Sunridge Gold Corp. (CVE:SGC) (OTCQX:SGCNF) says it has started a reverse-circulation drill program at its Kodadu target on its Asmara project in Eritrea, East Africa, where the company is also focused on completing a feasibility study on the already four established deposits.
The aim of its work at Kodadu is to quickly define a resource that could potentially be mined as feed to a gold plant at Emba Derho - one of the four established deposits. Kodadu is located around 25 kilometres south of Emba.
As of now, the Asmara project consists of 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 four 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 this year, after which the application for a mining license and permitting will follow, along with the social and environmental impact assessment.
"Although Sunridge's main focus has recently been completing the Asmara Project feasibility study and moving the four established deposits on the Asmara Project toward production, it is important to realize that the area remains highly prospective for new gold and base metal deposits" said president and CEO, Michael Hopley, in a statement Wednesday.
Indeed, the Kodadu volcanogenic-massive sulphide (VMS) target will see a program consisting of around 20 drill holes, specifically aiming for the oxide gold cap within the upper oxidized zones.
The junior explorer said that a 2009 trenching program by the company, in which 87 samples were taken, returned 28 gold values of over 0.2 grams per tonne (g/t), with the best values being 10.67 g/t over 14.7m, 2.3 g/t over 8m and 1.79 g/t over 13.3m.
It added that gold mineralization that has been found running parallel and about 100 metres west of Kodadu will also be drill tested.
Earlier this week, shares in Sunridge slid over 20% after reports from international news agencies broke out that more than 100 dissident soldiers with tanks stormed the Ministry of Information in the small East African nation on Monday, and forced state media to call for political prisoners to be freed.
The company issued a statement that day and said that information from its in-country staff is that Asmara is calm, and "these events have had no effect on Sunridge's ongoing engineering studies and drilling operations in the country."
Sunridge's upcoming 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, 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 is targeting that full production at 4 million tonnes per year would be reached roughly 2 years after the start of mining activities.
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