By Suridge Gold,
Sunridge Gold Corp. (the “Company” or “Sunridge”) (sgc:TSX.V/SGCNF) is pleased to announce that it has executed a binding term sheet (the “Term Sheet“) with the Eritrea National Mining Corporation (“ENAMCO”) regarding ENAMCO’s participation in the Company’s Asmara Project in Eritrea.
As first announced in August 2012, ENAMCO has exercised its right to acquire its maximum 30% participating interest in the Asmara Project in addition to ENAMCO’s existing right to be issued a 10% non-assessable interest that will be carried to production by the participating partners.
ENAMCO has now agreed to pay Sunridge US$18.33 million (the “Purchase Price“), bearing interest, payable in stages prior to production for the purchase of the 30% participating interest. Also, on signing of the shareholder agreement (the “Shareholders Agreement“) ENAMCO will pay Sunridge one-third of all project development costs back-dated to July 4, 2012, the date they exercised the right to purchase, which amount is currently estimated to be approximately US$4 million. In addition, ENAMCO will contribute one-third of the funding of ongoing expenditure on the project, including exploration and development.
“Sunridge has passed many milestones with the development of the Asmara Project over the last few years and this is the most significant milestone to date. We are very pleased that we have reached an agreement with the Eritrean Government and look forward to working cooperatively with ENAMCO to rapidly move the Asmara Project into production as soon as possible for the mutual benefit of Sunridge and the people of Eritrea” states Michael Hopley, President and CEO of Sunridge.
The valuation date for ENAMCO’s interest is July 4, 2012 and therefore it is largely based on the results of Asmara Project prefeasibility study which were published in May 2012. In May 2013, Sunridge completed a full feasibility study on the Asmara Project which showed a significantly higher value.
Sunridge and ENAMCO will now work towards completing a Shareholder Agreement which is expected to take less than three months. This agreement will govern the corporate activities, management and funding of the Asmara Mining Share Company (“AMSC”) the holder of the Asmara Project. The shareholders of ASMC will be Sunridge, holding a 60% interest and ENAMCO holding a 40% interest (30% participating and 10% carried). Management of AMSC will be by a five member board of directors comprised three members of Sunridge and two members of ENAMCO. Funding for future expenditure of AMSC shall be shared two-thirds by Sunridge and one-third by ENAMCO, subject to dilution and cancellation of AMSC shares owned by the diluting party.
The framework of the shareholder agreement will be similar to that of ENAMCO and Nevsun Resources Ltd., which have developed the very successful Bisha Mine in Eritrea.
The Purchase Price will be paid by ENAMCO to Sunridge on the following schedule:
* US$5 million – three months from execution of the Shareholders Agreement
* US$6 million – upon the execution of the financing agreement(s) securing a significant portion of the financing required to develop the Asmara Project
* US$4 million – 6 months from the date of the execution of the financing agreement(s)
* US$3.33 million – 12 months from the date of the execution of the financing agreement(s)
If either party decides to sell its shares of AMSC to a third-party, the payment schedule from ENAMCO to Sunridge will be accelerated and payable within a reasonable period of time of the closing of the sale.
The permitting process for the mining license for the Asmara Project was initiated in December 2013, with the submittal to the Ministry of Energy and Mines of the summary of the Social and Environmental Impact Assessment (SEIA) report for the Asmara Project. The permitting process to acquire the mining license is expected to take nine to twelve months.
Asmara Project Feasibility Study Summary:
The Asmara Project feasibility study (the “Study”) was completed in May 2013 and demonstrated that the mining of four of the six deposits that make up the Asmara Project (Emba Derho, Adi Nefas, Gupo Gold and Debarwa) and processing of the ore at a central location near the large Emba Derho deposit is economically robust with a pre-tax net present value (NPV) of $692 million (using a 10% discount rate) and with a pre-tax internal rate of return (IRR) of 34%. The Study outlines a three-phase start-up mining operation which would initiate production in 2015 starting with high-grade copper and gold direct shipping ore production from the Debarwa deposit and heap-leaching of near surface gold, followed by supergene copper production, then zinc and copper at a full production rate of 4 million tonnes per year. At full production, the mine will produce an average annual production of 65 million lbs (29,000 t) copper, 184 million lbs. (83,000 t) zinc, 42,000 oz gold, and 1 million oz. silver over the first 8 years. The life of mine is 17 years.
Michael Hopley, President and CEO of Sunridge Gold Corp. is the Company’s Qualified Person responsible for the contents of this press release and has reviewed the information in the release and confirmed that it is consistent with that provided by the independent Qualified Person responsible for the Study.
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