SUNRIDGE GOLD (CVE:SGC) (OTCQX:SGCNF) after starting field work in 2014 is advancing its joint venture Asmara project in Eritrea, expecting to acquire a mining license for the property, eyeing mining operations to start in the fourth quarter of this year.
Sunridge said that it would obtain the mining license within the first half of 2015 after receiving favorable feedback from the Ministry of Energy and Mines (MEM), which mandated a review of the Feasibility Study and the Social and Environmental Impact Assessment (SEIA) last January.
Current exploration work is concentrated 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.
Limited exploration to define new mineralization zones to guide future drilling has continued in both deposits even as the company has been focusing on the permitting and Feasibility Study to prepare for production.
“Although much of management’s recent attention has been on the permitting process for the development of the Asmara Project, it is important to remember that significant exploration potential remains on the project” said Sunridge’s President and CEO, Michael Hopley.
At Kodadu, 14 east-west oriented channels were cut with a portable diamond saw totaling 318.48 meters across the VMS gold oxide zone structures to define future drill targets, which now comprise a total strike length of 1,350 meters. An Audio-Magneto-Telluric geophysical survey was also completed to define massive sulfide conductors, occurring beneath the oxide gold zone gossans, representing potential drill targets.
The exploration effort at Adi Rassi has been on increasing the extent of the defined mineralization by focusing on the South Hill, marked by surface copper mineralization, which has yet to be included in the current resource estimate. A trenching program totaling 367 meters has yielded rock samples to be used in defining future drill targets.
The Asmara Project, 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%, should therefore remain on schedule for the Direct Shipping Ore first phase development.
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 for which Sunridge completed a feasibility study in May 2013, 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.
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.