OROMIA REGIONAL STATE MINERAL DEVELOPEMNT AUTHORITY, EAST HARAGEE ZONE OFFICE

OWNER: FAYISSA BARECHA

FEASIBILITY STUDY
FOR SMALL SCAL
E
GRANITEQUARRY
AT
WOBO JARSO LOCALITY
JALALLE KEBELE
,BABBILE DISTRICT , EAST HARAGEE
ZONE
OF
OROMIAREGIONALSTATE

CONSULTANT: MUSTAFA SHAYTO, CONSULTANT IN ANY MINERAL WORKS

TO BE SUBMITTED TO : EAST HARAGEE ZONE MINERAL DVELOPEMNT OFFICE

NOVEMBERER 2022

HARAR
 TABLE OF CONTENTS

Executive Summary ...................................................................................................................... 3

1. Introduction ............................................................................................................................... 4
1.1. OBJECTIVE .......................................................................................................................................................... 4
1.2.GEOGRAPHIC SETTING ......................................................................................................................................... 5
1.2.1. Location ....................................................................................................................................................... 5
1.2.2. Accessibility ................................................................................................................................................. 9
1.2.3. Physiography ............................................................................................................................................... 9
1.2.4. Climate ........................................................................................................................................................ 9
1.2.5. Socio – Economic condition ......................................................................................................................... 9
1.2.6. Infrastructural Development ....................................................................................................................... 9

2. Demand and Supply Trend .................................................................................................... 10

2.1. DEMAND TREND ............................................................................................................................................... 10
2.2. SUPPLY TREND .................................................................................................................................................. 11
2.3.PRICE CONSIDERATION ....................................................................................................................................... 11
2.4. BENEFITS AND BENEFICIARIES .......................................................................................................................... 12
2.4.1.Social Benefits ............................................................................................................................................ 12
2.4.2.Economic Benefits ...................................................................................................................................... 12

3.Regional and Local geology .................................................................................................... 12

3. 1.REGIONAL GEOLOGY ......................................................................................................................................... 12
3.2. LOCAL GEOLOGY .............................................................................................................................................. 14
3.2.1.Granite ....................................................................................................................................................... 14
3.2.2.Quartz. Plagioclase and Biotite .................................................................................................................. 14
3.3.MINERALOGY OF GRANITE ROCK ...................................................................................................................... 15

4. Reserve Estimation ................................................................................................................. 16

5.Mining Operation .................................................................................................................... 17
5.1.MINING METHODS AND RELATED ACTIVITIES ................................................................................................... 17
5.2.PRODUCTION CAPACITY ..................................................................................................................................... 18
5.3.PROJECT LIFE ..................................................................................................................................................... 18

6.Organization and Management .............................................................................................. 18

7. Resource Requirement of the Project ................................................................................... 19
7.1.MACHINERIES AND EQUIPMENT’S ...................................................................................................................... 19
7.2.MANPOWER ....................................................................................................................................................... 20
7.3.PROPOSED MANPOWER ...................................................................................................................................... 20
7.4.FINANCIAL EXPENDITURES ................................................................................................................................ 20
7.4.1.Pre – Production Cost ................................................................................................................................. 20
7.4.2.Fixed Capital of the Project ........................................................................................................................ 20
7.4. 3.Operating Cost ........................................................................................................................................... 21

1
 7.5. PROJECT COST SUMMARY ................................................................................................................................. 22
7.6.FUND SOURCES .................................................................................................................................................. 23
7.6.1.Financial Analysis ....................................................................................................................................... 24

8.Work Program ......................................................................................................................... 26

8.1.WORK PROGRAM FOR 5 YEARS ( 2022 – 2026/27). ............................................................................................ 27

9. Environmental Aspects of the project ................................................................................... 28

9. 1.EXPECTED IMPACTS ........................................................................................................................................... 28
9.2. MITIGATION MEASURES .................................................................................................................................... 28

10. Conclusion ............................................................................................................................. 29

Annex ........................................................................................................................................... 31
CONSULTANT’S DOCUMENTS ................................................................................................................................... 31

