KAMPALA (Commodity Online) : Uganda's third gold refinery named Victoria Gold Star started operations with a capacity to refine 60kg of gold daily.

The refinery, built with the help of Russian investors at a cost of around $1.5million, was located at Fifth Industrial area in country's capital Kampala.

The new plant comes at a time when gold deposits have been confirmed in Busia, Bushenyi, Mubende and Karamoja, according to a geophysical survey conducted last year.

Occurrences of gold have also been found in West Nile, Kitgum, Mbale, Jinja, Hoima, Rukungiri, Kisoro, Kabale, Kibaale and Kabarole.

A mineral deposit means that extensive exploration has been done and the quantities determined, whereas a mineral occurrence means the mineral has been seen but not quantified.

Uganda has only two gold mines in Busia and Mubende, leaving huge potential for investors to venture into mineral development and production.

The refinery shall also refine gold from Uganda and neighbouring countries like the Democratic Republic of Congo, refinery manager said.

He added: What we are trying to do is to legalise trade in gold. We shall require import and export licence for the gold that we shall refine.

Peter Lokeris, the state minister for mineral development, urged miners, mineral dealers and goldsmiths in Uganda and the region to use the facility to add value to gold so as to earn better income.

The refinery will make an important contribution to support the development of the mining sector and national economy. He said.

Uganda, Kenya, Tanzania, Burundi, Rwanda and the Democratic Republic of Congo take the raw gold to South Africa for refining, which has made them lose huge amounts of money.

The improving global economy and historically low central bank sales have boosted gold prices. Gold sales rose to $480 from $431 per ounce last year.

The Tira Gold Mine has been operating in Busia district since 1994, producing about 3kgs of gold a month.

The second mine is being developed in Kamulenge in Mubende by AUC Mines.

Experts say Busia has huge potential because it is part of the vast gold field belt stretching from Mwanza in Tanzania to Karamoja.

Tanzania has opened six world class mines in the area since 1998, producing over a million ounces of gold a year.

Last year's survey that covered 80% of the country showed that Uganda is also endowed with rich and diverse mineral wealth, ranging from copper, uranium, cobalt to limestone and phosphate.