Table of Contents

Executive summery................................................................................................................1
1. Introduction........................................................................................................................2
1.1 General Back Ground...................................................................................................2
1.2 Geography.....................................................................................................................2
2. MINERAL POTENTIAL...................................................................................................4
2.1 General Geology...........................................................................................................4
2.2 Local Geology...............................................................................................................4
2.3 Quality of Deposit and reserve Estimation...................................................................5
2.4 Structure........................................................................................................................6
2.5 Fault..............................................................................................................................6
2.6 Joints and fracture.........................................................................................................6
2.7 Site Analysis.................................................................................................................6
2.8 Regime of working.......................................................................................................7
2.9 Annual production capacity..........................................................................................7
2.10 project life span...........................................................................................................7
3. Project feasibility................................................................................................................8
3.1 Market study.................................................................................................................8
3.2. Target market and customer........................................................................................8
3.3. Market Demand and Supply of gravel.........................................................................9
3.4. Market competition......................................................................................................9
3.5. Market Promotion and Sales Strategies.....................................................................10
3.6. Production capacity in relation to market demand and supply..................................10
3.7. Pricing........................................................................................................................12
4. Resource Requirements....................................................................................................12
4.1. Machinery and Equipments required by the project..................................................12
4.2. Organization and management..................................................................................13
4.2. Management...............................................................................................................14
5. Financial Expenditure.......................................................................................................14
5.1. per production cost.....................................................................................................14
5.2. Fixed capital Expenditure..........................................................................................15
5.3. Operating cost............................................................................................................15

i
 5.4. Summary of Expenditure...........................................................................................16
5.5. Source of Finance......................................................................................................16
5.6. Project Duration.........................................................................................................16
5.7. Production & revenue forecast..................................................................................17
5.8. Business projects profits and loss statement..............................................................17
5.9. Socio economic Benefits of the project.....................................................................17
6. Conclusion and recommendation.....................................................................................18

ii
Executive summery

This is a business plan which is developed in order to examine Ato Hayilamariam Guluma
P.L.C.Aggregate basalt production and marketing business firm which would be establish
new gravel production and marketing business project in Oromia regional state, south west
shoa zone, Walisoo woreda in Abado Leman kebele that is located at distance of 5 km from
Zonal (waliso) town and 120 km far from the capital city of country Addis Ababa

The total capital budget required to implement this business is estimated to be birr
6,655,121.60 of which 60% or birr 3,993,072.96 is planned to owners’ equity where as
40%or birr 2,662,048.64 is planned to be secured from development bank of Ethiopia, waliso
branch as a medium term or scale investment lone. The lone required to finance the project is
proposed to be secure based on lease financing lone policy of financing organization.

The projects will produce an average 100 m3 of aggregate basalt production per day that is
necessary to satisfy the growing demand of aggregate basalt production in target market place
of Tulu Bolo, and surrounding town. The project will also provide socio-economic benefits to
both the local governments and communities living in the target area by creating total basis
employment for 28 peoples, (most of whom are unemployed youth and women in that
project area) and enhances the country’s effort to ward industrialization. From the total 28
employees 10 are planned to be permanent and 18 are planned to be hired on temporarily

Profitability: - the financial analysis of the envisaged business project was carried out for the
following five years based on five years financial projections the income statement.

Income statement: - the projected income statement shows that the project is profitable
starting from the first year of its operation. The average annual net profit is calculated to be
birr 1,670,983.44at first year.

1
1. Introduction

1.1 General Back Ground

Tomas Kitaba P.L.C, basalt aggregate production is just about to be incorporated under
the lows of Ethiopian after securing in mining licence from mineral resource office in
south west shoa zone. The objective of this investment program shall be to supply
crushed aggregate for the ever increasing demand of the construction industry.
For the realization of the intended project the firm has stated the procurement process for
importing the required machineries. The selected area for production of basalt aggregate
is found in Waliso town just about 120 km North West of finfine.

It has an access road to the quarry site. Power can be easily being tapped from the
neighbouring sites and the requisites technical and non-skilled youth group are also
available in the vicinity. From the total mining area of 26,000 m 2 of land, it’s planned to
produce basaltic rocks by excavating more than 29,568m3 of basalt aggregate annually.
This capacity quality, the project to fall under the category of small-scale mining venture
per standard set by oromia mineral resource authority bureau.
The project is scheduled to start production by February 2022. The project life is expected
to be 5 (five) years and above, the plan shall reach full production after one year from the
commencement of operations.

