lOMoARcPSD|28871883

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PROJECT PLAN FOR KAHF MINING PLC

FOR MINING EXTRACTION AND BENEFICIATION PROJECT
(Mainly Iron Ore beneficiation & Gold ore Processing plant)

PROMOTER: - KAHF Mining PLC

August, 2023

ADDIS ABABA, ETHIOPIA

 CONTENTS

I. INTRODUCTION ………......................................................................... 1

II. EXECUTIVE SUMMARY …………………………………………........ 2

II. BACKGROUND INFORMATION..............................................................3

III. MARKET ANALYSIS ……………………………………………………11

IV. ECONOMIC AND SOCIAL BENIFITS………….............................................13

I. Introduction

The license area applied for is located in western Ethiopia, Gambella Regional State, Zone 2, Gog
Woreda. The application area is bounded by geographic coordinates presented in Table 1 and covers a
total area of 294.5996km2.
The license area applied for is accessible by about 770Km tar road stretching between Addis Ababa,
Ambo, Nekemt, Gimbi, DembiDolo and Gambella towns. From Gambella town, the Project area can be
accessed by a 77Km gravel road passing through Abobo and Pigniwedo, seat of Gog Woreda. Access
within the license uses gravel dirt roads and several foot trails.

Physiography Drainage and Climate

The license area applied for lies in in the western Ethiopia lowlands with altitude of <600m. The area is
generally flat with altitude varying between 450 and 550m and dissected by Gilo River and its tributaries
in the south and streams draining to Ubela River in the north.
The license area applied for falls within the Baro River Basin. Gilo River is one of the main perennial
river
in the Project area draining the southern part of the license before joining Baro River west of the license
area applied for. The main small tributaries that drain to Gilo River include Cari, Timi and Lurbong. In
the other hand the northern part of the Project area is drained by small streams draining to Ubela River, a
tributary of Alwero River. All the small streams draining the area have a dendritic, parallel to sub-
parallel drainage pattern.
 II. EXECUTIVE SUMMARY

KAHF Mining private limited company is an Ethiopian based company legally established as a Private
limited company business by Mrs. Tsedey Tesfaye Gebremariam an Ethiopian citizen an experienced
entrepreneur. The company has been engaged in multiple business lines, which includes: Import trade,
Export Trade of different Minerals, Coffee processing and Production of other value added Agricultural
Commodities for global as well as domestic markets. However, with this project plan document, the
company has a plan to fully engage on Mining Operation projects in partner with three foreign investors
Known for owning the biggest textile factory called “MNS “to form a Mining Associations with (namely:
Semseddin Nursacan, Tahir Nursacan and Tayyip Nursacan) in Gambella Regional State, Zone 2, Gog
woreda. The envisaged mining and beneficiation project line has planned to take place on multiple sites
that already secured by mentioned entrepreneur and with-in the vicinity where the underground Mineral
Stock is available in bulk. Hence, considering a total investment cost about ETB 111.56 Million, the
company has an intention to implement Iron Ore and Gold Extraction as well as create a wider range of
export market access for value added (processed) Ethiopian Mineral Products.

The establishment of an envisaged Iron mining and beneficiation project is intended to take part on the
development activity of the country by involving in the mining sector development and manufacturing of
industrial minerals which there are huge potential market in the country and thereby contribute to the
overall national economic development. The company is inspired to supply various types of processed
industrial minerals using modern supply techniques through creation of employment and saving. In addition,
the business objective is to undertake multiple socio-economic responsibilities on one part and generate
income for the company in order to expand the existing and other development activities in the country.

