Sunridge Gold Corp. (the “Company” or “Sunridge”) is pleased to provide an outlook on some of the Company’s activities planned for 2014 which is expected to be an important year for the Company as it anticipates passing a significant number of milestones as it drives its Asmara Project in Eritrea as rapidly as possible towards production.
Some of these milestones and other salient points for the year are as follows:
- Mining License: The permitting process for the Asmara mine was initiated last month 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.
- ENAMCO: Negotiations continue with Eritrean National Mining Corporation (“ENAMCO”) to determine the price they will pay to the Company to purchase 30% of the Asmara Project from the Company. Management of the Company is encouraged with progress made in discussions late in 2013 and it is expected that these negotiations will be completed in early 2014. The time taken to negotiate this settlement is consistent with the time it took other companies to negotiate similar settlements with ENAMCO.
- Project Financing: A project information memorandum was disseminated to a group of potential debt financing lenders in late 2013. This group included commercial and development banks, export credit agencies and equipment suppliers, commodity off-take companies and royalty and streaming groups. At this stage several financing options are under consideration including conventional senior secured project related debt facilities and subordinated debt. Sunridge’s management will be continuing discussions with potential lending groups during the first quarter of 2014 with expectations of indicative term sheets to be delivered from the groups by the second half 2014 for consideration. The consulting group Micon International Limited has recently completed an independent "due diligence" review of the Asmara Project which is now available to these potential lenders.
- Engineering: Eligible engineering firm candidates for engineering, procurement and construction management (EPCM) of the Asmara mine were identified in late 2013. Tendering on the EPCM is expected in mid 2014 with basic design work beginning soon after the award of a contract to the successful firm.
- Eritrean Mining Update: Over the past year the mining economy of Eritrea has taken great strides with the Bisha mine recently passing its third anniversary of production. After more than 2 years of very successful gold production from the close to surface oxide gold zone, Nevsun has recently reported that the mine has completed the copper expansion project on-time and produced 36 million pounds of copper in Q4 2013. These concentrates are being trucked to the port of Massawa where they are transferred to bulk handling ships in the same way as is planned for the Asmara mine. In addition, construction is underway on what will be the second operating mine in the country - the Koka gold mine, part of the Zara Project located in north central Eritrea. Both projects are fully supported by the government of Eritrea through a 40% interest held by the state mining company ENAMCO who is also responsible for a third of all capital and operating costs.
- Appointment of Financial Advisor: Since publication of the results of the feasibility study in May 2013, Sunridge has been approached by a number of companies interested in acquiring all or part of the Asmara Project or possibly the Company. As a result Sunridge has engaged a Canadian Investment Banker to act as advisor on such potential transactions. The Company continues discussions with a number of interested parties. There can be no assurance that any transaction will occur, or as to the timing, structure or terms of any transaction.
Asmara Project Feasibility Study Summary
The Asmara Project feasibility study (the “Study”) was completed last May 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.
Important Milestones Achieved
Over the past two years Sunridge has passed a number of important milestones as it moves the Asmara Project through the development stage towards production. These are highlighted as follows:
- April 2012 – Final resource estimates completed on 4 advanced deposits on the Asmara Project
- May 2012 - Prefeasibility Study completed on 4 advanced deposits on the Asmara Project (NPV10 $555m)
- July 2012 - ENAMCO exercised right to purchase 30% of Asmara Project
- October 2012 – Completed a $10.8m financing
- December 2012 - Initial resource estimate completed at Adi Rassi copper-gold deposit (pipeline project)
- May 2013 - Feasibility Study completed on 4 advanced deposits on the Asmara Project (NPV10 $692m)
- May 2013 - Initial resource estimate completed at Kodadu Gold deposit (pipeline project)
- October 2013 - Completed a $6.5m financing
- December 2013 – SEIA submitted, permitting process begins
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.