By Sunridge Gold,
SUNRIDGE Gold (CVE:SGC) (OTCQX:SGCNF) after starting field work in 2014, expects to acquire a mining license for the its joint venture Asmara copper/zinc/gold/silver project in Eritrea as part of a wider mining agreement, covering every aspect of the operations over a 20 year term.
The Asmara Project, comprising six defined deposits – four of which are the subject of a feasibility study completed in May 2013 and are currently in the permitting process –is held by the Asmara Mining Share Company (AMSC), a joint-venture company of which Sunridge owns 60% and the Eritrean National Mining Corporation (“ENAMCO”) owns 40%.
Sunridge expects to secure the mining license shortly such that AMSC will be able to raise the capital to develop the mining and shipping of the high-grade copper direct shipping ore on the Debarwa deposit during Phase 1A of the project.
In a statement, Sunridge said that AMSC is in the final stages of negotiating the details of the mining agreement with the Ministry of Energy and Mines (MEM), including the timing of the start of development and commercial production, design capacity and production amounts, reporting requirements, royalty calculations, the use of expatriate employees, contractors and sub-contractors, financing and fiscal arrangements, safety issues, community relations, as well as reclamation and closure plans.
MEM advised AMSC that it has renewed all three exploration licenses that make up the Asmara Project until May 2016. Indeed, the Asmara project received favorable feedback from MEM, which mandated a review of the Feasibility Study and the Social and Environmental Impact Assessment (SEIA) last January.
Recent exploration efforts at the project have focused on the two “pipeline” deposits, known as the Kodadu volcanogenic-massive-sulphide (VMS) deposit and the Adi Rassi copper-gold deposit. Both areas have inferred resource estimates and remain open for expansion.
The project is pegged to produce an average annual rate of 65 million pounds of copper, 184 million pounds of zinc, 42,000 ounces of gold and 1 million ounces of silver over the first eight years. AMSC expects to start the first of three phases of production next year begins with high grade copper and gold, reaching full production by 2018.
The Debarwa direct shipping ore operation one of the four deposits that make up the Asmara project would have a pivotal role in the project’s overall phased mining plan, which yielded a net present value of US$428 million post tax and an IRR of 27 percent using a 10 percent discount rate.
Once mining operations have commenced at the Debarwa deposit, extraction and shipping of the direct shipping ore is expected to start in the second quarter of 2016. Total cash costs for Phase 1A are anticipated to be in the range of 70 to 80 cents per pound of copper.
Last spring, Sunridge recently had its buy rating reiterated by HRA Advisories in an update on the company’s project in Eritrea based on the company’s considerable upside potential and the fact that it is just months or weeks away from a mining permit.