List of Figures

Figure 1. Location map of project area…………………………………………………………………………………..7

List of Tables

Table 1. Bench Mark GPS Reading in (UTM)…………………………………………….……………………………...6

Table 2. Granite Imports data of Ethiopia - Voleba.com……………………………………………………………9

Table 3.Machinary........................................................................................................................
19 Table 4. Man
power ...................................................................................................................... 20 Table 5.
Production cost ............................................................................................................... 20 Table
6. Fixed Capital .................................................................................................................... 21
Table 7. Project cost summary ......................................................................................................
22 Table 8. Project profit and loss
statement ................................................................................... 24 Table 9. Cash
flow ......................................................................................................................... 25 Table 10.
Work schedule............................................................................................................... 27
Table 11. Project Work program ...................................................................................................
27 List of Plates

Photo plate 1: 1a (Left ) and Plate 2a (Right)………………………………………………………………………..14

2
Executive Summary
 Name of the Promoter :- FAYISSA BARECHA
 License Location: - Oromia National Regional State, East Hararghe Zone , Babbile
District, Jalaale Kebele , and Wobo Jarso Locality.
 Legal forms of business-Private
 Status of business:- Feasibility study
 License Type : -Small scale mining
 License duration : 5yrs
 Resource Type:- Granite
 The bulk density : 3.0t /m3
 The project area 50,000m2
 Effective assumed mineable thickness (estimated): 10m
 Deposit mineable volume at 85% recovery (R) :850,000 m3
 Assumed annual production per year :: 3,000m3
 Life Span at planned mining scale: above 283 years
 Average Cost of the Granite Block : 666.667Bir m3
 Annual Gross sale: 2,000,000Brr
 Royalty (5%) : 60,000Birr
 Fixed capital expenditure:10,036,000birr
 Annual operating cost : 1,715,305 Birr
 Source of finance is about 70 % is expected from a bank loan, whereas the remaining
30% of it or birr will be covered from own equity financing.
 Cumulative profit in 5 yrs : 32,963,000
 The annual cash flow from the production :12,371,500 Birr
 Pay Back Period (PBP): 1.5 years
 Net Present Value (NPV): 26,817,000 Birr
 Internal Rate of Return (IRR): 87.2%

3
1. Introduction

Construction and industrial Materials are essential and corner stones for economic development
of a country. Ethiopia is richly endowed with these mineral resources. The attention given to the
development of such minerals is very limited despite of their decisive role in industrialization
process. The investment can be seen from this point of view and its realization can encourage the
development of other similar resource found elsewhere in the region as well as in the nation
presenting. In our country, the number and type of factories that require industrial mineral and
rock row materials to produce different finished products have been increased significantly in
number and kind. `

In addition, the economic development of any country solely depends on the magnitude of
industrialization, which in turn, depend on the type and magnitude of industrial raw material used
and its final processed products. In is very obvious that mineral raw materials are the most
dominate industrial raw materials in industrialization process.

Despite the fact that the potential of industrial minerals and rock raw materials is found
inconsiderable size and type in different part of the country, the domestic supply problem of this
natural resource is becoming acute, hence has forced the situation to depend exclusively on
import activities. Nevertheless, this resource can be developed with simple technology, methods
and relatively with less amount of investment input. In this regard, the role of private sector is
expected to be of the leading rank in the development process.

1.1. Objective

The main objective of this mining project is to mine and process the granite body for decorative
dimension stone. At present, the market demand for the stone at home and abroad is very high.
Because of this, FAYISSA BARECHA presents this proposal with the main objective of
developing and quarrying the granite with subsequent processing and polishing of the stone to
any acceptable standard size for sale abroad and in the country. Its implementation will also
benefit the employee, the consumer society and the government. In this respect the project is
aimed to promote the following objectives:-

4
  To promote industrially processed granite and supply the produces to the market
at competitive prices.

 To provide direct and indirect employment to a large segment of the population.

 Facilitate the transfer of modern technologies to the locality of the project and
improve national production of dimension stone and lay bases for the
construction materials mining sector development.

 Effectively use of local resources inputs and strengthening the linkage between
construction industries and mining sectors of the economy.

 Save foreign currency drain by replacing tremendous granite dimension stone

imports by local home-made products. Rather, by exporting Granite Blocks the
investment can generate foreign currency, that minimizes the gap between
foreign Import /Export relations.

 Increase government revenue through different forms of taxes; which in turn

used to facilitate social and economic development.

1.2. Geographic Setting

1.2.1. Location

The license area is administratively located in Oromia Regional State, East Hararge Zone.
Babbiile District, Wobo Jarso Peasant Association at a locality called . It is about 560km from
Finfinnee city via Harar City up to the district town Babbiilee. After Babbiile Town, the quarry
site can be reached by an all-weather dirt road of about 4kms distance. The overall area coverage
of the project site is 50,000m2 (5.0 hectares) .