The project provides employment opportunities to some different compatriots. The

economic return to the nation and profit to be repeated by the investors is quite attractive.
There is very little damage if any, to the environment and the project has made adequate
mitigating plans for reforestation of the mining land and free planting measures on
abandoned land after quarrying.

1.2 Geography

1.2.1 Location
The project area is locate in the Oromia regional state, South West Shoa Zone woliso
district, walga locality, occurring partly in the north western margin of the 1:50,000 scale
woliso topo sheet and is bounded by the following UTM geographic coordinates:

2
 B.M Easting (M) Northing (M) Altitude (M)
A 382182 942409 1982
B 382101 942911 1989
C 382134 943236 1994
D 382213 943294 1990
1.2.2 Accessibility
The main Finfine woliso asphalt road reaches the licence area: the turn off the resource of
deposit from the asphalt road is 115 km and it has about 3km all weathered road leading to
North West wards. It’s planned to develop this and other inter quarry to make its smoother
and easier for that could similarly be constructed without difficulty.

1.2.3. Public services and infrastructures

The main Finfine- woliso asphalt road passes very close to the project area. An all weathered
less than 3km long gravel road branching from the asphalt is intended to be rehabilitated to
facilitate the easy reach of the project high site. And since the area by itself has suitable
gentle gradient topography, there will be no problem of inter quarry site road that could
similarly be constructed without difficulty.

Regarding other infrastructure the area is located within the coverage of mobile telephones
service and there is access road as it has been mentioned in the previous sections. And also
good quality of ground and walga river in the area. Healthy and postal service are also
available within the site, If electric power is required to tap from the main line it’s also 500m
from the project site.

Generally, the location of the project site is very close to different woredas of in South West
Shoa Zone Like Woliso, Bacho, Dawo, wonchi, Saden Sodo And Goro etc. where there is
every social service, even not too far from the capital, finfine so that the availability of
infrastructures will not be considered as the major problem.

2. MINERAL POTENTIAL
2.1 General Geology
In term of geological setting the project area could be classified into geology of northern
Ethiopia plateau that are part of the central type volcanism which built up the large shielded
volcanoes of several northern and southern Ethiopian plateau that include bashillo, selale,
tarmaber and megezez (zanettin et. al 1974). On the basis of absolute age determination, the
Addis Ababa basalt is analogues to httermaber – megezez formation of about 7 my

3
mohr1975). It overlies the into to silica which in turn is overlain by younger ignimbrites in
the vicinity of Addis Ababa area which occurred through the eruption of the fursa basalt that
are related to first stage formation similar to shield basalt products of megezez mountain
volcanoes the upper age limit of the tarmaber-megezez. Formation drops to 7to 8 MY. Along
the western margin and Justin –visentin (1974) mapped lava flows known as fursa basalt.
This basalt is stratified and generally aphyric with ignimbrite and silicic tuff intercalation.

Most basalt aggregate used for filing and repairing the house, building, foundation during
construction of big project. Large deposits of basalt aggregate are available in the central
region especially within the radius of 150-500 km Addis Ababa. As indicated already, the
local geology shares the characteristics of the regional geology in which basalt aggregate
products of first stage formation that is similar to scoria cone formation of igneous terrain.

2.2 Local Geology

South West shewa zone is characterized by distribution of thick and various volcanic
successions of litho-stratigraphic units and Quaternary sediments. These volcanic sequences
are the results of Tertiary volcanism occurred in the area. These rocks are found
unconformable overlaying the Mesozonic sedimentary litho logic units and the basement
rocks.

The litho-stratigraphic units, these are alluvial and lacustrine sediments. They are common
along Awash River course and plain and Holocene in age. Chilalo Formation. This
formation consists of trachyte, trachyte–basalt, rhyolite, with subordinate alkaline basalt. It
is found in most parts of Wonchi, Ameya, Woliso, Goro and North of Sebeta-Hawas
Districts. This formation forms prominent land marks like, Wechecha and Furi Mountains in
Sebeta, It is Neocene in age. Plateau Basalt It is alkaline basalt and trachyte and quaternary
in age and found at extreme north of Wonchi district.

Bishoftu Formation. It consists of alkaline basalt and trachyte litho-logic units and found
along Alemgena-Awash Melka-kunture roads. It is Pliocene to Pleistocene in age.

