Eritrean government extends olive branch

Vancouver — The Eritrean government is seeking further meetings with foreign companies exploring for minerals in the East African country. The move comes four months after its surprising and unexplained ban on all exploration within its borders.

Nevsun Resources (NSU-T), Sunridge Gold (SGC-V), Sanu Resources (SNU-V) and Northern Mining received a letter from the country’s mines ministry inviting them back for a meeting and thanking them for their patience and co-operation.

The news buoyed Nevsun, Sunridge and Sanu, whose shares had been languishing since their dramatic fall in early September. On Jan. 5, Sunridge gained 45 to close at $1.12, a 67% gain on 10 times its average share volume; Nevsun tacked on 76 to close at $2.90, a 35% rise; while Sanu added 35 to close at 80, an increase of 78%.

The government’s work stoppage prompted speculation it was related to escalating terrorist attacks near the borders with Sudan and Ethiopia in the west. Others believed the work stoppage was part of a ploy to obtain control of some of the substantial resources outlined by Nevsun at Bisha and prospective ground outlined by Sunridge at Asmera.

As things stand, the government has a right to a 10% equity participation in an economic project, with the option of an additional 20%. Royalties of 5% on precious metals and 3.5% on metallic and non-metallic minerals, including construction minerals, are payable.

Nevsun has a lot at stake. The company’s president and CEO is en route to Eritrea for the meeting with the government. Nevsun had completed a drill campaign on its Bisha project, which is 64 km from the border with Sudan. The company drilled more than 31,250 metres in 195 holes for a resource estimate, which was to be used for a feasibility study.

The Bisha Main zone represents a volcanogenic massive sulphide deposit in which three areas of mineralization have been outlined: the high-grade gold oxide zones extend from the surface to a depth of 35 metres; directly below the oxide zone are the copper supergene zones, 30 metres wide, which extend to a depth of about 65 metres; and there is copper immediately below the supergene zones, with wide, high-grade zinc intercepts in primary massive sulphides.

The Bisha deposit has an indicated resource of 5 million tonnes grading 6.51 grams gold per tonne at a cutoff of 0.5 gram gold per tonne, or 1 million oz. gold in situ in the surface oxide zone. The supergene copper zone contains an indicated resource of 7.6 million tonnes grading 3.47% copper at a 0.5% cutoff, or 585 million lbs. copper. The primary sulphide zone, which includes the zinc-rich zone, contains 8.4 million tonnes grading 9% zinc (1.7 billion lbs.) and 1.12% copper (207.7 million lbs.) at a cutoff of 2% zinc.

Sunridge is partnered with Sub-Sahara Resources, where resource drilling is under way at the Asmera volcanogenic massive sulphide project, 150 km west of the Bisha copper-gold project before the work stoppage. Sunridge can earn a 90% interest in the project from Australian-listed Sub-Sahara and Africa Wide Resources in return for financing the project through to production.

The latest results from definition drilling outline a resource that covers 200 metres of strike along the Debarwa South zone. Mineralization is open toward the Debarwa Main zone to the north.

Significant mineralized intercepts were found in three zones. The primary zone remains open to the south, north and at depth. Highlights from the Debarwa South drilling included 22 metres grading 11.82% copper, 3.84 grams gold and 69.67 grams silver; included in that intercept were 9 metres of 17.7% copper, 6.75 grams gold, and 104.46 grams silver.

Sanu Resources holds eight licences in Eritrea. The company was granted four prospecting licences covering 7,615 sq. km in western Eritrea in 1998, after which it went on to identify 20 encouraging gold anomalies. The company had planned to spend $1 million on exploration in 2004.

The company suspended work between June 2000 and October 2002, owing to the armed border conflict between Ethiopia and Eritrea. The company has explored the volcanogenic massive sulphide potential of its Kerkebet licence area, directly adjacent to Nevsun’s Bisha deposit.

Eritrean Minerals, 75% of which is held by Northern Mining, has four exploration licences in Eritrea and has begun to size up two potential deposits: Harab Suit and Matite.