General information

1. Project title-------- Samson Kebena Regassa and Meron Habtamu Small Scale Gold Mine

2. Legal form------------------------------------------------------------------Partnership

3. Name of organization ----------------------- Samson Regassa gold mining company

4. Address ------------------------------------------------------------------Bero woreda,Siyali Kebel

5. Telephone-----------------------------------------------------+2519----

6. e mail-----------------------------------------------------------

7. Project summary Organization ---------------- Samson Regassa god mining

8. Location of project---------------------------------- Bero woreda,SWEPRS,Ethiopia

9. Sector of intervention-------------------------------- Gold mining & processing

10. Project manager-------------------------------- Samson Regassa

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1. Introduction
Ethiopia is located in East Africa occupying a land area of 1.14 million km2 with a population of
over 70 million. Geographically the country is located between latitudes of 30 N to 150 N and
longitudes of 33 0 E to 48 0 E. and bounded with Kenya to South, Djibouti & Somalia to the
East, Sudan to the West and Eritrea to the North.

The main economic basis of the country is Agriculture. Over 80% of the population is engaged
on Agriculture & related activities. The major export of the country also comes from this sector.
The mining sector is becoming a significant source of foreign currency earnings. Gold, tantalum,
gemstones and dimension stones are the export minerals of Ethiopia.

Despite the fact that Ethiopia has a long mining history, the development of the mining industry
and its contribution to the national economy stayed at lower level. The government led economic
policy for about two decades and the existence of low level geological data have contributed for
the under development of the mineral sector. The change in policy to market oriented economic
policy has brought the promulgation of mining legislations aimed at promoting and attracting
private investment to the mining sector of the country.

The private investment in the sector is rising from time to time and the sector’s contribution to
the national economy in the form of foreign currency earnings, revenue generation, job creation
and input Mineral resources being non-renewable natural resources require sound systems of
governance to bring sustainable development. It is also very important to establish transparency
and accountability in the management of revenue generated by extractive industries through
active participation of stakeholders including civil society organization. To the construction and
other industries is also growing.

The history of gold mining in Ethiopia dates back to biblical times. Gold has been traditionally
mined from placer deposits. Semi-mechanized gold mining began in 1930's after the discovery of
placer gold in Siyali kebele in the Jebba belt.

The only large scale primary gold mine in the country is the Siyali kebele gold mine that started
production in the late 1980s with an annual production capacity of 3 tons of gold.

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2.Executive summary
Gold mining in Ethiopia has a long history. But the gold deposit has been mined traditionally by

the traditional miners for several thousand years. This traditional mining system has been a

primary source of employment for job seekers from various parts of the country. The number of

peoples entering this sector is significantly increasing.

This Gold has been traditionally mined for many years in disorganized manner in different

areas of the country. Bero woreda/Siyali kebele gold mining company has analyzed and decided

to work on this mineral in organized and modernized way. Bero woreda/Siyali kebele gold

mining company is dreamt to be incorporated in South West Ethiopia People Regional State

West Omo zone which is thought by many for having high amount of gold reserve. The

company has planned to invest around 1.2 billion to build this modernized company. The

activities under our company are gold exploration, processing and commercialization of these

mineral. We can call our company’s incorporation in the area as a one step forward of the sector.

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Vision
“To become a prominent gold producer aiming at contributing to the National

economy while setting benchmark in the mining sector.”

Mission
“We are a national growing gold company, targeting at producing

quality gold in a cost-effective manner and increasing resources for

long term viability of our business, while creating job opportunities

and engaging all stakeholders for the national development.”

Core Strategies

 To continuously improve health, safety and environmental

practices, to protect our staff, the environment and the

neighboring community and by enhancing our abilities to

recognize and mitigate risks.

 Growing reserves for long term viability of our business through acquiring

and exploring new areas.

 Growing margins for all of us to understand the financial implications of our

decisions. Strong margins will ensure remains the lowest-cost gold producer

and will allow us to deliver on our commitment to the Ethiopian

Community.

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 Growing partnerships outside the company as part of increasing the

company’s capital.

 Dedicated to responsible gold mining practices balanced to promote long

term benefit value, health and wellbeing of employees and host

communities.

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 Core Values

1. Integrity

Honesty and objectivity in all our deliberation and operations.

2. Professionalism

Commitment to deliver the best to our stakeholders and staff.

