Sunridge Gold says Eritrean govt plans to acquire 30% interest in Asmara project

Sunridge Gold Corp. (CVE:SGC) (OTCQX:SGCNF) said Monday that the Eritrean government plans to acquire a 30 per cent paid interest in the company's Asmara project in Eritrea.

The company's shares were up almost 2 per cent in the afternoon, at 26 cents.  

The 30 per cent interest owned by the Eritrean National Mining Corp (ENAMCO) would be in addition to the government's existing right to get a 10 per cent non-assessable stake that will be carried to production by participating partners. 

The terms of the acquisition have not yet been established, Sunridge said, and will be determined through negotiations. 

"We are very pleased that ENAMCO has made the early decision to purchase a participating interest and become our partner to bring the Asmara Project into production," said Sunridge president and CEO, Michael Hopley, in a statement. 

"This kind of support from the government, for the development of what will be the largest mine in Eritrea, is a major validation of the project and will certainly help with completion of the next steps towards production – completion of the feasibility study, mine permitting and construction financing."

The Asmara project consists of four mineral deposits, the Emba Derho, Debarwa and Adi Nefas copper-zinc-gold and silver deposits, and the Gupo gold deposit, all located within 40 kilometres of the capital city of Asmara. 

The results of a preliminary feasibility study that considered all deposits being processed at a central mill was announced in May, and showed production of 365,000 tonnes of copper, 812,000 tonnes of zinc, 415,000 ounces of gold and 11 million ounces of silver over a 15.25 year mine life. 

The report also projected a pre-tax net present value of $555 million at a 10 per cent discount rate and an initial capital cost of $489 million.

Sunridge is now completing a feasibility study on the project, which is planned for completion in 2013, subject to financing. Application for a mining license and permitting will follow this study.

The mineral exploration and development company also has exploration properties in Madagascar.