Kampala — Uganda is set to resume the mining of copper following the commencement of a feasibility study by Uganda Gold Mining Ltd (UGM) on the metal deposits in the country, a trade source said last week.

The Company, based in Vancouver, Canada, signed a memorandum of understanding with Kilembe Mines Ltd on September 27, 2004, to start exploration and production on copper, cobalt and other minerals that might be found.

The agreement also gives UGM a 70 per cent stake in Kilembe mines, which was initially owned 100 percent by the government of Uganda.

Established in 1950 by the British colonial government, Kilembe mines developed to a peak, pouring 16 million metric tonnes of ore (cobalt and copper).

However, it was progressively ruined by political turmoil and dwindling ores.

According to estimates of government geologists, Uganda has more than four million tonnes of copper deposits.

Last month, UGM appointed a number of experienced geologists and mining technicians to assist in the study.

According to a statement from the company, $2 million Canadian has already been raised to fund the exploration operations. Cost study and analyses by UGM US consultants, however, indicate that preliminary activities would require $4 million.

"We have so far hired about 80 employees but the figure grows daily. We have one diamond drill operating and will shortly have one or two more going," said the statement.

Uganda largely relies on agricultural product exports for its foreign exchange earnings.

If successful, the development is expected to ease the pressure on the country's poor economy and pave way for greater development.