2.3 Quality of Deposit and reserve Estimation

The geological investigation of the deposit reveals that the basalt is best quality for
excavation production. This is attributed to the physic-chemical nature favouring the required
engineering properties of the rock to be used in construction works. As can be seen from the
existing aggregate production sifter owned by other people within the project area who are

4
quarrying basalt of exactly the same deposit varieties as observed from previous excavation
its thickness is around 10m thick. Required selective mining, Regarding its composition, the
homogeneous type throughout the deposit in general and within the extent of the proposed
area of the project in particular.

The deposit of the project area has surface area of 26,000m2, Altitude reading taken at
different high and low position of the area were averaged and gave average altitude of 1970
masl. The purpose of averaging the altitude was to obtain a horizontal plane representing top
surface of the deposit, in order to be able to calculate realistic deposit thickness by
subtracting the average altitude from the high altitude to the lower altitude position the
deposit, as the deposit has horizontal disposition. Down the slope of the project area, the
basalt continues and forms the dome shape geomorphology about 12m of the site. Therefore,
the deposit is minimum 22m thick

The project area geology is volcanic (extrusive) rocks of the Ashangi group i.e. porphyritic
basalt. This has dark gray to dark brown colors and covers more than 100% of the total
volume.

Generally, the basaltic rocks in the area are qualitatively important for all kinds of
construction like buildings & road constructions and engineering applications. The outcome
product of the crusher plant will be used for:

 Base course material for roads,

 Aggregate for asphalt surface construction,
 Surface dressing and patching,
 Concrete mixing,
 The production of concrete hollow blocks,
 Material for the production of cobble stones, pipes, drainage inlets, slabs, etc.
In estimating the volume of rock available for production, the following parameters have
been considered:

 Effective thickness =22 meters

 Deposit area 26,000 m2
 Basalt aggregate recovery is assumed to be 95%
 Resource deposit 26,000m2 *22m =572,000 m3

5
Therefore the volume or reserve of the deposit =572,000 m3x0.90=514,800m3

Total Volume reserve calculation= 514,800m

3

2.4 Structure
The area is highly tectonized and is complex in structure because its vicinity to the Main
Ethiopian Rift or its margin. The main diastrophic structures encountered are lineaments and
faults, whereas the non-diastrophic structures are bedding and volcanic layering.

Different geomorphic features align mostly to the NE-SW direction which is parallel to the
structure of the rift or rift margin. Most of these lineaments are observed in all units as
interpreted from the digital elevation model and the maximum length estimated is about
400m.

2.5 Fault
Most of the faults mainly observed in the SE part of the map area and cut the entire unit.
They have a structure trending in NE-SE direction. These faults are mainly normal faults.

2.6 Joints and fracture

These are openings in a rock along which there is no observable movement. The lengths of
the structures vary between few centimeters to several meters. In some places they are
oriented normal to the flow banding and are parallel to each other.

2.7 Site Analysis

The natural functions of a plot of land (hydrology, geology and microclimate) could be
seriously disrupted by the quarry mining as to ensure sustainable site development is in
tune with its topography, climate, and ecological character. The main objective is to
allocate and define the use of various parts of the site for quarrying and gravel production in
most appropriate and efficient way. Additionally, site analysis help to determine the
site characteristics so that proper drainage pattern and system, circulation pattern,
landscape design and other site development features can be considered in relation to
the existing site features and proposed actions.

The site analysis evaluates all the environmental determinants, which include (soil, air,
water, solar access, noise), that could get affected due to development on the proposed
site. All the concerns and their mitigation options at site level are covered in this section.
The project development impact on ecology and available resources, existing wind
patterns on the site, soil erosion, existing vegetation, habitat protection, water and air

6
pollution and waste handling were assessed and their mitigation options are
recommended to reduce the negative impact.

2.8 Regime of working

Working hours/day=8

Number of shift/day=1

Number of working days/month=22(to the nearest)

Number of working days/year=264

2.9 Annual production capacity

The annual production capacity of the project depends on feed and crushing capacities of the
quarry operation and crushing plant respectively.

Considering the size of the deposit and the intended scale of operation, a plant with
theoretical excavator capacity of excavating 30m3 per hour is recommended for this project.

Form experience to date, usually there is a failure in attaining the theoretical capacity, mainly
because of feeding problems. Therefore the effective capacity is assumed to be 100% of the
theoretical capacity. Hence the effective capacity of the plant for this project will be
14m3/hour.

