Alecto Minerals Plc, a British-registered mining company involved in gold exploration in Ethiopia, has acquired shares of Ethiopia Rift Valley Resources Ltd, a local mining company, for 9.7 million Br.
Ethiopia Rift Valley Resources, a recent entrant to the sector, was established in 2010 by Wondimu W. Yohannes (Eng). Prior to establishing the company, he worked as a senior consultant for Nyota Minerals, which owns several gold and other precious mineral exploration licences in Ethiopia.
The company he established acquired a three-year gold and emerald exploration licence in Woya Boda zone, Oromia Regional State, in July 2011. It holds a 945.5sqm concession, for which it put up 200,000 dollars as a performance bond for one year.
This concession is located in one of the highly prospective areas for gold exploration, near where Legedenbi of MIDROC is located. Oromia Regional State is the top gold producing state contributing 646.2kg of gold worth 109.5 million dollars in the first quarter of this fiscal year.
The agreement to acquire shares in this company became effective on November 22, 2011, with payment to be paid in two phases. In the first phase, Alecto Minerals is to pay 3.6 million Br within two months of the date of the agreement. The remaining is to be paid before July 1, 2012, if Alecto decides to continue to fund the exploration programme beyond that date.
This acquisition will increase the presence of Alecto, which already has a 1,953sqm gold exploration licence in Metekel zone in Benishangul Gumuz Regional State. The company also has gold and uranium exploration licences in Mauritania totalling 1,592sqm.
This a deal brings much needed capital backing to the new entrant, Ethiopia Rift Valley Resources. The deal is meant to increase the exploration capacity of the company, according to Wondimu, who also manages the company.
“Since the gold exploration is risky and capital intensive, international companies help in the transmission of technology,” he told Fortune.
However, declining to comment on exactly how much of the shares was transferred to Alecto, the majority stake still remained with Ethiopia Rift Valley Resources, Wondimu stated.
Indeed, many companies have sold portions of their shares to strengthen their exploration capacities, of which another recent one is Sheba Exploration Ltd, another British-based mining company. It transferred 40pc of its shares to Centmin Egypt Ltd, which is registered in Australia due to financial constraints. Read More on Fortune