saudi business tycoon Sheik Mohammed Hussein Al Amoudi, has also discovered a new deposit estimated at 18 tonnes in the Lege-Dembi gold belt, Gebre Egziabher said.

The Golden Prospecting Mining discovery is at Tulu-Kapi, about 450 km (279.6 miles) west of the capital Addis Ababa and near the border with Sudan.

The company is also exploring another site near Tulu-Kapi, which has indications of a separate reserve of 30 tonnes, Gebre Egziabher said.

Once the two proven gold deposits were developed into mines, Ethiopia's annual income from the sector could reach up to $1.7 billion a year at current prices, from the present $105 million a year, he said.

Ethiopia has earned $450.5 million from nearly 48 tonnes of gold exports in the last 10 years, according to statistics by the National Bank of Ethiopia.

The country says it has indentified possible reserves of up to 500 tonnes in different parts of the country.

Gebre Egziabher said 44 international and local companies were engaged in mineral exploration throughout the country.

The government issued mining regulations in 1993 giving foreign investors incentives such as duty-free imports of equipment and repatriation of profits.

© Thomson Reuters 2009 All rights reserved

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