2.10 project life span

The life of the project depends on the size of the deposit reserve and annual production
capacity the project.

The following parameters are considered to calculate the project life in the first year

 Annual production =29,568m3

 Deposit reserve =514,800 m3
 Hence, the project life= deposit reserve =514,800m3/29,568m3=17.4 years

3. Project feasibility
3.1 Market study

The project cannot succeed without effective marketing. Because of this fact the promoters
has tried his best to assess the gravel market in WolisoTulu Bolo, wonchi,Goro, town and
surrounding reference markets of Addis Ababa and listed many factors that helps the

7
association or the owner of the project to take a bold investment decision to launch the
business project some of these a factors assessed by the promoter including

 The existence of high construction works and market demand for gravel in the market
 The inability of the gravel production enterprise of woliso and near towns to supply
the gravel quality demanded by the area which is estimated to be 700 m3/day,
 The existence of a remarkable growth /in the construction sector in woliso and
surrounding towns, and
 Rapid growth and expansion of urban areas as a result of rapid processes of
urbanization.

Therefore, if the envisaged expansion project is implemented, it will help to certain extent to
fill the market gap created due to low supply and high market demand of gravel that has been
forcing consumers from woliso surrounding towns and other nearby areas to travel as far as
to sebeta town and Addis Ababa markets to buy the aggregate they require.

This is caused by low production capacities of the four gravel production and marketing
business firms that produce not more than 280m3 of gravel per day while the leverage
demand in woliso and nearby town market per day is estimated to be 700m3 per day.

3.2. Target market and customer

The growing use of gravel and fine in most construction activities such as in building houses,
roads (gravel roads, Asphalts roads, cobble stone roads ), bridges, irrigation dams, canals,
government , public and privet institution in the projects areas has led to presence of
increasing market demand for gravel at major gravel market place of the area.

Therefore, by taking into account the high market demand in woliso and better production
capacity of the business, woliso and other near to town is chosen to be target market place of
the proposed project.

Being this the case, major potential customers of the business expansion project are planned
to be;-

Government and non-government institution in the area,

Contractors that engaged with building and construction activities,
Public and privet sector business organization

8
 Micro-enterprise organizations that engage in bloket production, gravel roads and
cobble stone roads construction, and
Individual members of the community engaged in their own house construction.

3.3. Market Demand and Supply of gravel

As it is started previously, the for gravel producing enterprises that are operating in and
around Tulu Bolo town at present are producing 280m 3 of gravel per day while the market
assessment made by the promoter indicated the average market demand of gravel in woliso
estimated to be 600m3 /day. So, the business project will have a role to play to fill the market
gap at woliso and its surrounding areas by providing 100 m 3gravel it produces per a day in
the first starting year of the project.

3.4. Market competition

The unique selling proposition of the envisaged project will be to provide good quality gravel
at an affordable price and in required quantity to its customers. Accordingly, the business
firm is expected to face little (Getacho Kasa small business firm) or no competition from
other small business firm which are supplying very limited quality of gravel to targeted
market area. However, it will face market competition will business firm located in Sebeta
Hawas woreda which is located near the capital city Addis Ababa and which attracts
customers that are located in Sebeta, Alamgena and Addis Ababa cities. Regardless of this
potential customers will choose to buy the business firm’s product because of the following
advantages they get from the project.

The advantage include:-

 Low sales price that is affordable birr 450/m3 gravel and 400/m3 fine
 Good quality gravel at require quantity
 Better value to customers in terms of efficiency
 Transporting services by trucks of the firm

The project will also provide other benefits to its clients who come to buy its product. They
will be able to save their time and money they spent by travelling to far away market places
to buy gravel.

9
 3.5. Market Promotion and Sales Strategies

The business will employ different product promotion techniques that facilitate marketing of
its product. It also uses different methods to facilitate its marketing activities and to overcome
the threats of market competition. These included:-

 Provision of good quality aggregate and fine,

 Low sales price to influence the buying decisions of potential customers,
 Use a number of sales agents, brokers and contact persons that are found in different
locations (Woliso,Goro,Wonchi,Tulu Bolo, up to Addis Ababa city) well known by
the owner of the projects.
 Utilize different product promotion methods such as advertising the products, use of
publications and etc. and by employing different customer handing techniques that
will make the project preferable by market customers.

