Eritrean gov’t lifts ban on exploration

Vancouver –After changing the mining legislation to ensure it gets a bigger piece of the pie, the government of Eritrea has lifted the ban on exploration by foreign mining companies. The move comes four months after the government suddenly called a halt to all exploration, catching foreign explorers and investors by surprise.

The lifting of the ban boosted the shares of Nevsun Resources (NSU-T), Sunridge Gold (SGC-V) and Sanu Resources (SNU-V), building on gains in the previous week, when the companies were called back to Eritrea for a meeting with Eritrea’s Mines Ministry.

At that meeting, Nevsun was granted permission to resume exploring its properties.

The government has increased the amount of equity interest it can purchase in a project to 30%. Until now, it had a right to a 10% equity participation with the option of an additional 20%. Royalties of 5% on precious metals and 3.5% on metallic and non-metallic minerals are payable.

Nevsun’s immediate plans involve starting a feasibility study of the Bisha gold-copper-zinc project.

According to an independent estimate, Bisha’s oxide zone has an indicated resource of 5 million tonnes grading 6.51 grams gold per tonne, or 1 million oz. gold. A cutoff of 0.5 gram gold per tonne was used.

The supergene copper zone contains an indicated 7.6 million tonnes grading 3.47% copper, or 585 million lbs. copper, at a cutoff 0.5% copper.

The primary sulphide zone contains 8.4 million tonnes grading 9.04% zinc and 1.12% copper, or 1.68 billion lbs. zinc and 208 million lbs. copper, at a cutoff of 2% zinc.

At the same meeting in Eritrea, Sunridge Gold was granted permission to resume exploration. The company, together with Sub-Sahara Resources, has extensive landholdings near Asmara.

Drilling on the Debarwa South project, before the ban, returned 22 metres grading 11.82% copper, 3.84 grams gold and 69.67 grams silver, including a 9-metre section 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 providing financing through to production.

The work stoppage is also expected to be lifted for Sanu Resources, which holds eight licences in Eritrea. The company had planned to spend $1 million on exploration in 2004.

After the ban was lifted, Sunridge gained 28 to close at $1.38, Nevsun tacked on 28 to close at $3.14, and Sanu added a dime to close at 81.