DEVELOPMENT BANK OF ETHIOPIA

DUE DILIGENCE ASSESSMENT ON MINJAHAYA

COAL MINING PLC LEASE FINANCING

DECEMBER, 2023

DUE DILIGENCE ASSESSMENT REPORTFOR SME FINANCING

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 1. The project/Company
1.1. Name: Minjahaya Coal Mining PLC
1.2. Address: Project Location
Region: BGRS Zone: Kamsh Woreda: Kamsh , Kebele: Gilgila
House No.: ______Tel. (Office): _______ P.O. Box: ____________
Mobile: 09-11-63-13-36 E-mail: ______________
Fax_____City/Town: Kamashi
1.3. Legal Form of Business: PLC
1.4. Date of establishment: 18/03/13 E.C
1.5. Is Article of Association submitted (if applicable): a) Yes  b) No.
1.6. Is Memorandum of Association submitted (if applicable):
a) Yes  b) No

1.7. Marital status (Sole proprietorship): PLC

 Trade License: New
 Licensing Organ: BGRS Mine Resource Development Board
 Date Licensed 03/07/12 E.C
 License No :3495/ምርት/12
1.8. Registered Capital: 2,300,000.00
1.9. Project Objective:
The general objective of the PLC is to extract coal stone that can be used in various
large manufactring like, Cement factory and others.
The specific objectives:
To create revenue both for the government and the promoter of the project
To establish a large scale component and Modern mine plants with qualitative
energy raw material product ;
To satisfy local demand with reasonable market price.
To alleviate the acute shortage of coal products required for the country.
To export the product for generating hard currency and intensify government
revenue in the form of tax from salaries and wages, profit & royalty payment,
savings of hard currency, etc.

1.10. Status of the Project: New ✓ Expansion

1.11. Business License:

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 o Type of license: COAL EXPLORATION
o Licensing Organ: BGRS Mine Resource Development Board
o Date Licensed: 03/07/2012 E.C
o License No.: SSML-21-ML/2012
1.12. Name of Company Members &Address (if applicable):
Sr.
Name Nationality Sex
No. Region Zone Woreda Kebele
A/to Abebe Etrhiopia
1 M A.A
Gnaro Birru
A/to Yadeta Kamashi Kamashi
2 M
Gutema Nono
Gilgela
A/to Amanauel
3 M
Gutema Nono

A/to Gutema
4 M 02
Nono Baro

W/ro Nuritu Gilgela

5 F
Megersa Tesop

W/ro Yadete
6 F
Abdisa Gobena

W/ro Bekelech
7 F
Safa Amente

W/ro Endae
8 F
Emana Hambisa
W/ro Tayech
9 Jiregna F
Wayema

W/ro Jimate
10 F
Deyasa

A/to Feyisa
11 M
Gutema Nono
12 W/ro Alemnesh F
Wakweya
Bedasa

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 Wro Dinkinesh
13 F
Chaka Tirsu

W/ro Berite
14 F
Tasisa Ufga

A/to Bacha
15 M
Waktola Gelete

A/to Taye
16 M
Meshesha Abdi
A/to Asmeraw
17 M
Hitayi Mire
A/to Leta Gilgela
18 M
Nmera Gelete
W/ro Tsehay
19 F
Lemu Teso

W/ro Ayantu
20 F BGRS Kamashi
Taye

W/ro Dinkitu Ethiopiya

21 F
Etana

A/to Isayas
22 Olani M 02
Mekonnen

A/to Shifera
23 M Gilgela
Abebe Amente

W/ro Beshatu
24 F 01
Endalew

W/ro Obse
25 F Gilgela
Tadese Senbeta

Capital of the project/company: 2,300,000.00 (Two million three thousand birr)

1.13. Tax clearance certificate from the concerned payment organ not later than 6 months):
Since the project is new as the new checklist under 2.2.1 mention tax clearance is not mandatory.
1.14. Track recording of the enterprise and/or the company and its shareholders (if applicable):

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 A.
Name of Address Status of business
Sr. Name of
the
No. Owner Zone Woreda Kebele Profitable Loss New
Business

- - - - - - - - -

No truck recording of the plc and members

B. While examining the track record of respective applicants for lease financing, the issues
stipulated in procedure manual for lease financing should be considered. Since the project is
new as the new checklist under 2.2.1 mention track record is not mandatory.
Comment on business track record of the enterprise/company/private entrepreneur and its
shareholders business (Here it should be noted that the capital of the enterprise/company/private
entrepreneur be part of the assessment in line with the requirement).
C. Since the project is new, there is no truck recording.
1.16. Credit status of the company /project
Make assessment on the past credit history of the applicant & fill in the information in the table here
under.
Name of Amount Date Expiry Periodic O/S As Collateral
Sr. No.
Creditor Granted Granted Date Repayment at … Value