The reasons of selecting the granite quarry site location for the proposed project are attributed
to:-

 Its proximity to the raw material supply sources of granite body in the region;

 Its proximity to services and facilities like road, transport services and infrastructure
facilities;

 The existing conductive social and investment situations and increase number of private
investment; and

 Accessibility and ease of future development opportunity.

5
 The geographic coordinates of the project sites are described in a table as shown below.

Table 1. Bench mark Geo-coordinates ( in UTM ) reading of the project area

B.M X Y Area

1. 210808 1017639 50,000m2/ 5.0 (hec.)

2. 210929 1017559

3. 211127 1017628

4. 211223 1017767

5. 210991 1018117

6. 210955 1017759

6
7
Figure 1. Location map of project area

Figure 2. Site map of project area

8
1.2.2. Accessibility

The quarry at Wobo Jarso Granite site can be reach by the main asphalted road that runs from
Finfinnee to Babbiile via Harar City with over 500km distance; i.e., e Babbiile Town is at
35Km distance from Harar and on the way to Jijjiga Town asphalt road towards east.. Finally,
a 4Km all-weather gravel road connects the site to in SSE direction of Babbiile Town.

1.2.3. Physiography

Most topography of Eastern Hararghe Zone of Oromia Region is known for its rugged terrains,
elevated mountain peaks , stretched plain lands and dissected valleys and narrow flood plains.

The Babbiile district also shows some pronounced contract in topography and small parts of the
area is characterized by plain flood plain valleys. In addition, the quarry area and the highest
point in surroundings topography lie in an altitudinal range of 1600m & 1627m above the sea
level respectively; rather can be said very few meters.

1.2.4. Climate

The climate of the quarry site is almost Woina – Dega type of the Ethiopian classification
characterized by hot temperature.
 The main rain rains from June to August season and the mean annual
temperature is between 150c-300c. In addition the surrounding area gets small
amount of rainfall during the rest of the year.

1.2.5. Socio – Economic condition

The inhabitants of the area are the Oromo people except for few settlers. Afaan Oromo is the
language of the inhabitant and the surrounding people mainly Islamic region. The major cash
crops collected from the irrigated farms are fruits dominantly, orange & banana ; cash crops
Maize, & Onion are also produced in less quantity.

1.2.6. Infrastructural Development

The village had a small climate and elementary school to party satisfies their demand in health &
education. The area is a suitable for industrialization due to road access that runs from Finfinnee
to Jijjiga and potential of construction and industrial materials.

9
2. Demand and Supply Trend
2.1. Demand Trend

The future demand for granite, like many other construction materials is a function of a number
of interrelated variables. These variables are essential in determining the magnitude and trend of
demand for construction materials are:-

 The overall economic development level and growth trend of the country.

 The pattern and growth trend of the industrialization process

 Government policies and regulations that have impact on the future level and
trend of industrialization activities. and

 Size of population and its growth rate considering all the above factors future
demand for the products is estimated to grow at a higher rate. Therefore the
project under consideration will have a reliable market prospects both locally
and in export markets.

Table 2. Granite Imports data of Ethiopia - Voleba.com

10
2.2. Supply trend

The country’s requirement for granite is met through domestic production and imports. On the
other hand, the country exports high quality granites to various countries. Therefore, the apparent
consumption of granite is composed of domestic production minus export.

2.3. Price consideration

The price of the proposed material is determined based up on the production cost excluding
transport and fuel expenses. At the present condition on site sell price (mouth sale) of
3500birr/m3 is negotiated between us and the buyer for our products, which is subject to change
on the future prevailing conditions.

11
2.4. Benefits and Beneficiaries

The benefits expected from the project activity are firstly the project owner or the investor. Then
goes to the local people which including them by daily labor, temporary and permanent worker
and it will benefit our country by substituting the imported construction material products from
abroad. The company will also generate an income tax. Royalty, and turn over tax for the
government. Since the area is near the road no much effort can be expected from the investor.

2.4.1.Social Benefits

The planned manpower of the project amounts are 20. These will create jobs that will contribute
to the reducing of the alarming unemployment growth rate in the country.

The project employees will acquire experiences in mining industry. This is believed to contribute
to the development of mining skills in the country.

Above all, the project will contribute to satisfy the demands of the ever increasing construction
finishing materials shortage in Oromia Regions and the country in general..