After successful project implementation and start-up of the operation, the company will explore the
possibility of making takeout and delivering quality Iron Ore and Gold products through wholesale and
retail market outlets. Hence, the market for the products under consideration is projected to grow
rapidly in the coming years. The products will be supplied to high demanding export and domestic
markets. It also will improve the supply of Iron based industrial inputs to and improve the lives of local
community through employment creation. To this end, the global trend indicates that the demand for
and prices of most cleaned and processed quality mineral commodities have been continuously
increasing at rate higher than that of its supply. This is mainly driven by a rapid global population
growth and has caused shortage of the products and rapid increase of their prices in the market.
Based on the study conducted for the envisaged mining and export trade activities, the total investment
cost required including existing asset is worked out ETB 111.56 million. Of which ETB 78.04 Million
accounted for equity contribution of the promoters and the remaining birr 33.44 Million for Machinery
Lease Financing and additional Working capital fulfilment will be sought from external financer as term
loan facility from local banks.

According to projected profit/loss statement of planned project implementation, the envisaged project
will generate an attractive net profit through entire years of operations. i.e. ETB 92.7 ml.; ETB 118.87
ml.; ETB 145.71 ml.; ETB 160.03 ml; ETB 178.92 ml; ETB 190.05 ml; ETB 201.85; ETB 214.36 ml;
ETB
227.62 Ml and ETB 241.69 Ml during 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th and 10th years respectively.

The projected cash flow of the project shows that the project would generate positive net cash flows
throughout the operation years, which will be ETB 4.64 ml.; ETB 68.57 ml.; ETB 103.13 ml.; ETB
128.33 ml; ETB 140.98 ml; ETB 156.74 ml; ETB 164.38; ETB 172.30 ml; ETB 180.49 Ml, 188.95 Ml
and
ETB 197.67 Ml during Year-0, 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th and 10th years of its operation.
Concerning financial measurement, the NPV and IRR Calculated on the projection are both attractive
and acceptable with IRR 60% after tax and NPV of 89.53 million, with further finding that the pay-back
period of invested cost will be fully recovered at 3.25 years.

Furthermore, the underlying project and its considerable business operations will contribute
tremendous amount of foreign currency towards national savings by exporting quality products,
contributes on job opportunity for the acute unemployment problem of the country by creating job
opportunities, it creates technological transfers to the country in the form of new adaptive innovations
and contribute towards the government treasury in the form of corporate taxes. Apart from other socio-
economic benefits of the business, the study has identified that the business creates employment
opportunities for about 67 permanent individual staffs.

Finally, with the available documents and based on the findings of the project establishment study; it is
found to be financially viable, economically sound and socially desirable and warranted. Therefore, the
establishment of the project is justified and worth financing due to its financial viability and social
desirability.
 III. BACKGROUND INFORMATION
.1 ESTABLISHMENT
 Company Name:.................................KAHF Mining Private Limited Company
 Business Address:..............................A.A, Bole Sub city
 Company Status:.................................Existing
 Legal form of Business......................Private Limited Company
 Licensing Organ….....................Addis Ababa City Administration, Trade Bureau
 New Business Line.............................Mining and Quarrying Extraction and Processing (Iron Ore & Gold)
 Project Location:.........................Under Gambella Regional State Government.
Gog woreda, Zone 2
 Total Investment Outlay................ETB 111,491,695

.2 COMPANY BREIF AND OWNERSHIP

KAHF Mining PLC was registered and established in accordance with commercial code of the country
as well as under governing rules by Addis Ababa City Administration Trade Bureau. It is an Ethiopian
based company legally established as a Private Limited Company business by Mrs. Tsedey Tesfaye an
Ethiopian citizen an experienced entrepreneur. Previously, the underlying Business Company has been
engaged in operating multiple business lines; Such as: Service delivery business, mining export and other
trade activities in Ethiopia. Furthermore, Company’s General Manager; Mrs. Tsedey Tesfaye been running an
Existing Business lines as a chief person and also acquired strategic management of business service delivery
and he has a good character and well appreciated personality among the society. On top of all, the founder
who earned experiences in various business activities has considered the fact that there is a huge gap to meet
the demand for and supply of mineral products in the country.

