Sunridge Gold (CVE:SGC)(OTCQX:SGCNF) Monday unveiled "positive" results of a feasibility study for its 100 percent-owned Debarwa volcanogenic-massive-sulphide (VMS) copper-gold-zinc deposit, part of the Asmara project in Eritrea.
Debarwa is one of four deposits that comprise Asmara. The company
said the study concluded that operating Debarwa as a stand-alone mining
operation is economically viable.
Sunridge recently started a feasibility study on the Asmara North
deposits, which will examine the integration of the Debarwa deposit with
the Asmara North deposits into one operation.
Sunridge said the Debarwa feasability study showed a net present
value of $71 million at a 10 percent discount rate, an internal rate of
return of 41 percent, and payback in 1.1 years from start of production.
Initial capital costs were estimated at $140 million, including contingency and owner's costs.
On-site operating costs were seen at $73.09 per tonne average through
the 4.7-year life of mine, with average annual metal production pegged
at 35.1 million pounds (15,932 tonnes) of copper, 16,500 ounces of gold
and 271,000 ounces of silver.
Total metal production was seen at 116 million pounds (52,576 tonnes)
of copper, 78,000 ounces of gold and 1.3 million ounces of silver.
Base case metal prices used in the study were US$3.28 per pound of
copper, US$1,111 per ounce of gold and US$21.00 per ounce silver.
A Debarwa stand-alone operation provides the company the opportunity
of generating cash flow earlier than if Debarwa were integrated with the
Asmara North deposits, it said.
The ultimate decision will be made when the Asmara project feasibility study is completed in 2013.
"The completion of the Debarwa feasibility study demonstrates that
the Debarwa deposit can be operated as an economically viable
stand-alone open-pit mine," Sunridge Gold's president and CEO Michael Hopley said.
"The choice to advance Debarwa separately from the northern deposits
provides Sunridge the opportunity for earlier production and cash-flow
from the high-grade copper ore at Debarwa.
"Management will review all options upon completion of the Asmara
Project Feasibility Study which is being conducted concurrently with the
application for permitting and a mining license at Debarwa."
The independent feasibility study for Debarwa was carried out by lead engineer SENET (Pty) Ltd.
In a note, capital markets firm Ocean Equities said: "The publishing
of a positive feasibility study on Debarwa gives us comfort that the
full FS on the Asmara Project will provide further positive economics to
warrant development of the integrated Asmara project.
believe Debarwa will not be developed on a standalone basis but
developed and integrated alongside the complete Asmara project."
In early May, Sunridge announced the positive results of a
pre-feasibility study on the Asmara North deposits which integrated the
Debarwa deposit into a single mining and processing operation.
The pre-feasibility study, which showed a net present value of $555
million using a 10 percent discount rate, considered the trucking of ore
from the Debarwa deposit approximately 40 kilometres south of Emba
Derho, to a centralized operating facility located near the Emba Derho
The Debarwa feasibility study announced today, in contrast, considers
the technical and economic viability of operating Debarwa as a
stand-alone operation with its own processing plant and ancillary
Based on the results of the feasibility study now underway, Sunridge
will make the decision as to whether Debarwa would be best be operated
as a stand-alone mine or as ore feed to the proposed central milling
facilities near Emba Derho.
The results from the study announced today concluded that Debarwa is
best mined by open-pit methods, up to a maximum rate of 7.5 million
tonnes of rock (ore and waste) per annum of open pit mining. The open
pit is estimated to contain 1.3 million tonnes of ore and 18 million
tonnes of waste rock.
Debarwa is located within a 30 minute drive on paved roads south of
the capital city of Asmara, with close proximity to a labour force,
power, water and an international airport. In addition, the Red Sea port
city of Massawa is 120 kilometres east of Asmara via paved road.
Opportunities to further enhance the economic value of the Debarwa
deposit will be investigated before start of production, the company
said. This would include the availability of lower cost power from
national grid for operation of process facilities, movement of direct
shipping ore and copper concentrate using bulk transport, and reducing
units costs for material mined and processed at Debarwa, among other
Sunridge is a mineral exploration and development company focused on
the acquisition, exploration, discovery and development of base and
precious metal deposits on the Asmara project in Eritrea and exploration
properties in Madagascar.
Full details of the study can be found at: http://www.sunridgegold.com