Shares in Sunridge Gold Corp. (CVE:SGC) popped higher on Monday in heavier than usual volumes, after the company announced the signing of a mining agreement with the Eritrean Ministry of Energy and Mines.
The ministry will issues three mining licences to Sunridge’s 60% owned subsidiary, the Asmara Mining Share Company (AMSC) providing the key permits required for development for the four advanced projects – Emba Derho, Adi Nefas, Gupo Gold, and Debarwa – that constitute the Asmara copper-zinc-gold project in Eritrea.
During lunchtime trade the Vancouver-based junior was trading at $0.18, up 12% on the Toronto Venture Exchange, its high for the day. More than 160,000 shares in the $35.7 million company changed hands. Unlike most if its peers Sunridge has enjoyed a positive 2015 – the counter is up 26% year to date.
Sunridge said in a statement that an additional 83.12 square kilometers of exploration licenses will be retained by AMSC which include the Adi Rassi copper-gold deposit and the Kodadu gold deposit.
The Mining Agreement gives AMSC exclusive rights to the mineral title within the licensed areas for a 20-year term. Under the terms of the deal, development work leading to production must commence within 6 months of receiving the licence, with commercial production to be reached within 36 months.
Sunridge is responsible for funding two-thirds of the $32 million capital-costs to begin mining directly shippable high-grade copper ore (DSO) from the Debarwa deposit in the third quarter of next year. Eritrea’s state mining company will fund the remainder of phase 1A of the project as detailed in a May 2013 feasibility study.
The DSO zone at Debarwa hosts 116,000 tonnes of material with an average grade of 15.6% copper, 2.96 g/t gold, and 76.8 g/t silver, containing 39 million lbs copper, 11,000 ounces of gold, and 286,000 ounces of silver. Direct cash cost is expected to be $0.70 to $0.80 per pound of copper.
Phase 1B of the project involves mining 3.0 million tonnes near-surface gold “caps” at Debarwa and Emba Derho followed by Gupo Gold and processed at a gold heap-leaching operation near the Emba Derho deposit at a rate of 1.4 million tonnes per year. Phase IB average grades are 1.48 g/t gold and 8.2 g/t silver and average recoveries of 66.7% gold and 37.7% silver.
According to Sunridge full production will be achieved in 3 years and during the first 8 years average annual production will reach 65 million lbs. (29,000 tonnes) of copper, 42,000 oz of gold, 184 million lbs. (83,000 tonnes) of zinc and 1 million oz silver.