3. Innovativeness

Creativity is encouraged to enhance efficiency in operations.

4. Teamwork

Working together as a team to achieve best outcomes.

5. Results-oriented

Committed to meet our obligations by being focused and objective.

6. Accountability

Responsible for the effects of our actions and willingness to explain or

be criticized for them.

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Safety, Health and Environmental Policies

Samson Kebena Regassa and Meron Habtamu Small Scale Gold Mine
Company trusts that nothing is more important than the health and safety of her
Employees, Visitors and surrounding communities. The Company has thus thrived
to conduct the business in compliance with the relevant Tanzanian laws and
regulations in place for mining activities.
Our Occupation, Health and Safety Policy
 To ensure that Occupation, Health and Safety management is a key function
at all levels in the company.

 To identify and assess work place hazards and risks, develop and implement
programs to mitigate them.

 To train all employees and visitors on work place hazards and risks and how
to identify all hazards, risks and report them to management for rectification.

 To constantly review all the site working procedures to make them user
friendly.

 All incidents/accidents and near misses will be reported, investigated,

documented, and thereafter to put and implement proper remedial actions to
avoid their recurrence.

 Establish, Train, equip and maintain high level of emergency preparedness

and response team at our mine site at all times during the course of our
business.

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  Hold individuals/groups accountable for their actions/omissions, breaches
of
Health and Safety policy and procedures.
3. Environmental and industry analysis

3.1 Environmental analysis

As we explained it earlier Samson Kebena Regassa and Meron Habtamu Small Scale Gold

Mine company is currently located in South West Ethiopia People Regional State West Omo

zone. The reason behind our selection of the area is that the region especially West Omo rich in

gold reserve. Several other natural minerals has been found in this region, beside gold, all of

which is ready for commercial exploration, even as deposits of platinum, tantalite, iron, copper,

lead, zinc, nickel and other base metals do exist. Petroleum and gemstones have also been

identified. Industrial and construction minerals have identified. But the reason why we select to

do in gold is that its amount. There is huge amount of gold in the region.

3.1.1 Site analysis

Our gold extractor company is located specifically in Bero woreda the area which is believed to

have high gold reserve in the region by exceeding Siyali and Gesena areas. There is also high

amount of extracting activity in traditional way. Because of its traditionalistic way of mining

citizens are supposed to dig manually and that’s time taking and needs high force.

3.1.2Economic impact

Our company’s operation is so useful for the citizens of the area in so many angles. The one is its

role in the gross national product. Since giant companies are owned by Ethiopians it has great

advantage on saving foreign currency. The other and the most important is its reduction of

unemployment rate in the country. Since there is high amount of unemployment in Ethiopia

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every company opened in the country is highly welcomed by the government. Areas like mining

industry needs many workers/5000 up to 50000/. You can see how many employment chance we

are going to create in the area.

3.2 Industry analysis

As economy of countries is growing & demand of gold is increasing, technology on the mining

industry is growing. The need of peoples for purchasing prestigious product like gold is rising.

But entrance of investors on this industry is not as fast as the need of gold in the market. That’s

why we are so eager to invest on this area. Samson Kebena Regassa and Meron Habtamu

Small Scale Gold Mine launch its new project to invest on gold extraction work, as expressed

by the directors that may cost them around 6 billion birr. It’s the only company to launch their

project next to our company.

The only fierce competition we might face in the future is from this company. So to take

advantage of the supply of traditional miners to our company we have developed a strategy. The

strategy developed concerns about building facilities for the citizens like school, health centers,

sanitation etc…this strategy makes us to be closer with the citizen (traditional miners) of the

area.

4.Description of the project

By its nature mining industry needs huge capital and high effort to be successful. It’s also highly

risky for life because of the explosions which happen by sudden accident. The main drawback of

this work, as we portray it earlier, is its accident. Ones the accident appears it might kill

thousands. Samson Kebena Regassa and Meron Habtamu Small Scale Gold Mine company

has a mission of building a huge name in the industry by providing high amount of gold to the

national bank of Ethiopia and makes the working area as much as safe for employees.

