SAKARO, the Second Mine of MIDROC Gold goes into operationNovember 25th, 2009
The MIDROC Gold Company exploration effort since year 2004 in the Sakaro area has resulted in minable gold resource of 20,483 kg (20.4 ton), which is about 57% of the total gold mined at Legedembi Mine in 10 years. This new mine will be identified as Sakaro Mine, and will be the second mine that will be run by MIDROC Gold. With the start up of the Sakaro mine and the continued operation of the Legedembi Mine, MIDROC Gold's operation in the area will extend by 12 years till year 2021.
The agreement between the Ministry of Mine and MIDROC Gold for the Sakaro Mine operation is signed by the two parties on 24 November 2009 at Sheraton Addis. The signatories were H.E. Ato Alemayehu Tegenu, Minister of the Ministry of Mines & Energy and Dr. Arega Yirdaw, the CEO & General Manager of MIDROC Gold Mine PLC.
The Sakaro Mine exploration, feasibility study and pre-development work is estimated to cost USD 37.2 million. With an estimated gold selling price of USD 1,000 per ounce, the mine will generate a revenue of USD 564 million resulting in an after tax profit of USD 189 million. This is expected to generate a total of USD 130 million in profit tax and royalty payment to the national treasury and an increase of the workforce by about 10% over the current 1,400 number of employees.
MIDROC Gold started its operation as a private company in March 1998. It was acquired through privatization at a cost of USD 172 million as a result of the Ethiopian government's policy to advance investment in mining. The start-up included acquisition, taking over and operation of the Legedembi open pit gold mine including the process plant.
Ownership of MIDROC Gold is shared between Chairman Sheik Mohammed Hussein Ali Al-Amoudi and his family, who own 98% of the share. The 2% is allocated as a free equity share for government participation. Ministry of Finance and Economic Development represents the Federal Government in the ownership.
During the last 10 years, up to 2008, MIDROC Gold has produced close to 34,000 kg of gold and 10,000 kg of silver and earned USD 466 million in revenue. This has enabled the company to manage and maintain 1,400 full time employees, which is an increase of 224% over the 625 employees it inherited during privatization. Likewise salaries and benefits to employees has risen from Birr 2.7 million during take over to Birr 37.9 million per annum, registering a 1,380% increase during the last 10 years.
The company's profit in year 2008 amounted to Birr 372 million resulting in a 35% profit tax payment of Birr 119.3 million to the national treasury. The stated profit shows a 203% increment over the preceding year.