3.6. Production capacity in relation to market demand and supply

Base on the above stated marketing strategies the projects to sale its 100 m 3 of aggregate or
gravel it produces in eight normal working hours in one day covering more than half of the
existing market demand for gravel as it is indicated below:-

 Daily market demand of gravel = 700 m3

 Gravel produced and supplied to market by existing three Tulu Bolo, woliso and its
grounding areas production enterprises = 280m3
 Market gap created per day =320m3
 Gravel produced and provided to markets by the proposed project per day =112 m3
 Market share of the current gravel producing business firms = 46.7%
 Market share of the expansion project = 16.67 %
 Remaining market gap =36.63%

The remaining gap in the market can still be filled by the project by adding four extra
working hours on its normal eight working hours in one day or by using weekend days for
production.

Lest of gravel production and marketing enterprises that are found in Tulu Bolo, woliso and
its grounding areas

No Name of the enterprise Location Distance from One day Own quarry marked with

10
 mashkur Hasan estimated
project in km production
capacity
1 Getacho Kasa Tulu Bolo 35km 100m3

2 Tomas Kitaba Waliso 12 km 180m3 Supply (storing and selling)

Town o2 Not production
Total 280m3

As it is indicated in the above table of gravel production and marketing business firm list, the
promoter of this business project owner / AtoTomas Kitaba / will have his own quarry that is
used to extract basalt stone that is a raw material used for gravel production. Therefore,
according to the promoter, the presence of his own quarry has benefit him to retain birr189
for every m3 of gravel produced by his business firm. Therefore, this firm will be competitive
in the market.

Nevertheless, all business firms are similar in their production methods. All produce gravel
by using manual labour force and small scale crasher machines that are more or less similar
in their productions.

The owner the gravel production and marketing business project estimated production
capacity and revenue generated by the project

No Description Estimated revenue from sales

Unit of Production capacity Unit price Total price
measur Per Per month m3 Per year Birr Ce Birr Cent
ement daym 3
m3 nt
1 Gravel Aggregate M3 65 1430 17,160 600 - 10,296,000 -
(01, 02….)
2 Fine ( 00) M3 47 1034 12,408 550 - 6,824,400 -
3 Total M3 112 2464 29568 - 17,120,400 -

Assumption; - the crasher is assumed to produce 112m3 of gravel and fine/day

Average working days is in one month excluding Sundays is =22 day

One year working days are assumed to be 264 days
Regular working hours are to be 8 hrs/day

11
3.7. Pricing

The promoter determines the sales prices of the products of the project as indicated below
1m3 of gravel = birr 450 which is less by birr 100 from the current market price of gravel at
Woliso town gravel market.
- 1m3 of fine (00) = birr 400 which is less by birr 150 from the current market price of
birr 550 at gravel market of Woliso town.
- These are the sales price on which the project plans to sell its product in orders to
generate reasonable its business operation.

Being this the case, by fixing low sales prices for its products, the project plans to maximize
its market share. Also the promoter knows very well that sales are price sensitive. Therefore,
fixing low sales price will be used by his business firm as one of its sales strategies to
influence the buying decisions of market customers and to overcome and market competition.

As indicated in the table that shows estimated gravel production capacity of the projects, it is
planned to produce a minimum of 112 m3 of aggregate and fine in eight normal working
hours in one day by taking into consideration the time the excavator machine requires to do
digging, crushing and loading activity prices of large basalt rocks one in the dump trucks of
the business firm or directly into the crasher machines rock container.

It is also assume gravel is produced for 22 days in one month and for 300 days in one project
year heaving the rest 65 days of the year for Sundays and holidays (52 days for Sunday + 13
public and religions holiday). The project produces an estimated 65 m3 of gravel and 35 m3
of fine in one day. It sales 1m3 of gravel at birr 600 and sales 1m3 of fine at birr 550. Based
on this it produces 17,160 m3 of gravel x birr 600 = birr 10,296,000 and also 12,408 m3 of
fine x birr 550 = birr 6,824,400 generating a total revenue that amounts to birr 17,120,400 to
the business firm one project year. This can enable the promoter to repay his loan in a short
period. In addition to this 10% sales price increase is expected for every project year.

4. Resource Requirements
4.1. Machinery and Equipment’s required by the project

The project requires modern and technologically capable machineries and equipments to
produce and market 112 m3 of gravel in one day. Based on this machineries required by the
project, their purchasing prices, lists of suppliers and list of tasks performed by these
machines are listed in a table below.

