Sunridge Gold Corp. (CVE:SGC) (OTCQX:SGCNF) provided Thursday an update on its feasibility study for the Asmara project in Eritrea, which is still on track to be wrapped up in the second quarter of next year.
The company recently closed a $10.8 million financing, which allows it to maintain work on the study at "full speed" and complete the work on schedule, it said.
The study started in April of this year, just prior to the release of the prefeasibility study, which showed that all four deposits at the property could be processed in a single central processing plant.
The feasibility study will also consider using a centralized plant using flotation for recovery of the base metals, but in order to boost economics and reduce capital costs, some processing trade-off studies showed more "optimum economic scenarios".
Based on new metallurgical testwork, the feasibility study will now include early mining of the direct shipping ore (DSO) from Debarwa, and early heap-leaching of the surface gold material from the project, Sunridge said, allowing more revenue to be generated earlier.
As a result, cash flow is expected a year earlier than presented in the prefeasibility study, now anticipated in 2015.
Initial capital costs are also anticipated to be lower due to the new operating scenarios, and overall economics are expected to be enhanced when compared to the preliminary report.
The DSO Zone is located within the supergene copper zone of the Debarwa deposit and contains 116,000 tonnes of high grade material at an average grade of 16% copper, 3.0g/t gold and 77.0g/t silver.
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 the preliminary feasibility study that was announced in May 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 economic analysis, using 5-year average metal prices and a 10 per cent discount rate, showed the project to have a pre-tax net present value of $555 million and an internal rate of return of 27 per cent.
Work for the feasibility study, which started in April, included drilling for metallurgical samples on the Emba Derho deposit, as well as geotechnical drilling near the proposed Emba Derho pit and at proposed plant facilities.
The metallurgical work on the gold material from the gold caps supported heap leach production, showing between 51 to 71 per cent gold recovery.
"This is an improvement to the gold processing plan in the PFS which outlined a Carbon in Pulp (CIP) facility which would have stockpiled the material from the gold caps and processed it at the end of the mine life," Sunridge said in a statement.
The feasibility study is being done by Senet, based in Johannesburg, South Africa.
Capital markets firm Ocean Equities released a comment based on the news today: "The enhancements to the mine plan and scheduling of the Asmara project are positive for the company in that the early selective mining and shipping of the DSO from the Debarwa deposit and the early heap leaching of the gold zones means that the project could provide earlier cashflow than was originally intended, and a reduction in the initial capital expenditure than what was previously estimated in the PFS."
"Prior to completion of the Asmara project feasibility study we expect Sunridge to produce a maiden resource statement on the Company’s Adi Rassi deposit which has the potential to be the company’s second largest deposit."
In separate news, the company said it is in negotiations for Eritrean National Mining Corp to purchase a 30 per cent working interest in the Asmara project. Once this is wrapped up, Eritrean National Mining Corp will have a 10 per cent carried interest and a 30 per cent working interest, and will be responsible for funding one third of the cost of operations, which could include a portion of the study.
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