2.4.2.Economic Benefits

The project’s employee will benefit from salaries and wages. While the project owner and
government shall gain profit from sales revenue and royalty and income tax , respectively from
the project’s revenue. The local community will also get the job opportunity. The overall benefit
goes to the economic development of the country, in general.

3.Regional and Local geology

3.1.Regional Geology
The geological set up of the eastern part of the country comprise the Precambrian metamorphic
complex basement, Mesozoic sediments characterized by marine deposits (Limestone beds
succession) alternating with continental sediment. The Precambrian complex basement rocks of
the region are exposed largely in Eastern part of the region East of Harer Town and extend
towards Dire Dawa covering the area between Qarsa and Dhangago further to the east and to the
west, mostly cropped out in valleys where rivers resulted in deep gorges and wide valleys.
Kazmin 1978 and other researchers classified the metamorphic complex basement of Ethiopia

12
into three groups based on metamorphic grade, age relationship and deformation style. Kazmin
1978, named them Lower, Middle and Upper Complexes.

 The Lower Complex

Consists of metamorphic rocks of high – grade metamorphic faces markedly characterized by
high grade gneisses.

 The Middle Complex

Basement composed characteristically of volcano – sedimentary rocks subjected to regional
metamorphism of green schist to lower amphibole facies.

 The Upper Complex

Basement is characterized by the rock association of volcano – sedimentary origin that
underwent low that underwent low grade metamorphism (green schist fancies) and typically
consist of chlorite phylite, graphitic phylite, ferruginous and graphitic quartzite marble lenses talc
serpentine schist. Talc –chlorite schist etc.

 Mesozoic Sedimentary Successions

Are known to consist sedimentary rocks formed as a consequence of transgression and regression
of marine water body in the eastern and central part of the country. The whole stratigraphic
succession of Mesozoic sediments comprises (from old to young) Adigrat sandstone, Hamalie
Limestone and the Ambaradom Sandstone (upper sandstone) formation.

 The Lower Sandstone (Adigrat Formation)

Over lain directly on the Precambrian complex basement unconformably and consists
conglomerates (at basal), sandstone, siltstone, marl and graded to hamalie limestone.

 The Amba – Aradam (Upper Limestone and Sandstone) Formation

Is considered, as youngest sedimentary formation deposited during the Mesozoic Indian Ocean
regression to East Africa, This formation is represented by Upper SST ( Debrelibanos Formation
and Muger Mudstone ) in western Ethiopia ( Bule Nile Basin ). But in eastern Ethiopia ( East and
West Harargee Zones Oromia ) , Ambaaradom Formation (Upper Sandstone and Limestone ) is
represented in North Ogaden Basin by Qoraahe , Mustahil, Ferefer , Belet Un, Auradu and Taleh
Limestones and Jessooma Sandstone , collectively referred as Upper Limestone and Sandstone).

13
This is due to the regression sequence time gap and hence environment of deposition difference
between the margin and central part of the ocean into the sea.

3.2. Local Geology

3.2.1. Granite

The Babiile Granite is structurally post tectonic body and Litho- stratigraphically associated to
the Middle Basement Complex of Ethiopia (V. Kazmin 1978). This granite body is selected for
dimension stone due to its massive nature (un-foliated structures and few systematic joints of
significant separations) beautiful color, grain size and standard technological tests (compressive
strength, etc.).

So, Babiile Granite is highly preferred in this proposal and studied for its use as a dimension
stone, because of its location and accessibility being adjacent to the main road and a city. The
area has been subjected to detail geological studies. Selected samples from the area have also
been taken to determine its properties for future quarrying of the stone. The sampling has shown
that the rock can take polish exhibiting smooth reflecting surfaces without scratches, pits or
chips.

The granite itself is fine to medium grained, light gray to gray with tints of black (biotite) and
pink (feldspar). The mineral constituents are mainly quartz, plagioclase and biotite.

They are often jointed giving a conspicuous blocky appearance to the outcrop. Fractures are
generally scarce with some being filled with quartz veins. From the sparing of the joints, most of
which have left the granite outcrop it is easy to extract blocks of sizeable quarry dimensions. It is
possible to immediately start of the mining.

Geologically the region around Babiile is gneiss of the lower complex intruded by the granite
body which is post tectonic.