Table 1. KAFH Mining Private Limited company proposed share holders

S. No Share Holders Name Share Amount (%) Share In ETB(Million) Nationality

1 Semseddin Nursacan 31.6 35.25 Turkey
2 Tahir Nursacan 31.6 35.25 Turkey
3 Tayyip Nursacan 31.6 35.25 Turkey
4 5 5.578 Ethiopian
Total 100 111.56
.3 PROJECT OBJECTIVES

The general objective of proposed project is to implement well integrated mineral extraction and
processing plant, which enable the company to produce and supply 75,000 tons of Iron products and
10,000 grams of Gold per year. The Rated plant capacity is based on single shift working for 8 Hours/day
and 300 days/year.

 To become a leading supplier of quality Iron products and other industrial inputs following
modern marketing techniques;
 To generate income for the company in order to involve in the existing and other development
activities in the country

 To engage in processing of industrial inputs and sourcing globally as well as locally, which in
turn contribute on import substitution of manufacturing raw materials,
 To create a value addition process of different varieties of mineral products by using advanced
techniques and enclosures
 To satisfy the demand of local market
 To create job opportunities for citizens which resulting contribution to un-employment
reduction strategies of the country
 To develop production targets aiming at high quality and quantity standards to be acceptable at
domestic and international level as a known brand.
 .2 SECTORAL BACKGROUND

Modern mineral exploration was introduced in the country during the 1960s when the United Nations
Development program (UNDP) executed a mineral survey in western and southern Ethiopia. Systematic
and integrated mineral exploration started when the Economic Minerals Exploration Department was
organized in 1984 with the establishment of the Ethiopian Institute of Geological surveys (EIGS). Later
the department was reorganized as the Mineral Exploration and Evaluation Core Process (MEECP) in
July [Link] aim of this core process is to explore and evaluate metallic and industrial minerals and
rocks including Iron and oil shale potential of the country and avail the data of these recourses for users
for development and/or further detail exploration ultimately contributing to the socio-economic
development of the nation. During the past three or four decades’ various occurrences and deposits of
precious, metallic and industrial minerals as well as rocks, Iron and oil shale resources have been
identified.

Most of the explorations related to the understanding of the geodynamic evolution of the P roterozoic,
Paleozoic to Mesozoic, and Cenozoic terrenes of Ethiopia were intended to determine whether the
Proterozoic basement and other rocks have potential for economic mineral deposits. Systematic regional
geological mapping and mineral exploration activities by the GSE and others were successful in locating
economic mineral deposits in different parts of the country. These investigations showed that the low-grade
belts of volcano-sedimentary successions and associated intrusive in the north, south and west of the country
are most promising for gold and base metal deposits.

Industrial minerals such as rock salt, potash, phosphate, soda ash, feldspar, dolomite, betonies, graphite, lime,
silica sand and kaolin are found in different parts of the country associated with a wide variety of lithology.
Dimension stones including marble, granite, sandstone, limestone, and ignimbrite, raw materials for cement
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and aggregate manufacturing, and gemstones of different type and quality are also available in many parts of
the country. Ethiopia is endowed with a wide variety of minerals and rocks, some of which are available
in large quantities and are of excellent quality. Minerals such as potash, bentonite, kyanite, diatomite,
graphite, kaolin, marble, granite, limestone, gypsum, sand, etc. occur in sufficiently large reserves that
could warrant medium to large-scale mining.

IV. PRODUCTS DESCRIPTION, IMPORTANCE AND APPLICATION

The proposed project envisages the setup of Iron Ore and Gold extraction as well as mineral products
processing operations. Mineral processing is actually the important step of virgin mineral preparation to
be ready for the market. When processing the Ore, non-Iron materials and undesirable material from the
run-of-mine is washed or cleaned. Through the processing plants, a qualified product will be achieved.
Accordingly, the general description and application/uses such mineral products are discussed below:

V. Iron Ore Description

Earth's most important iron ore deposits are found in sedimentary rocks. They formed from chemical
reactions that combined iron and oxygen in marine and fresh waters. The two most important minerals in
these deposits are iron oxides: hematite (Fe2O3) and magnetite (Fe3O4). These iron ores have been
mined to produce almost every iron and steel object that we use today from paper clips to automobiles to
the steel beams in skyscrapers.

