TransAfrika Eyes Rwanda Gold Renaissance

`The drillings have proven that there`s gold down there,` said Edward Mills, project manager for TransAfrika Resources Ltd.

A Mauritius-based mineral exploration company says it is encouraged by initial gold deposits in Rwanda after the first exploratory drillings in the central African nation for fifty years.

While prices for base metals have dropped over the past year due to the economic global downturn, gold has flirted with record highs as investors look toward precious metals as a safe haven from turmoil in the financial system.

"The drillings have proven that there's gold down there," said Edward Mills, project manager for TransAfrika Resources Ltd. "The next step is to find the extension and see if we can come up with the results to say gold here has economic potential," he told Reuters in an interview late on Thursday.

TransAfrika said it had drilled 22 holes in the small hilly nation since being awarded a four-year contract in 2007. Small-scale artisanal production has dominated the local industry since Rwanda won independence from Belgium in 1962.

Mills said the company still needed to establish volume and grade for the deposits. He said TransAfrika will have invested around $15 million by October of this year.

The unlisted company has two exploration permits in Rwanda covering approximately 970.9 square kilometres, according to its website, www.transafrikaresources.com.

Rwandan President Paul Kagame has been praised for fostering robust growth since the 1994 genocide of 800,000 Tutsis and moderate Hutus. In 2008, the economy grew 11.2 percent, according to the central bank.

Rwanda's mineral industry earned more than $41 million from tin ore cassiterite, $37 million from coltan and almost $13 million from wolfram, or tungsten, last year, the bank said in a report this week. Coltan is used in mobile phone electronics.

Mills said TransAfrika, which operates in seven countries across the continent, may float on the South African stock market later this year depending on the world financial crisis.

Some 80 percent of Rwanda's known gold deposits lie in the inaccessible Nyungwe Forest, an ecological hotspot that is home to chimpanzees and large troops of Colobus monkeys, Mills said.

He said Rogi Mining Ltd, a rival Russian company, won exploration contracts for the best gold deposits identified by the Belgians a few years ago, but have yet to start drilling.

"I still think it's early days, but we are encouraged by our initial results," Mills said.