MDN starts drilling in Eritrea

It was almost 10 years ago to the day that MDN Northern Mining (MDN-T) began drilling in Tanzania, and to mark the occasion the company announced a new drill program in Eritrea.

MDN spokesman Paul Girard says the Montreal-based company is comfortable with the political situation in the country a border dispute with neighbouring Ethiopia has been seen as a significant political risk and sees its activity there as a step towards greater control over its own direction.

“Our strategy in 2006 is to manage our own drilling programs in both Eritrea and Tanzania,” Girard says.

Currently, MDN is limited to a 30% interest in the Tulawaka mine in Tanzania. Barrick Gold (ABX-T, ABX-N) holds the other 70% and is the operator of the mine.

Tulawaka went into production in March of 2005 and MDN is using cashflow generated from the mine to pay back a loan from Barrick of roughly $22 million. Girard says the loan should be repaid in full by the second quarter of 2007.

MDN has a majority interest in 25 adjacent mineral licenses around the Tulawaka mine, and with a recently announced gold discovery there, Girard says the region is currently MDN’s main exploration focus.

On Mar. 27 the company announced results from its drill program 17-km northwest of Tulawaka. The program covered an area 1-km long by roughly 1 km wide and was tested by 26 drill holes for a total of 2,582 metres.

Highlights from that program included: grading of 4.4 grams gold per tonne over 2 metres, grading 3.25 grams gold per tonne over 1 metre and a grading of 3.55 grams gold per tonne over 1 metre.

In January of this year, MDN completed a private placement raising roughly $5.9 million. Of that the company plans to spend roughly $2 million on exploration drilling in Eritrea and $3 million on a 10,000-metre program in Tanzania.

In Eritrea the company’s drilling campaign is at the Harab Suit exploration licence in northwest part of the country.

The 260 sq. km area is underlain by metavolcanic and metasediments and dioritic intrusives, and is traversed by major shear zones. One of these shear zones hosts the abandoned Tamanti gold mine, which was operated during the Italian colonial era in Eritrea during the late 1930s.

Sampling programs conducted over the last two years have resulted in the company identifying two main targets — the Tamanti mine area itself and “Area 2”, approximately 4 km to the south west of the mine.

Test Area 2 will be drilled with at least fifteen reverse circulation inclined drill holes arranged in “fences” across the strike of the shear zone at hole depths of between 60 and 120 m.

At the old Tamanti mine 12 sites have been identified for drilling.

MDN also holds gold and base metal exploration interests in Quebec.

In Toronto on Tuesday Apr. 4, MDN’s share price remained unchanged at 60 on roughly 81,000 shares traded.