Nearly all of Earth's major iron ore deposits are in rocks that formed over 1.8 billion years ago. At that
time Earth's oceans contained abundant dissolved iron and almost no dissolved oxygen. The iron ore
deposits began forming when the first organisms capable of photosynthesis began releasing oxygen into
the waters. This oxygen immediately combined with the abundant dissolved iron to produce hematite or
magnetite. These minerals deposited on the sea floor in great abundance, forming what are now known as
the "banded iron formations." The rocks are "banded" because the iron minerals deposited in alternating
bands with silica and sometimes shale. The banding might have resulted from seasonal changes in
organism activity.
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Figure-1: Iron Ore Image

2.5.1 Application of Iron mine

The primary use of iron ore is in the production of iron. Most of the iron produced is then used to make
steel. Steel is used to make automobiles, locomotives, ship, beams used in buildings, furniture, paper
clips, and tools, reinforcing rods for concrete, bicycles, and thousands of other items. It is the most-used
metal mineral by both tonnage and purpose.

2.5.2 Gold Description

Gold is a chemical element with the symbol Au (from Latin aurum 'gold') and atomic number 79. It is a bright,
slightly orange-yellow, dense, soft, malleable, and ductile metal in pure form. Chemically, gold is a transition
metal and a group 11 element. It is one of the least reactive chemical elements and is solid under standard
conditions.

Gold often occurs in free elemental (native state), as nuggets or grains, in rocks, veins, and alluvial deposits. It
occurs in a solid solution series with the native element silver (as in electrum), naturally alloyed with other metals
like copper and palladium, and mineral inclusions such as within pyrite Less commonly, it occurs in minerals as
gold compounds, often with tellurium (gold tellurides)

Gold is resistant to most acids, though it does dissolve in aqua regia (a mixture of nitric acid and hydrochloric
acid), forming a soluble tetrachloroaurate anion. Gold is insoluble in nitric acid alone, which dissolves silver
and base metals, a property long used to refine gold and confirm the presence of gold in metallic substances, giving
rise to the term 'acid test'. Gold dissolves in alkaline solutions of cyanide, which are used
in mining and electroplating. Gold also dissolves in mercury, forming amalgam alloys, and as the gold acts simply
as a solute, this is not a chemical reaction
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Figure-2: Gold of Ethiopia

A relatively rare element, gold is a precious metal that has been used for coinage, jewelry, and
other arts throughout recorded history. In the past, a gold standard was often implemented as a monetary policy.
Gold coins ceased to be minted as a circulating currency in the 1930s, and the world gold standard was abandoned
for a fiat currency system after the Nixon shock measures of 1971.
In 2020, the world's largest gold producer was China, followed by Russia and Australia. A total of around
201,296 tonnes of gold exists above ground, as of 2020. This is equal to a cube with each side measuring roughly
21.7 meters (71 ft). The world's consumption of new gold produced is about 50% in jewelry, 40% in investments,

2.5.4 Gold Uses/Application

Gold is the most malleable of all metals. It can be drawn into a wire of single-atom width, and then stretched
considerably before it breaks. Such nanowires distort via the formation, reorientation, and migration
of dislocations and crystal twins without noticeable hardening. A single gram of gold can be beaten into a sheet of 1
square meter (11 sq ft), and an avoirdupois ounce into 300 square feet (28 m2). Gold leaf can be beaten thin enough to
become semi-transparent.