The granite body forms a prominent ridge extending North West- South East along a narrow belt
which extends 4-5 kms in general width NW-SE and 0.5-1 kms, along the general foliation
directions (length NE-SW). The contact with the underlying granitic gneiss is simply an
unconformity. Mineral constituents of the Babiile is generally can be categorized as follows:

14
3.2.2. Quartz- Plagioclase - Biotite Granite

The successful and economical working of granite quarries depends upon an intelligent
application of knowledge of the structure of the rock and its natural divisions in the mass. As
well as upon improved methods, tools, and machinery for quarrying. The topographical location
of the quarry and its relation to facilities for transportation are important factors that affect the
productiveness and greatly modify the actual cost of operations in a given place. The
manufacturing process of granite blocks and slabs involves the following operations: quarry
opening, block production; cutting to produce slab; polishing and tiling in terms of the market
out let.

3.3. Mineralogy of Granite Rock

Mineralogical analysis of granite rocks can be done either using X-ray diffraction techniques or
thermal methods of analysis such as differential thermal analyzer (DTA) and Thermogravimetric
analyzer (TGA). DTA measures the endothermic decomposing while TGA measures the change
in the mass of the granite minerals.

It is not easy in the field to determine the percentage of quartz. biotite and plagioclase of granite
rocks.Its color is, light gray to gray with tints of black (biotite) and pink (feldspar) in color. They
are generally massive, with few ill-defined banding, fine to medium grained and well
crystallized. The banding of the rocks is due to variation in grain size and mineralogy.

15
Photo plate 1: Granite body (1a (Left ) and Plate 2a (Right))

4. Reserve Estimation
Though no drilling has been done on the project site to determine the depth of the deposit, minor
geological mapping was done in the area for the preliminary estimation of the reserve. The
minimum and average thickness of the deposit common to all the area under concession is taken
and is calculated using the polygon method.

The average mine-able depth is measured to be 12 meter. Furthermore the total area of the
proposed area is about 70,400 sq m

Effects of unforeseen factors like weathering, intercalation of unwanted materials and

nonresistant inclusions in the rock, are assumed to lower its actual exploitable volume by about
85%.

16
Therefore the total mineable reserve of the granite rock deposits at the proposed project site is
estimated as follow.

Total Area = 50,000sq m

Average minable thickness of the deposit =10m

Total mineable Reserve (volume)= 50,000m2 x 10m = 500,000m3

No overburden or man-made structure is observed on the deposit, so that the recovery is

estimated to be high i.e., 85%

Therefore the recoverable reserve from the deposit will be:

500,000m3 * 0.85= 850,000m3 which will be proposed to be harvested from the project site
throughout the project life.

5. Mining Operation
5.1. Mining methods and Related Activities
The Babiile Granite deposit can be mined by a simple open pit kind of quarrying. A
semimechanized method of quarrying shall be applied for the cutting of the stone block from the
site. The quarry face and height shall be chosen in such a way that it shall ensure the required
marketability, safety of mining work, better productivity of mine equipment and possible low
extraction costs.
During field visit to the area a quarry face suitable to produce a block of 3*3*3 =9m 3 has been
selected to maximize markets. Nevertheless, Granite Blocks as big as 6, 7 to 8 m 3 is a reasonable
size of productions. Fortunately, no overburden material has been found except for the
consideration of limited agricultural lands. As the Babiile Granite body is massive quarrying can
possibly be by surface quarrying and benching. Mining of the Granite dimension stone shall
commence with direct cutting of the exposed outcrop face into acceptable block size as big as
6.75 m3 (3m*1.5m*1.5m) or even better. Mining equipment such as pneumatic hammer drills
with compressors, inserts, etc are required. Heavy duty machineries like wheel loader and
temporarily Bull Dozer are demanded. The mining equipment to be deployed has been stated
under resource equipment section.

17
5.2. Production Capacity

The production capacity of any mining operation can be affected by numerous factors, especially,
during the early stage of the execution of the operation. Some of the major capacity limiting
situations is given below for comparison.

- The history and stage of mine

- Mining conditions

- Capacity of machineries and equipment’s

- Availability of required skilled manpower and supplies

- Above all, the size of the needy market

Thus annual production of the operation will be solely depending on the achievement and gained
experiences during the pilot time. At present, it is planned to produce processed material of
3,000m3 per year.

5.3.Project Life

The life period of any mining process is a variable of the volume or tonnage of workable
resource deposit and the average annual production size of the final marketable production,
provided that other governing conditions remains constant.