Comment on credit worthiness of the applicant based on the information depicted above (check
whether the applicant has relationship with capital goods leasing companies in respective
localities if any).
Credit Status of the project already send to the NBE for the assessment of the past credit history
of the Clint and as the report of NBE show the client has no relationship with capital goods
leasing companies in respective localities.
2. Management of the Project/Management/Company
2.1. Name: Abebe Gnaro Birru
2.2. Address:
Region: BGRS Zone: Kamash, Woreda: Kamashi,

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 City/Town: Nekemte, Kebele 01, House No.: New
Tel. Office______ Residence: Nekemte town Mobile: +251-11-63-13-36

2.3. Educational Background

No Formal Education
Literate
8th grade complete
12th grade complete
Diploma
✓
First degree & above

Attach relevant documents:

List of attached important documents are
 Not fully submitted
2.4. Experience:
o Employer Gov’t __________ Service year ____________ Position_________
o Employer NGO __________ Service year _____________ Position_________
o Employer private business: Service year: more than 10 years
o Position: As General manager
o Overall experience in years: more than 10 years
o Relevant experience: more than 3 years
Comment on overall management of the project:
 The general manager of the project has good working experience as he orally told us and also
currently engaging on the production of coal extraction around the project, Moreover ; the
branch will undertake continuous and frequent follow up when the project
implementation starts.
3. Financial Investment
3.1. Sources of Equity contribution
Clearly indicate source of equity by ()
 Cash on hand
 Receivables
 Project retained earning
 Sales of assets
 Inheritance
 Others
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  Cash at Bank
Please note that the source of equity should be substantiated by documents and while examining
the source of equity, it should be in line with Anti-money Laundering and Combating Terrorism
Financing Policy and procedure of the Bank.
The PLC submitted conformation letter to blocked equity contribution
3.2. Method of Blocking Equity ()
 Cash at once
 Cash on phases
 Equity in kind
 In cash and in kind

Remarks on source of equity contribution:

The PLC submitted conformation letter to blocked equity contribution as well as also submitted
document on the source of equity contribution (Confirmation Letter dated 23/03/2016 EC)
4. Technical
4.1. Land/Working premises:
4.1.1. Is adequate production area or shade available (as the document submitted show adequate
production area was available, but not checked against the planned machinery layout)
a) Yes √ b) No

Note: As per the District’s technical team respond dated August 31, 2022 about accessibility,
compatibility of the map with the land lease certificate and coal deposits were checked
approved with good response except some road accessibility improvements KYC Team
recommended it for appraisal.
4.1.2. Is the production premises privately owned or rented? (If rented, the rent contract should
be reviewed in line with the procedure manual issued for manufacturing premises)
The quarry is rented for 10 years starting from 02/07/2012 E.C with License Ref. No
SSML-21-2012 for.
4.2. Machinery & Equipment
4.2.1. Are Performa invoices submitted? a) Yes b) No

The Performa invoices was submitted and evaluated by District technical team and
attached with the client file.
4.2.2. Is the technology reliable & valid (while checking the reliability of the technology the
following points should be considered, proven reputation, close after sales support of

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 manufacturers/dealers, competitive price/reasonable cost of acquisition, ease of operation and
maintenance)?
a) Yes b) No
4.2.3 The potential suppliers list and list of machineries and equipment’s with respective price and
country of origin should be stipulated in table.

Qt CU Total FOB Total Price,

SN Machine Description FOB Price
y R. Price, USD ETB
9,912,230.0
1 Crawler excavator 2 ETB 19,824,460.00
0
1,804,531.6
2 Soosan hydraulic breaker 1 ETB 1,804,531.60
0
4,200,000.0
3 Wheel loader 1 ETB 4,200,000.00
0
Capital Goods Total Price, (Local Procurement) x 25,828,991.60
Capital Goods Total Price, (International Procurement) 0.00 0.00
25,828,991.6
Total FOB Price =[A] 0.00
0
Sea freight from Delivery port to Djibouti Port =[B] 0.00 0.00
Marine Insurance From Delivery Port to Djibouti Port =[C] 0.00 0.00
25,828,991.6
Estimated CIF ([A]+[B]+[C]) =[D] 0.00
0
Social Welfare Tax (3.0% x [D]) =[E] x 0.00
Bank Charge (for Irrevocable LC & Confirmed LC) =[F] 0.00 0.00
25,828,991.6
Total Cost of Capital Goods ([D]+[E]+[F]) =[G] 0.00
0
Inland Insurance (Djibouti Port to Project Site) =[H] 0.00 12,929.50
Port Clearance at Djibouti =[I] 0.00 0.00
Port Handling Cost at Dry Port =[J] x 0.00
Inland haulage charge (Djibouti to Dry Port) =[K] x 0.00
Port Clearance at Dry Port =[L] x 0.00
Storage Costs (for 12 days after 1 week) =[M] 0.00 0.00
Transportation Cost (Dry Port - Project Site) =[N] x 0.00
Unloading Cost at Project Site =[O] x 0.00
Food, Hotel, Local Transportation Cost for Technicians =[P] x 0.00
Installation Cost (Round trip tickets, Perdiem and Insurance) =[Q] 0.00 0.00
Scanning Fee & Vehicle Identification, Inspection & Registering Fee
x 0.00
=[R]
Associated Cost (SUM([H]:[R])) =[S] 0.00 12,929.50
25,841,921.1
Estimated Total Cost up to Project Site ([G]+[S]) =[T] 0.00
0
Contingency (10% x ([T]-[E]))=[U] x 2,584,192.11
28,426,113.2
Grand Total Cost of Capital Goods ([T]+[U]) =[V] 0.00
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In Birr Twenty Eight Million Four Hundred Twenty Six Thousand One Hundred Thirteen and Twenty
Word: One cents
Note that percentage of Associated Cost/Estimated Total Cost Up to Project Site is 0%, which is less than 15%
of Cost of Capital Goods.

