Northeast Africa and Middle East: Gold Frontier

Eritrea - the New Frontier for Mining Companies
Eritrea – the New Frontier for Mining Companies

By Tim Williams,

Eritrea is underlain by the volcano-sedimentary rocks of the Arabian-Nubian shield, one of the world’s most unexplored but potentially productive mineral provinces. It has only a handful of deposits now in production or under development.

The major styles of economic mineralisation include the volcanogenic massive sulphide (VMS) deposits; the geologically much younger orogenic and intrusive related gold deposits; and very large potash accumulations. Many of the outcropping VMS deposits form high-grade ‘gold caps’. The current rapid erosion of the elevated land surface has resulted in excellent exposure of the geology. 

Gold has been mined in Eritrea for thousands of years, but the country is seeing a rapid expansion of artisanal mining activity in several areas – not only in river valley deposits, but also in auriferous quartz vein systems.

Eritrea has promulgated a Minerals Proclamation that is clear, concise and enforced, which significantly encourages foreign investment in mineral exploration. More than 20 companies are actively exploring in Eritrea.

Bisha mine

The first modern mine to be built in Eritrea is the Bisha VMS-gold mine of Bisha Mining Share Co, which is 60% owned by Canada’s Nevsun Resources Ltd and 40% by the Eritrean National Mining Corp (ENAMCO). Bisha is a large polymetallic deposit that went into commercial gold-silver production in February 2011, built on time and on budget.


The mine produced 379,000oz of gold in 2011 and 313,000oz in 2012. Bisha has a proud safety record with more than 12 million man hours without lost time injury.

A major copper expansion project is now complete, again on time and under budget, and Bisha will transition to low-cost copper-gold-silver production.

After a ramp-up of copper supergene ore is completed in the March quarter of 2014, the Bisha operation is expected to produce around 200Mlb/y (90,000t/y) of copper at less than US$1.00/lb (US$$2,200/t) cash cost.

Bisha also operates a substantial exploration programme in the area around the current operations and this is expected to extend the currently remaining 12-year mine life.

Zara

The second modern mine being constructed in Eritrea is the Zara gold project under construction by China’s SFECO Group, with a probable reserve of 0.76Moz, grading at 5.1g/t Au. This is an example of the separate, and geologically much more recent, style of shear-hosted gold.

Construction of the Zara mine and infrastructure began in 2012 and production is expected to start during 2014.

Asmara

The Asmara project, of Sunridge Gold Corp has six separate deposits in the region around the country’s capital, Asmara, and they contain significant amounts of copper, zinc, gold, and silver.

A feasibility study on the four advanced deposits estimated the net present value (NPV) of the project at US$692 million at a 10% discount rate, and an internal rate of return (IRR) of 34%.

The plan is to create an integrated mining operation for all four deposits with a central mill located at the large Emba Derho deposit to process ore from open-pit mines at Emba Derho, Debarwa, and Gupo and an underground mine at Adi Nefas.

Yacob Dewar

Andiamo Exploration Ltd has reported a discovery of oxide gold mineralisation at the Yacob Dewar VMS about 50km southwest of the Bisha mine.

The current mineral resource is expected to increase with further drilling. Oxide copper has also been discovered in the area, with a drill intersection of 63m at 2.4% Cu from surface.

Colluli potash project

South Boulder Mines Ltd reports that Engineering Scoping Studies have indicated that a 1Mt/y potash mine could be built at Colluli in the Danakil depression, some 65km from the Red Sea coastline, at half the cost of a typical potash development.

The estimated open-pit mineral resource is reported at 1,080Mt at 18% potassium chloride (KCl) of contained potash at very shallow depths of 16-70m below surface.

South Boulder reported in 2012 that the capital requirement estimated at US$736 million would produce an IRR of more than 40% and an NPV (12% discount rate) of US$1.33 billion on project revenue of US$6.03 billion.

In March 2013, the company outlined a proposal to mine the sylvinite resource at a rate of 1Mt/y and then expanding after five years to a production rate of 2Mt/y by mining and processing the carnallite resource.

In May, South Boulder announced it had reached a joint venture agreement with ENAMCO stating that each party would hold a 50% ownership interest in the Colluli project.
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Tim Williams is the chief executive officer of Andiamo Exploration Ltd 
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