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Three are so many things we need to have to achieve our goal. Amongst these needs

infrastructure is the one and the major criteria. the area in which the company is built have good

infrastructure like light, water, transportation, telephone access, health centers for employees

etc…these facilities are easily accessible with fair price. Especially in the future when the grand

renaissance dam is finished it makes the access of light cheaper and easily accessible since it

is(the dam) found in the regional state of South West Ethiopia People Regional State West

Omo zone. All of these elements are what the mining industry needs most. Without these

infrastructure facilities one cannot get success whether it’s a big or small business.

5.production

As we depict it earlier our company is formulated in South West Ethiopia People Regional

State West Omo zone. The first job to do is to choose the area and receive the land in which the

gold is found in much amount. After preparing the land the next job is to build facilities like

building warehouse, building house for workers, plant machineries etc…

5.1Investment requirements

There are many requirements in which one investment is in need of. Among them are the

following:-

5.1.1Financial

South West Ethiopia People Regional State West Omo zoneis financed by 80% equity and

the rest 20% is obtained from bank loan. The company has got great appreciation and good loan

provision from the bank managers to promote the new business. We sincerely want to thank the

managers and other workers of the bank.

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5.1.2Material

The most expensive things in gold mining industry are the materials. The gold indicators, bull

dozers, Reverse Circulation (RC) drill rig 98 etc...These 3 materials are the basic ones. Besides

these, there are also so many other materials.

5.1.3Man power

When we come to the manpower requirement gold mining industry needs at least 10000 workers

including the managerial team. The top level workers are first there is a general manager/chair

man, deputy chair man then a product line manager, Employee administration controls, finance

director, technical director.

6.Marketing plan

Ethiopia is a country with high natural resources potential, being mining one of the sectors with

possibilities of development, therefore, promoting both national and international investment in

mining and creating the means to contribute to an easy access of investments is one of the

priority State Policies. The mining industry is becoming on the future to be one of the

cornerstones of Ethiopian economy concentrating a number of activities and processes where

different areas of professional knowledge and fields converge. The demand of gold is highly

increasing worldwide.

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We can see the table below how the market demand is growing rapidly:-

Years Gold in tons

1998 872

1999 998

2000 1034

2001 1103

2002 1200

2003 1630

2004 1893

2005 2078

2006 2370

2007 2920

2008 3400

In today’s growing gold market, to be successful means to dig more.

So our main target is to increase our supplying capability by modernizing the traditional mining.

Instead of all of these things we face some weaknesses in our work. Among the weaknesses are

the citizens know how about how useful the company is for their market, lack of skilled

personnel to operate the highly mechanized machineries, lack of finance for our operation, lack

of experience of the managerial department.

The goal/objective of our company (as we discussed it earlier) is to become the giant gold miners

in the continent.

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6.1Pricing

The pricing condition in gold market is fixed. For instance the current price of a 24 carat gold is

birr 845.50 per gram that means the price of a 1 kilogram gold is 845500 birr. We can see how

profitable it will be.

6.2Distribution

After the gold is mined out and processed its size to one kilo, the final job is to provide the gold

to the National bank of Ethiopia. The transportation of gold needs so much care. Because the

main problem for gold processers in transportation is robbers (well equipped robbers). So to

avoid this problem we move our gold to Bero woreda in a highly secured way then we transport

it to Addis Ababa by air plane.

7. Financial plan and analysis

The financial plan includes the following:-

Cash flow analysis--Cash flow statement indicates the difference between actual cash received

and cash actually dispersed. It san over view of the cash we anticipated in to our business based

on sales forecast minus the anticipated cash expenses of running the business.

Income statement analysis—subtracts the cost of the business from the earnings over a specific

period of time, typically a quarter or a year.

Balance sheet analysis----includes our assumed and anticipated business financial, include

asset, liability and equity.