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 Explain the reason for selection if any.
The first reason is depend on the interest of the Clients as the bank’s policy; the Suppliers are supply with
its Accessories and also accepted by District technical team.
4.2.4 The availability of spare parts in local market available.
 Locally available, (Source: business plan)
4.3. Availability of Utilities
4.3.1. Is the project site accessible by vehicle? () a) Yes b) No 
As per the District’s Agricultural-engineering report dated August 31, 2022 about road
accessibility, compatibility of the map with the land lease certificate and coal deposits were
checked approved with good response except some road improvement for easily accessible
4.3.2. Is there sufficient water supply for the project (if necessary/required):
a) Yes b) No

4.3.3 Is power supply readily available and sufficient to run the project?

a) Yes b) No


Comment on the technical matters;

Project does not need power supply.
4.4. Raw Material
4.4.1. List the major raw materials to be used by the project:
4.4.2. As per the District’s Agricultural-engineering report dated August 31, 2022 Coal
mining stone is excessively deposited
4.4.3. Is the raw material locally produced/available or imported ()
a) Imported b) Locally available  c) others

4.4.4. Is there any problem of access to raw material a) Yes b) No 

Comment on the Raw material availably and related issues:
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As per the District’s technical team verification dated August 31, 2022 Coal mining stone is
excessively deposited
4.5 Environmental and Social Aspects
The operator will assess and classify all projects applied for Lease financing according to their
potential environmental and social impacts. The screening process will consider potential
positive and negative environmental impacts whether direct, indirect, or cumulative in nature.
 As the confirmation document submitted from BGRS Environmental and Forest

protection Authority the project is accepted with Ref, No 1563/mriob/11 dated

30/12/2011 EC.
5. Market strategy
5.1. Product
5.1.1. List down the major products/services of the project:
The major products of this project is coal stones which can be used in various large scale
manufacturing like cement factory and other coal consumption
5.1.2. The product has: a) High demand  b) Moderately high demand
c) Low demand

5.1.3. Destination of the market (Import substitution or export)

 Import substitution
5.1.4. Is there any destination market () a) Yes b) No

Comment on the Market (if any)
Most of large scale manufacturing industries like cement factory require or use coal stone as
input or energy source for their operation. Therefore, market problem to the product is not
expected

6. Identified Risk Areas (Based on the assessment made & comments given at each
level)
Any form of business firm are not operates without any risk, they are truly rounded by various
types of risk even if their reacting mechanisms differ from one to the other. The following
points are some risk factor of the project under study.
 Unpredictable fluctuations of market price.
 Foreign currency shortage

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  Sometime political instability.
 The capacity utilization efficiency may not operate as per the planned target
6.1. Management
 Education background: a) satisfactory  b) unsatisfactory

 Experience: a) satisfactory  b) unsatisfactory

 Availability of skilled labor: a) satisfactory  b) unsatisfactory

6.2. Technical
 Technology (choice) a) satisfactory  b) unsatisfactory
 Technology required skill a) Yes  b) No

 Availability of sufficient water supply: a) available  b) un available

 Availability of power supply: a) available  b) un available

 Is the project environmentally friendly? a) Yes  b) No

6.3. Market
 Is there sufficient raw material on demand? a) Yes  b) No

 How is the demand for the product: a) Satisfactory  b) Unsatisfactory

 Is the price competitive? a) Yes  b) No

 How is marketing strategy of the business a) satisfactory  b) Unsatisfactory

 Others a)Satisfactory  b) Unsatisfactory

7. Are all required documents submitted and disclaimer signed?

a) Yes b) No
√

8. Based on the above due diligence assessment the promoter/project is:

a) Creditworthy/Bankable  b) Non-creditworthy/Non-bankable

Note: This KYC recommended for the purpose of appraisal and loan approval.

Name and Signature of the Team

Name ____________________ Signature ________________ Date ___________
Name ____________________ Signature ________________ Date ___________
Name ____________________ Signature ________________ Date ___________

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 Approved by: ________________
Position: ____________________
Signature: ___________________
Date: _______________________

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