Gold has a density of 19.3 g/cm3, almost identical to that of tungsten at 19.25 g/cm3; as such, tungsten has been used
8 in
the counterfeiting of gold bars, such as by plating a tungsten bar with gold. By comparison, the density of lead is
11.34 g/cm3, and that of the densest element, osmium, is 22.588±0.015 g/cm3.
 Fig 3. Different colors of Ag–Au–Cu alloys
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I. Decoration
Gold is an excellent mineral to use for decoration. With its bright green color, the mineral adds a lot to
a build, even in small quantities. If players have a ton of Golds and nothing to do with them, decoration is
a great option!

The use of gold has been prevalent throughout history, spanning across various cultures and civilizations.
Its unique properties have made it a highly sought-after metal for both practical and symbolic purposes.

One of the most prominent uses of gold is in the field of jewelry. Gold's lustrous appearance and
malleability make it an ideal material for crafting intricate designs. From ancient Egyptian pharaohs to
modern-day fashion enthusiasts, gold jewelry has always been a symbol of wealth status, and beauty.

Gold also holds significant value as a form of currency. Throughout history, gold coins were used as a
medium of exchange in many societies. Even today, central banks hold substantial amounts of gold
reserve to stabilize their economies during times of financial uncertainty

II. Investment

Gold is regarded as one of the safest investment option, so people often invest in gold coins, bars and
jewelry for financial security

III. Technology

Gold is used in many technological products due it’s excellent conductivity and resistance to corrosion,
it’s widely in cellphones, laptops and other devices.

IV. Medical Field

Gold is used in medical equipment’s like pacemakers, stents and other devices due to its conductivity
and bio compatibility

VI. MARKET ANALYSIS

3.1 BACKGROUND OF MINING SECTOR

Ethiopia has many advantages as a destination for mining investment. These include promising geology,
a well-designed fiscal regime, stable government and a growing domestic market. Additionally, it has a
well-managed and successful artisanal and small scale mining sector. Under the second phase of
Ethiopia’s Growth and Transformation Plan, Ethiopia has the ambitious target for the mining sector to
contribute 10% of GDP by 2025. Recently, Mining Geological surveys prove that Ethiopia has abundant
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mineral resources of metals and precious metals; like gold, coal as well as industrial minerals. These
make the mining sector to be one of the priority sectors in the nation's development program. According
to Ministry of Minerals and Petroleum of Ethiopia, the Ministry is working to revamp production both in
quantity and quality to tap the natural resources for common good of the citizens through developing in
conventional agreements with various local and international companies.

"The main strategic directions of attracting sizable Foreign Direct Investment (FDI) for exploration and
extraction of minerals are to increase (tenfold) foreign exchange earnings of the sector and focus on
production of mineral inputs for the manufacturing sector that promote import substitution," the ministry
underscores. The effort is bearing fruits and the mining operations within the country are expected to be
an important economic catalyst for the Government's export-orientated development strategy.

Recognizing the need to promote market-oriented modern mineral production, processing, and
marketing, the Ministry of Minerals and petroleum established Mineral Market and Value Chain
Development Directorate in 2014 bestowed with diverse responsibilities. The goal is to bring the
minerals sector to a level of larger than 10 percent GDP contribution within 10 years. The government
approved last December a 10-year economic plan, aimed at boosting the amount of foreign-exchange
earned through export and import substitution of minerals from 265 million USD currently to 17 billion
USD by 2030.

Thus, the establishment of such project is intended to take part on the development activity of the country
by involving in the mining development sector, especially through the processing and supplying high
quality Iron products which is demanded as industrial mineral with huge market potential

VII. Economic and social Benefits

The project can create employment for 67 persons. The project will generate Birr 9.85 million in terms of
tax revenue The project can create employment for 67 persons. The project will generate Birr 98.85
million in to the country by exporting to the international Market. The project will also create backward
linkage with a local economy and forward linkage with the jeweler, and construction sector, automotive
sub sector also generates other income for the Government.
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