Ethiopia-focused explorer Megado Gold’s (ASX:MEG) shares will start trading on the ASX Tuesday after an IPO that raised $6m of fresh capital for exploration activity in the African country.

Investors bid for more shares than the 71.5 million on offer in the IPO that values Megado Gold around the $14m mark.

The company aims to start drilling at its Babicho project in the south of the African country in November to target a 2km-long gold anomaly in outcropping quartz veins.

Megado Gold expects to double to 12 its six-strong geologist team to accelerate a review of gold-bearing anomalies across its tenement holdings of six Ethiopian gold projects.

The company has carried out extensive sampling, mapping and trenching at its flagship Babicho project that covers 132sqkm, and its total exploration area is 700sqkm.

Drilling will move on to Megado Gold’s Chakata project located 5km along strike from the 3 million-ounce Lega Dembi and 600,000oz Sakaro gold mines in Ethiopia.

Company technical director Dr Chris Bowden is credited with discovering Allied Gold Corp’s 1.5 million-ounce Dish Mountain deposit in Ethiopia.

Megado Gold has six gold projects in Ethiopia
Megado Gold has gold projects in Ethiopia. Company supplied

Megado Gold has partnerships with local community groups

Megado Gold’s exploration activity in Ethiopia coincides with moves by the country’s government to attract more investment into its under-developed gold sector.

“Fundamentally important to us, as emerging gold exploration leaders in Ethiopia as well as our success as a company, is building a strong relationship with the local communities and stakeholders around our project areas,” managing director and chief executive, Michael Gumbley said.

“Our impact investment approach to gold exploration will create life-changing prosperity for our local partners which will in turn ensure the success of our company,” added Gumbley.

Led by its prime minister, Abiy Ahmed, a 2019 Nobel Peace Prize winner, Ethiopia is undergoing economic and political reforms and is one of Africa’s fastest growing economies.

A new $US3bn rail line connects Ethiopia’s capital Addis Ababa to the port city and country of Djibouti on the Red Sea.

The government wants Ethiopia to achieve 137 tonnes of gold production in the 2020s.

Ethiopia has experienced economic growth of around 10 per cent per year between 2007 and 2018, according to the World Bank.

Share price for Megado Gold (ASX:MEG)