The golden Horn of Africa

Resource Clips

by Greg Klein
While continuing the Asmara feasibility study in Eritrea, Sunridge Gold TSXV:SGC announced on March 7 a new near-surface discovery at Kodadu, four kilometres east of Asmara’s Debarwa deposit. With assays complete on 21 reverse-circulation holes, the company now plans an initial resource estimate for the potential deposit.

True widths for the two zones were estimated at about 70%. Some highlights from the gossan zone include:

• 1.71 grams per tonne gold over 51 metres
• 1.77 g/t over 31 metres
• 1.66 g/t over 22 metres
• 1.06 g/t over 32 metres
• 1.08 g/t over 27 metres
• 1.05 g/t over 20 metres
• 1.18 g/t over 17 metres.

The top-most intercepts started at surface while the deepest stopped at a down-hole depth of 51 metres.

Some shear zone highlights include: 

• 1.15 g/t over 33 metres
• 2.3 g/t over 16 metres
• 0.99 g/t over 21 metres
• 0.64 g/t over 15 metres
• 0.81 g/t over 11 metres
• 1.19 g/t over 1 metre.

Again, the top-most interval began at surface. The deepest ended at 79 metres down hole.
The company now wants to “rapidly define a resource that could be mined as feed” to a processing facility near Asmara’s Emba Derho copper-zinc-gold-silver deposit, 25 kilometres away, which would also serve three nearby satellite deposits. Three of Asmara’s four deposits would be open pit operations. The fourth, Adi Nefas, would go underground.

Asmara’s feasibility study is slated for Q2 release and already the company is forecasting improvements to last May’s pre-feas. Using a 10% discount rate, that study projected a pre-tax net present value of $555 million and a 27% internal rate of return. With initial capital costs then estimated at $489 million, payback would have come in 3.5 years, while the life of mine would last 15.25 years.

Now Sunridge is considering a staged start-up to cut capex and get to the ore earlier.

Mining would begin with copper, gold and silver from Debarwa’s supergene (higher-grade) zone. Work would progress with heap leach gold production at the Emba Derho plant, processing ore from the Debarwa and Gupo deposits as well as Emba Derho.

The next stage would involve mining and processing the remaining copper supergene ore from Debarwa and Emba Derho. With full production in year three, Asmara would produce an estimated annual average of 70 million pounds (31,750 tonnes) copper, 140 million pounds (63,500 tonnes) zinc, 31,000 ounces gold and 997,000 ounces silver over the mine’s first eight years.

hat’s the forecast so far. Full details should come with the Q2 feasibility study. Last May the company released a full feasibility study for a possible standalone operation at Debarwa. Exploration and expansion drilling continues on a fifth deposit, Adi Rassi, which produced a maiden copper-gold resource estimate in December.

Asmara is subject to a 30% acquisition on fair market terms by the Eritrean National Mining Corp (ENAMCO). That comes in addition to a 10% non-assessable interest that would be carried two-thirds by Sunridge and one-third by the state-owned corporation. Once the 30% deal has been negotiated, ENAMCO will pay a third of all expenditures, including development and exploration.

Sunridge opened March 7 at $0.195, a penny above its previous close. The stock reached $0.21 before closing on $0.205. With 175.16 million shares outstanding, the company’s market cap came to $35.91 million.

About 150 kilometres west, a process is underway that might almost be described as reverse alchemy. There, Nevsun Resources TSX:NSU readies the transformation of its Bisha gold operation to copper output. The company expects to produce 80,000 to 90,000 gold ounces in 2013 before depleting its yellow metal reserves by mid-year. The second half of 2013 should see Bisha give up between 60 million and 80 million pounds copper, Nevsun stated. With full copper production in 2014, the company expects to see about 200 million pounds that year.

Nevsun has a $9-million, 18,400-metre drill program planned this year to explore the mine area and surrounding properties. An initial resource estimate for the Northwest Zone, 1.2 kilometres from Bisha, is slated for Q3 release. Bisha’s carbon-in-leach plant remains on site in hopes that gold exploration finds it useful again. ENAMCO holds a free-carried 10% interest in Bisha plus an additional 30% paid participating interest.

About 10 kilometres north of Bisha, Chalice Gold Mines TSX:CXN has early-stage drilling underway at its Mogoraib North copper-zinc project, a JV with ENAMCO holding 40%. The company hopes to find volcanic massive sulphide systems similar to those of Bisha.

Last September Chalice completed the sale of its Zara gold project in Eritrea to China SFECO Group and ENAMCO for a combined $114 million. Just prior to the transaction Chalice technical director Doug Jones told ResourceClips,

“The Chinese are already heavily invested in Eritrea. It’s not a surprise that they’re quite keen on acquiring additional assets there. And there’s quite a strong political link between Eritrea and China.” The sale allowed Chalice to make a December payout to shareholders totalling $25 million, leaving the company with $54 million cash on hand.

Resource Clips

Resource Clips provides investors in the Canadian junior mining sector with a quick source of key information – discoveries, watch lists, private placements, insider trades, news releases, quotes, level II information, charts and company history. We cover gold, silver, base and rare metals.

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