Explorers shares soar as Eritrea lifts ban

Vancouver – After changing the mining legislation to ensure itself a bigger piece of the action, the government of Eritrea has lifted the ban on exploration by foreign mining companies. The move by the ministry of energy and mines comes four months after its sudden halt in exploration caught foreign explorers and investors by surprise.

The news propelled the shares of Nevsun Resources (NSU-T), Sunridge Gold (SGC-V) and Sanu Resources (SNU-V) higher, building on last week’s gains when the government called the companies back for a meeting.

At that meeting, Nevsun was granted permission to resume work on its exploration properties. The Eritrean government increased the amount of equity interest it can purchase in a project to 30%. Up until now, the government had a right to a 10% equity participation with the option of an additional 20%. Royalties of 5% on precious metals and 3.5% for metallic and non-metallic minerals are payable.

During the work stoppage the ministry reportedly reviewed the country’s mining act relative to other countries to ensure that it also benefits from potential mining projects. The minister gave assurance that the government wants to see sustainable long term development of its mining industry.

Nevsun plans to start the feasibility study at its Bisha gold-copper-zinc project believing that all other provisions of the proclamation will remain unchanged.An independent resource estimate released in mid-October for Bisha pegs the deposit at 4.984 million tonnes grading 6.51 grams gold per tonne in the indicated category at a 0.5 gram cutoff, for 1.04 million oz. gold in situ in the surface oxide gold zone; the supergene copper zone contains 7.645 million tonnes grading 3.47% copper at a 0.5% cutoff or 585 million lbs. of copper, in the indicated category; and the primary sulphide zone which includes the zinc-rich zone, contains 8.413 million tonnes grading 9.04% zinc for 1.68 billion lbs. zinc and 1.12% copper for 207.7 million lbs. at a 2% zinc cutoff grade.

Sunridge Gold was also granted permission to resume work on its exploration portfolio at the same meeting. Sunridge and the company’s joint-venture partner, Sub-Sahara Resources are planning to recommence exploration on the high-grade copper and gold deposits on their extensive landholdings near Asmara, where resource drilling was under way prior to the ban. 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.

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.

Although Sanu has not officially been notified of proposed changes for its projects, it will be a party to the process and expects the halt work order should be lifted shortly for it as well.

Sanu holds eight licences in Eritrea. The company had planned to spend $1 million on exploration during 2004.

The three companies saw a second round of hefty gains tacked onto their share prices on January 14. Sunridge gained another 28 to close at $1.38, adding another 25% to a 67% gain on January 5. Nevsun tacked on 28 cents to close at $3.14 adding to a 35% increase while Sanu added a dime to close at 81 after tacking on 78% earlier this month.