Thus:

- Project life =mineable reserve/annual production

= 718,0803 /3,000m3/year

= 283years (Based on the assumed annual production rate)

6. Organization and Management

The organizational structure and management of the project is designed to have two major
functional bodies. The head quarter which is supposed to be established in Finfinnee town
undertakes annual budget planning, control and evaluates the performance of the overall
activities of the project. The site office which is supposed to be established at the quarry site,
18
undertakes technical activities like quarrying, storing, loading and over all operation and
maintenance works of the maintenance works of the machineries.

The organization includes project manager, secretary, production and Technical unit. Marketing
unit and Administration and finance unit.

7. Resource Requirement of the Project

In order to realize the project implement in addition to the mineral resource, expenditure for the
purchase of machinery and equipment’s, vehicle, manpower (skilled and unskilled) etc. and
related financial requirements are considered. In addition, the intended project requires office and
store etc. to be constructed at the site.

7.1. Machineries and Equipment’s

Proposed machineries requirements of the project are presented on the following table.
Machinery Requirement

Table 3. Machinery
No Machinery Quantity
1 Compressor 2
2 Loader 1
3 Excavator 1
4 Generator 1
5 Jacking plant 3
6 Winch crane 30ton 1
7 Plugs and feather 100
8 Tungsten carbide chisels bits 800
9 Integrated drill rods 400
10 Pneumatic hammer/rock drill 5pcs
11 Pneumatic tungsten edge sharpener with replacement 1
disk
12 Rubber hose and connection 2 rolls 40mts. Each
13 Demolishing agent 15ton
14 1 set lifting and swing mechanism 1
15 Control panel 3pcs
16 Air bag polymer control 3pcs
17 Double Cabinet Pick –ups Car 1
18 Office and safety equipment’s
19 Hand tools

19
7.2. Manpower

The organization structure is designed in such a way that it enables to fully undertake the project
objective. It consist managing staffs, qualified personnel, and unskilled labors. Production
Division will handle the production activity of the project.

The designed manpower requirement of the project is 9 permanent and 2 temporary employee
and 9 production workers. Except guards, all are good experience in their respective field of
work. The organizational structure and the manpower of the project are presented as follows.

7.3. Proposed Manpower

Table 4. Man power
No Personnel Quantity
1 General manager 1
2 Secretary 1
3 Driver 1
4 Technical manager 1
5 Accountant 1
6 Loader Operator 1
7 Production workers 9
8 Sales man/cashier 1
9 Guards 4
Total 20

7.4.Financial Expenditures
7.4.1.Pre – Production Cost

Table 5. Production cost

No Description Cost(Birr)
1 Exploration and consultancy fee 20,000
2 License Fee 5,000
3 Land acquisition
4 Access road construction 100,000
5 Office and store construction 100,000
6 Mobilization of Machineries 50,000
Total 275,000
7.4.2. Fixed Capital of the Project

20
Table 6. Fixed Capital
No Machinery Quantity Unit cost Total cost
1 Compressor 2 500,000 1,000,000
2 Loader 1 2,000,000 2,000,000
3 Excavator 1 3,000,000 3,000,000
4 Generator 1 500,000 1,000,000
5 Jacking plant 3 100,000 300,000
6 Winch crane 30ton 1 500,000 500,000
7 Plugs and feather 100 100 10,000
8 Tungsten carbide chisels bits 1000 100 100,000
9 Integrated drill rods 500 500 250,000
10 Pneumatic hammer/rock drill 6 5,000 30,000
11 Pneumatic tungsten edge sharpener 1 50,000 50,000
with replacement disk
12 Rubber hose and connection 2 rolls 5,000 10,000
40 mts.
Each
13 Demolishing agent 20 ton 5,000 100,000
14 1 set lifting and swing mechanism 1 500,000 500,000
15 Control panel 2 pcs 8,000 16,000
16 Air bag polymer control 2 pcs 10,000 20,000
17 Pick –ups 1 1,000,000 1,000,000
18 Office and safety equipment’s 100,000 100,000
19 Hand tools 50,000 50,000
Total 10,036,000

7.4.3. Operating Cost

a. Salary and Wages

No Personnel Quantity Salary/month Salary /year
1 General manager 1 10,000 120,000
2 Secretary 1 2,000 24,000
3 Driver 1 2,000 24,000
4 Technical manager 1 3,000 36,000
5 Accountant 1 3,000 36,000
6 Loader Operator 1 3,000 36,000
7 Production workers 9
8 Sales man/cashier 1 2000 24,000
9 Guards 4 2500 30,000
Total 20 330,000

