April 22 (Bloomberg) -- AngloGold Ashanti Ltd., the world’s third-biggest gold producer, and its partner Stratex International Plc are expected to begin drilling for the metal in Djibouti in September, an Energy Ministry official said.
The companies, which obtained 10 exploration licenses in the Horn of Africa country, identified two blocks that may hold “high concentrations” of gold, Abdourahman Omar Haga, director of natural resources in the ministry, said in an interview at a mining conference in Dar es Salaam on April 18. They will continue to explore the remaining eight blocks, he said.
The first stage of drilling is expected to take less than four months, Haga said. Thani Ashanti Alliance Co., a joint venture between AngloGold and Dubai-based Thani Investments, will spearhead development if sufficient reserves are proven, he said.
Djibouti, which hosts about 2,500 U.S. military personnel at the Camp Lemonnier military base, has a $1.1 billion economy with fewer than 1 million people. The economy relies on services related to the country’s strategic location on the Red Sea, one of the world’s busiest shipping lanes.
The joint venture is planning to drill by the fourth quarter “subject to monies being available, the arrangement of appropriate logistical support and approvals,” AngloGold said in an e-mailed response to questions yesterday.
The gold price has fallen 15 percent in 2013 after rising sixfold in a 12-year rally through last year. The metal fell 14 percent in a two-day drop through April 15, the worst slide since 1983.
“We have a port, a good investment code and tax exemptions” he said. “It’s easy to have successful businesses here. We just hope that the price of gold doesn’t continue to drop.”
Thani and Stratex are exploring an area of land between Lake Assal and Lake Abbe in the southwestern part of the country, where gold deposits are embedded in volcanic rock. Lake Assal lies 155 meters (509 feet) below sea level and is Africa’s lowest point on land.
Djibouti’s mining industry, which includes production of minerals including gypsum, diatomite and ignimbrite, accounts for less than 1 percent of total economic output, according to the African Development Bank.
Salt Investment SA, owned by Washington-based Emerging Capital Partners, plans to begin exporting salt from Lake Assal, which has a 60 square kilometer (23 square mile) salt crust and 100 million metric tons of the mineral, making it the world’s largest undeveloped salt reserve.
JB Djibouti Mining Ltd., a unit of JB Group of India, obtained a gold exploitation license in 2011. The company has yet to begin building a mine.
“We have a very high gold anomaly,” Haga said. “If the results give us only one mine, it’s nice for us because we are a small country.”
Djibouti is also in the process of renewing its mining code, which hasn’t been updated since 1994.
To contact the reporter on this story: Sara Jerving in Nairobi at firstname.lastname@example.org
To contact the editor responsible for this story: Paul Richardson at email@example.com