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7.1 Balance sheet analysis
Assets
Fixed assets
Building-----------------100,000,000
Equipment--------------450,000,000
Others ------------------300,000,000
Total fixed assets--------850,000,000
Current assets
Cash on hand-----------150,000,000
Account receivable----
Inventory --------------
Total current asset---------150,000,000
Total asset --------------1,000,000,000
7.2Fixed Asset and working capital requirement
Fixed asset
1-building------100,000,000
2-equipment—450,000,000
3-others--------300,000,000
Total fixed asset—850,000,000
5-salary expense---------10,000,000
6-transportationcost-----20,000,000
Total working capital-----150,000,000
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Liabilities
Long term liabilities
Loans from bank---------200,000,000
Others-----------------
Total long term liabilities—200,000,000
Current liabilities
Account payable-------150,000,000
Other payable------------50,000,000
Total liabilities-------------200,000,000
Owners equity
Partners saving----------600,000,000
Total ownership equity—600,000,000
Total liabilities + total equity1,000,000,000
Working capital
1-adinstrative cost-----30,000,000
2-operating cost---------20,000,000
3-manpower hiring cost-30,000,000
4-raw material cost-----40,000,000
 7.3Financing
Our company is operated through our capital and bank loan. Bank loan might seem risky in
returning it but it’s vital in financing our fund requirement and in fulfilling the financial gaps we
have. It helped us to satisfy our needs and entering fully in to our operation without any
hesitation, there is also an equity finance fund obtained from the owners of the company.

Equity (80%) Loan (20%)

800,000,000 200,000,000

Total=1,000,000,000

7.4Cash flow forecast

Time period in years Pre operation YR-1 YR-2 YR-3

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Cash at the beginning of the year 90,000,000 95,000,000 115,000,000
Equity 600,000,000

Loan 200,000,000

Sales 80,000,000 95,000,000 100,000,000

Total cash in 1,000,000,000 170,000,000 190,000,000 215,000,000

Investment 850,000,000

Operation cost 50,000,000 55,000,000 60,000,000

Interest 10,000,000 10,000,000 10,000,000

Total cash out 850,000,000 60,000,000 650,000,000 70,000,000

Ending balance 150,000,000 110,000,000 125,000,000 135,000,000
Cash at the end o the year 90,000,000 95,000,000
115,000,000

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 7.5Income statement analysis
Yr-1 Yr-2 Yr-3

Total sales

Operating expenses 80,000,000

1,000,000 95,000,000 100,000,000

Salary expense---------------
1,000,000 10,000,000 15,000,000
Interest expense-------------
3,000,000 10,000,000 10,000,000
Administrative expense --------
50,000,000 35,000,000 35,000,000

Total operating expense -------- 30,000,000 55,000,0000 60,000,000

Profit before tax------------- 3,000,000 40,000,000 40,000,000

27,000,000 4,000,000 4,000,000

Taxes (10%) --------------------
27,000,000 36,000,000 36,000,000
Net income after tax------------------

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7.6 project Revenue
Revenue is the income obtained before tax and other costs are deducted from the sold product.
Before determining revenue of any production, first we have to know the product. Unlike many
other products the price of mineral is set by the World Bank. So there is no need for us to set the
price for the gold, or we didn’t have the right. For instance the current price of 24 carat one gram
gold is 84550 birr if one kilogram gold has the price of 845,500birr.
8.The organizational plan
8.1 legal ownership of the company
Basically there are three basic legal forms corporation, partnership and sole proprietorship.
Samson Kebena Regassa and Meron Habtamu Small Scale Gold Mine Company is formed
under the basis of partnership with 7 friends came together with the same idea of creating a
profitable and huge gold mining company.
8.2organizational structure
The organizational structure of our company is a little complex because of the company’s
broadness and its many departments. There is a general manager at the top level which controls
and manages the whole company. A product line manager controls the dig out process of the
gold. Employee administration controls and governs the employees. Under this there is a sub
branch of employees union.

Chair man

Product line Deputy chair man Man power Finance

manager manager director

Quality control Technical director Employee affair

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8.3Job description for owners
Samson Kebena Regassa and Meron Habtamu Small Scale Gold Mine Company is a
privately held partnership owned by majority of its funder and manager Samson Kebena
Regassa. There are 2 partners including the manager.
9.Risk Assessment
Risk assessment is implemented to analyze the various risks facing the project by looking to all
aspects of the project and their potential impact on the overall goal of the company. Knowing the
level of the impact various elements have on a project can assist management with getting
priorities to more quickly achieve the end result. The potential hazards facing our company are:-

 Entrance of new big gold extracting companies. Companies like midroc gold mining are
entering in to the market which gives you no way to compete because of the huge capital
they are investing on it.

 Fluctuating price of gold in global market. Fluctuation of price of gold is the main
problem facing all gold miners around the world. And this is one of the factors which
may lead companies to loss.

 Explosions happening on digging process. This might kill thousands of workers. To avoid
this problem a fire extinguisher is preferable.

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