21
 b. Fuel, Lubricants, and Maintenance Expense

No Machine Type Consumption Lit. Unit cost Total cost

Rate
1 Loader 15lit/hr 9,000 23.00 207,000
2 Compressor 10lit/hr 6,400 23.00 147,200
3 Generator 15lit/hr 3,600 23.00 82,800
4 Lubricants (10)% 43,700
Fuel cost)
5 Maintenance 150,000
6 Excavator 15lit/hr 9,000 17.00 207,000
7 Contingency 5% 41,885
Total 879,585

- Note, for all machineries- it is calculated on the basis of working hours per/day.

c. Utilities Expenditure
Includes materials to enhance the day to day activities of the project. The details are as follows.
No Item Cost(Birr/Year)
1 Stationary, cleaning agents etc 50,000
2 Telephone, Fax, Postage, internet 50,000
3 Others (unseen) 30,000
Total 130,000

d. Miscellaneous
No Item Cost (Birr/Year)
1 Travel and Perdime 100,000
2 Insurance (2% of fixed capital) 200,720
3 Medical expense 50,000
4 Uniform 10,000
5 Environmental rehabilitation 15,000
Total 375,720

- Total operating cost = 1,715,305 birr

22
7.5. Project Cost Summary
Table 7. Project cost summary

Description Project Cost (Birr)

1. Pre –production cost 275,000
Exploration and consultancy fee 20,000
License Fee 5,000
Land acquisition
Office and store construction 100,000
Access and road construction 100,000
Mobilization of Machineries 50,000
2. Fixed Capital Expenditure cost 10,036,000
Compressor 1,000,000
Loader 2,000,000
Excavator 3,000,000
Generator 1,000,000
Jacking plant 300,000
Winch crane 30 ton 500,000
Plugs and feather 10,000
Tungsten carbide chisels bits 100,000
Integrated drill rods 250,000
Pneumatic hammer/rock drill 30,000
Pneumatic tungsten edge sharpener 50,000
With replacement disk
Rubber hose and connection 10,000
Demolishing agent 100,000
1set lifting and swing mechanism 500,000
Control panel 16,000
Air bag polymer control 20,000
Pick up 1,000,000
Office and safety equipment 100,000
Hand tools 50,000
3. Annual operating Cost 1,715,305
Salary and wages 330,000
Fuel, Lubricants and Maintenance 879,585
Utilities 130,000
Miscellaneous 375,720
Total Project Cost 12,026,305

23
7.6. Fund Sources

The Fixed Capital Expenditure cost is Birr 10,036,000 and 70% ( Birr 7,025,200) is financed by
bank loan involvement at 9% interest rate in the implementation of the project. 30% ( Birr
3,010,800) of the project cost will be financed from own equity. The bank loan payment schedule
is as follows

Year Principal Interest (9%) Loan Loan+ Interest Remark

00 7,025,200 00 00 00

1 7,025,200 632,268.0 1,405,040 2,037,308.0

2 5,620,160 505,814.4 1,405,040 1,910,854.4

3 4,215,120 379,360.8 1,405,040 1,784,400.8

4 2,810,080 252,907.2 1,405,040 1,657947.2

5 1,405,040 126,453.6 1,405,040 1,531,493.6

Sum - 8,922,004

7.6.1. Financial Analysis

 Preliminary Project profit and loss statement forecast for the first year

Table 8. Project profit and loss statement

No Description Amount (Birr)

1 Sales Revenue (=) 9,000,000

2 Royalty (5%) 450,000

24
3 Turn Over Tax (2%) 180,000

4 Operating cost 1,715,305

5 Annual Depreciation 401,440

25
  Project Cash (resource) flow Statement (in ‘000 Birr)

Table 9. Cash flow

Project Year

Description 0 1 2 3 4 5
Capital Cost 2490.9 490.9 490.9 490.9 490.9 490.9
Cash Revenue 0 2000 3000 3500 4250 5000

Cash flow Before

Dep. And Taxes -2490.9 1509 2510 3010 3760 4510

Less Depreciation
Streak line Method 0 369 738 1107 1476 1845
IBIT -2490.9 1140 1772 1903 2284 2665
Income Tax30% 0 342 531 570 685 799.5
Net Income -2490.9 798 1241 1333 1599 1865.5
Add. Depreciation 0 369 738 1107 1476 1845

After tax
Cash flows -2490.9 1167 1979 2440 3075 3710.5
Present Value 5399 5939 6533 7187 7905
NPV 26,817
IRR 87.2%
PBP 1.5yrs
25
8. Work Program

It is expected that the project will be ordered 6 months after singing agreement with the licensing
authority. The major activities after completion of the license acquiring process and the sequences of their
implementations during the initial year are as follows.