12
 Fixed capital expenditure
No Description Quantity Unit price Total price Remark
Crasher machine with accessory No 7,500,000 7,500,000
1 Excavator 1 480,000 480,000 Rent 30
day /year
2 Hand tools Lump 55,000
3 Ancillary service equipment /materials Lump 40,000
4 Office furniture Lump 80,000
Total 7,675,000

4.2. Organization and management

4.2.1. Organization structure

Project Manager

Administration Marketing
Production &Production &
Finance Promotion

As it is indicated in the above diagram of the business venture’s organizational structure,

there is a manager at the top level of the structure who will take the overall management and
business operation of the ‘envisaged business expansion project. He will be accountable to
the promoter of the propose project.

Below the post of the project manager, the promoter plans to from three departments by
grouping together similar job tasks preformed in the organization in the three departments
created in order to bring about smooth business operation of the enterprises.

The production department as its name implies deals with overall gravel production activities
and the marketing department will do all sales and marketing activities of the project.

Administration and finance department of the business expansion project 2 is formed in order
to manage the human resources and financial operations of the organization.

13
4.2. Management

The promoter very well knows the importance of having a good management team and
skilled man power that helps his business firm achieve its goals and objectives. Accordingly,
he plans to give the necessary emphasis for screening employees he required for business
expansion project. So it is planned to hire qualified professionals and skilled man power for
his project as it is described in table of human resource requirement table below. From total
28 employees 10 are permanent and 18 are non-permanent workers.

Human resource requirement of the project are presented as follows

No Position Quantity Remarks

1 General Manager 1
2 Secretary/ Cashier 1
3 Technical Manager 1
4 Administration and Finance Head 1
5 Excavator operator 1 Rent
6 Crasher Machine Operator 1
7 Vehicle driver 1
8 Store keeper 1
9 Guards 2
10 Youth labour 22 Daily worker
Total 32

5. Financial Expenditure
5.1. per production cost
No Description Amount (Birr)
1 Exploration (consultancy fee ) 40,000
2 Site adjustments for different house contraction 80,000
3 Contraction of office, store and guard house 500,000
4 For machineries installation 100,000
5 License Renewal fee and EIA corking 60,000
6 Transportation cost 40,000
Contingency(%5) 41,000
Sub Total 861,000

14
 5.2. Fixed capital Expenditure
No Description Unit of Quantity Unit price Total price Rema
mass (Birr) (Birr) rks
1 Crasher machine with accessory No 1 7,500,000 7,500,000
2 Excavator No 1 480,000 480,000 Rent
3 Hand Tools Lump Lump 55,000 55,000
4 Ancillary service equipment No Lump 40,000 40,000
5 Office furniture No Lump 80,000 80,000
Contingency(%5) 281,500
Sub Total 5911,500

5.3. Operating cost

5.3.1. Salary and wages

No Position Quantity Monthly Year salary Remark
salary( Birr) (Birr)
1 General manager 1 10,000.00 120,000
2 Secretary( Cashiers ) 1 3,000.00 36,000
3 Technical Manager 1 9,000.00 108,000
4 Administration and Fiancé 1 6,500.00 78,000
5 Crasher Machine Operator 1 15,000.00 180,000
6 Vehicle Driver 1 3,000.00 36,000
7 Store keeper 1 1,500.00 18,000
8 Guards 2 1500x2= 3000 36,000
9 Daily labourers 22 5500x22=121,000 1,452,000 250/day
in
Total 32 1,902,000

5.3.2. Fuel, Lubricants, Spare parts and Maintenances

Fuel, Lubricants, Spare parts and Maintenances consumption for machineries and its cost is
listed in the following table

No Description Daily Yearly Unit cost Total cost

consumption consumptio (Birr) in
(litter) n (litter) year(Birr)
1 Fuel for Excavator 40 10560 29.15 307,824
2 Fuel for Vehicle 5 1320 36 47,520
3 All Repair & Maintenance per 250,000
year
Contingence %5 30,267.2
Total 635,611.2

N.B. On the basis of 25 working days per month 300 working days per year and 8 working
per day we have 2400 working hours per year. (Time is money)

15
5.3.3. Other Expenditures
Other expenditure are includes materials to enhance the day to day activity of the projects .it
also including the insurance cost, safety dresses, Helmet, excavator and electric light service
for the comp site and etc. see the list in table below

