The unidentified attackers struck near Nedjo town, about 500 km (310 miles) from the capital Addis Ababa in the Oromiya region where several conflicts simmer, the inhabitants told Reuters.
State-affiliated Fana Broadcasting said on Twitter three Ethiopians and two foreign nationals had died in the incident early on Tuesday. It did not give their countries.
Prime Minister Abiy Ahmed, himself an Oromo, has overseen a series of major political and economic changes since coming to office in April 2018 – making peace with arch-foe Eritrea, freeing political prisoners, pledging to open up the state-controlled economy and promising to overhaul security services.
Ethiopia’s Oromo, who make up about a third of the population, have long complained of being marginalized during decades of authoritarian rule by governments led by politicians from other smaller ethnic groups. In recent years the Oromo have been angered by what they see as encroachment on their land.
It was unclear which mining company was involved in Tuesday’s incident.
Among companies operating in Ethiopia are MIDROC Gold Mine Plc owned by Ethiopian-born Saudi billionaire Mohammed Hussein al-Amoudi, which has operated an open-cast mine in the Guji zone of Oromia region for more than two decades.
Its license was suspended last year after weeks of protests by locals who accused the mine of polluting their water and the atmosphere.
Others are Newmont Mining, which is prospecting for gold, while Norwegian fertilizer maker Yara International plans to build a potash mine and a fertilizer factory.
Writing by George Obulutsa; Editing by Elias Biryabarema and Andrew Cawthorne