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Wednesday, 19 December 2012
Sunridge Gold sees progress in negotiations with Eritrean government regarding purchase into Asmara project
Vancouver-based Sunridge Gold (CVE:SGC) (OTCQX:SGCNF) says that talks are progressing with the Eritrean National Mining Corp (ENAMCO) for the African company to buy a 30 per cent participating interest in the gold explorer's Asmara project in the region.
The Canadian junior gold company said that negotiations are progressing within the framework of the mining code of the country.
"We are pleased with the progress of negotiations with ENAMCO so far," said president and CEO of Sunridge, Michael Hopley.
"We are working within the understandable and transparent framework outlined in the Eritrean Mining Proclamation. We hope to conclude the agreement in a timely manner and look forward to moving into the next phase of development of the Asmara project with ENAMCO as a partner."
So far, the framework of the discussions has provided for the fact that the 30 per cent interest will be in addition to ENAMCO's existing right to receive a 10 per cent "non-assessable" stake that will be carried to production by the participating partners.
The 10 per cent interest will be carried two-thirds by Sunridge, and one third by ENAMCO.
The price and terms for the participating 30 per cent stake are still being negotiated.
Once talks are concluded, ENAMCO will contribute 33 per cent of all development costs, as well as any other ongoing expenses on the project, including exploration.
"The key point here is that we are working under the Eritrean framework that was outlined, and that talks are progressing well," Sunridge's VP of corporate development, Greg Davis, tells Proactive Investors.
"We have the blessing of the goverment," Davis says, adding that an agreement is expected within a few months.
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 in May that considered all deposits being processed at a central mill 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 estimated a pre-tax net present value of $555 million at a 10 per cent discount rate and an internal rate of return of 27 per cent, with an initial capital cost pegged at $489 million.
Sunridge is now working on finishing a feasibility study on the Asmara project, on track for April next year, after which an application for a mining license and permitting will follow, along with the social and environmental impact assessment.
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.
The company recently closed a $10.8 million financing, which allows it to maintain work on the feasibility study at "full speed", and earlier this month, announced an initial NI 43-101 resource estimate for its Adi Rassi copper-gold deposit - the fifth deposit defined by the company on its Asmara project.
The junior mineral explorer reported an inferred mineral resource of 15.77 million tonnes at Adi Rassi, with an average grade of 0.54% copper and 0.33 grams per tonne (g/t) gold. This translates to contained metal of 189.06 million pounds of copper, and 167,000 ounces of gold, with the resource area remaining open for expansion in most directions.
Further expansion drilling on this fifth deposit is planned next year.