December 8, 2010 / 2:56 PM / in 8 years

Ethiopia grants UK firm exploration rights for gold

ADDIS ABABA (Reuters) - Ethiopia has issued exploration rights to UK-based Sheba Exploration for two sites in the northern Tigray region, the company said on Wednesday.

Mineworkers work deep underground at Harmony Gold Mine's Cooke shaft near Johannesburg, September 22, 2005. REUTERS/Mike Hutchings

The Horn of Africa nation has identified possible gold reserves of up to 500 tonnes in different regions and wants to attract investors to explore the reserves.

Ethiopia’s gold export earnings almost tripled to $300 million in 2009/2010 from $105 million in 2008/2009, outpacing plans to double revenue this year.

Sheba Exploration said the licence was for gold and base metals covering about 110 square km, and is valid for an initial term of three years and thereafter may either be renewed for two years or be converted into a mining licence.

“The new (and exclusive) licence is a consolidation of two pre-existing prospecting licences, namely Finarwa (71 square kilometres) and Winibo (39 square kilometres),” the company said in a statement.

Sheba Exploration said it had identified “significant” gold and copper mineralisation in the area during preliminary work in 2007-2009.

“Within the next year, the company aims to delineate an extensive gold mineralized system at Finarwa while at Winibo, the company aims to define a small to medium scale bedded copper drill target,” Sheba said.

Ethiopia’s Minister for Mines and Energy, Alemayehu Tegenu, told Reuters in August that 86 firms were exploring for minerals in the country, of which 30 are exploring gold.

Saudi Arabia’s Midroc Gold Co. and Britain’s Golden Prospecting Mining Co. discovered recoverable deposits estimated at more than 40 tonnes of gold last year and were awarded extraction licenses.

The International Finance Corporation (IFC), the World Bank’s private sector lender, in May invested $5 million in the fledgling sector through Nyota Minerals (NYO.L).

Nyota has announced a maiden inferred resource of 690,000 ounces of gold at the Tulu Kapi project, 500 km (310 miles) west of the capital Addis Ababa.

Overwhelmingly reliant on exporting commodities like coffee and sesame, the Ethiopian government predicts growth of about 10 percent for 2010/2011. The International Monetary Fund says the economy will grow by 7 percent.

Ethiopia’s government has said some companies are also exploring for gemstones like opal, emerald and ruby in various projects scattered in most of its nine regions.

Ethiopia has made $450.5 million from about 48 tonnes of gold exports in the last 10 years, according to the country’s central bank, also known as the National Bank of Ethiopia.

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