1. Procurement of mining equipment, machinery, etc.

2. Recruitment of necessary manpower.

3. Construction of access road and store, respectively.

4. Mobilization and installation of equipment

5. Pilot production and project commissioning

The following table presents the work schedule for the initial year of the project. Table
10. Work schedule
28
No Activities Months

1 2 3 4 5 6 7 8 9 10 11 12

1 Procurement

2 Recruitment

3 Civil work

4 Mobilization and
Installation

5.
Pre- production

It would be important to mention here additionally that the project will be managed and smartly
coordinated by well- experienced personnel management so that the task accomplishment will be effective
to implement the project according to this schedule.

8.1. Work program for 5 years ( 2022 – 2026/27).

Table 11. Project Work program

Activity Years 1 2 3 4 5

2022/23 2023/24 2024/25 2025/26 2026/27

29
Production of 3000 3000 3000 3000 3000
granite in m3

9. Environmental Aspects of the project

Any type of natural resource extraction leaves negative scar on the area of the process, particularly where
preplanned conservation and reclamation programs are not under taken side by side with the extraction
activities.

Problems that can be generated as the consequence need to be addressed specifically with remedial
solution. Not only planning for the extraction of the extraction of the specific resource, but also long term
land use strategy must be designed simultaneously. Overall hazard – crushing conditions must be avoided
and/or minimized either during the process or after stoppage.

9.1. Expected Impacts

The possible negative environmental impacts that can be generated as the consequence of the mining
activity are:

- Destruction of natural topography or landform

- Sound pollution during mining operation and crushing

- Dust generation possibly throughout the process

- Down movement of rock fragments

- Increased erosion intensity

- Cut down of trees found within the operation site and

- Farmland disturbance

These are the foreseen possible impacts that can occur as the consequence of the activities of the project in
the vicinity of the site and in the surrounding.

30
9.2. Mitigation Measures
In view of environmental conservation, it is concern of this investment since the generation of the project
ideal. Hence, the problems that can be possibly arise as the result of the project activities and the
protective measures are not lined or planned with sufficiently allocated funds., starting from the date of
commencement of the project we will assign the environmental work program.

- The land to be quarried will get leveled and made topographically in agreement with the
surrounding.

- The stripped soil will get damped at selected part of the site and compacted by using bulldozer as
to minimize aggressive run-off water action against it.

- Down movement rock debris can be controlled by employing bench method with sufficient.

- The trees found around the site are mostly thorny bushes. If it is necessary to cut down them, then,
after the mining is advanced trees, which are friendly to the area, will be selected and planted.

- If it is necessary to use farmland the farmers will be paid compensation on negotiation bases.

In general, based on the above setup plan and the licensing office advice, reclamation activities will take
place side by side with the mining operation. Subsequently, for the purpose, Birr 25,000 budget is
allocated annually. This figure can be changed whenever necessary.

10. Conclusion

The project owned by FAYISSA BARECHA is to be shown to operationally profitable and has
significant socio – economic benefits.

According to the projected income statement, the envisaged project starts earning profit from the first year
of operation. The income statement and other profitability indicators show that the project is viable. The
project is believed to have significant social and economic benefits that accrue to the society beyond those
financial returns to its owner.

The most remarkable social benefits can be expressed in terms of job creation that leads to reduction in the
level of unemployment.

31
The project directly employs 20 persons. It is obvious that in the sales and distribution activities outside
the project, more persons can engage themselves gainfully. Any manufacturing process using relatively
modern technology helps to advance technical awareness and skill development in a society. The project
contributes to the overall technological development of the nation.

By all considerations, the country and the promoter will benefit from the project. Therefore, the realization
of the project is justifiable on all grounds and should be recommended for implementation and deserve the
necessary support from all concerned.

Finally, considering the attractive financial and economic benefits the project is to produce, the company
has made the necessary preparation hoping that all the concerned offices and financial institutions should
give their support to facilitate the implementation of this plan.

32
Annex
Consultant’s Documents

33