No Description Cost (Birr)

1 Travel and per diem /year 40,000
2 Insurance, personnel(10% of annual salary 190,200
3 Safety dresses for all youth ( Helmet, Goggle, safety shoes, etc) 50,000
4 Unity and supply 20,000
5 Environmental Protection Fund /Rehabilitation Fund 50,000
Sub total 350,200

A. Salary and wages

B. Fuel, Lubricants, Spare parts and Maintenances
C. Other Expenditures
D. Total operating cost is: - A+B+C (1,902,000+635,611.2+350,200) = 2,887,811.2

5.4. Summary of Expenditure

No Description Total Amount (Birr)
1 Per Production Cost 861,000
2 Fixed Capital Expenditure 8,058,750
3 Total Operating Cost /Year 2,887,811.2
Grand total 11,807,561.2

5.5. Source of Finance

The total investment cost of the project Birr 2,969,066.4will be financed from two sources:
equity of the owner and a loan from Development Bank of Ethiopia. By this, about 40 % of
the project cost (1,187,626.56 Birr) will be financed from the Bank, while the remaining
balance (1,781,439.84 Birr) will be from owner’s equity.

5.6. Project Duration

The life time of the project will be 5 years. The project might be extended above the given
period depending on the profitability of the first 5 year by rule and regulation of mineral
development Authority of the region.

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 5.7. Production & revenue forecast
No Description Project year
1st
2nd
3rd 4th 5th
1. Sale of gravel
(0.1,0.2) m3
Production per/day 65 78 90 100 110
Production per month 1430 1717 1980 2200 2420
Total production 17160 20,592 23760 26,400 29,040
per/year
Selling price of 1m3 in 7,722,000 9266,400 10,692,000 11,880,000 13,068,000
birr 450
2. Sale of fine (00) size
Production per/day 47 50 62 68 82
Production per month 1034 1100 1364 1496 1804
Total production 12408 13,200 16,368 17,952 21,648
per/year
Selling price of 1m3 in 4,963,200 5,280,200 6,547,200 7,180,000 8,659,200
birr 400
3 Total production of 29,568 33,792 40,128 44,352 50,688
(00,0.1,0.2…..) m3
/year
Grand total 12,685,200 14,546,600 17,239,200 19,060,000 21,727,200
If no expansion project on the first 5th year

5.8. Business projects profits and loss statement

No Description Amount in birr Remark
1 Total Production cost 11,807,561.2
2 Gross sale less 17,120,400
3 Royalty (3%) 513,612
4 Deprecation less(2.5) 428,010
5 Interest on lone / 225,000
6 Community fund 118,075.6 1%of Summary of Expenditure
7 Total cost 13,009,356.8
8 Total income 2,632,643.2
9 Income tax (15%) 394896.5
10 Net profit 2,237,746.7 In one year project life
5.9. Socio economic Benefits of the project

As it is explained in the previous parts of this proposal documents the project will provide
different socio-economic benefits to the communities that live around the project site and to
the local government in particular and to the country in general. Some of the major benefits
provided by the project included;-

 At initial stage of the project implementation it will create employment opportunity

for total of 28 people by employing 10 permanent and 18 manual employments in the
area. An estimated 18 youth and women members of Tulu Bolo town are planned to

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 work in and with the project in quarry excavation, stone crushing, loading &un
loading etc activities as well as in supplying raw material to the proposed projects.
 It will provide additional source of tax revenue for the local, regional and national
governments of the country.
 It promotes private sectors involvements in the country economic developments
programme.
 It helps the country move towards industrialization and contributes its saw share
increasing the role of industrial sector in the GDP of the country.

6. Conclusion and recommendation

The projects will produce an average 100 m2 of gravel and fine par day that is necessary to
satisfy the growing demand of gravel in target market place of Tulu Bolo, and surrounding
town. The project will also provide socio-economic benefits to both the local governments
and communities living in the target area by creating total basis employment for 28 peoples,
(most of whom are unemployed youth and women in that project area) and enhances the
country’s effort to ward industrialization. From the total 28 employees 10 are planned to be
permanent and 18 are planned to be hired on non-permanents.

Profitability: - the financial analysis of the envisaged business project was carried out for the
following five years based on five years financial projections the income statement.

Income statement: - the projected income statement shows that the project is profitable
starting from the first year of its operation. The average annual net profit is calculated to be
birr 1,670,983.44at first year.

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