UN Sanctions Against Eritrea To Impede Miners?

Sunridge Gold (SGC-V) says new United Nations Security Council sanctions against Eritrea won’t interfere with its ambitious drilling and exploration plans there in 2010.

The Vancouver-based junior intends to drill the large and previously undrilled Daero Paulus copper-zinc-gold target at its Asmara project in mid-January, part of its joint-venture ground with Antofagasta Minerals, the mining arm of Antofagasta (ANTO-L).

It also plans further drilling at its Debarwa volcanogenic massive sulphide deposit to increase its size.

The U.N. imposed sanctions for the first time against Eritrea on Dec. 23, claiming the state in east Africa is aiding Islamist insurgents in nearby Somalia.

The sanctions were supported by 13 of the 15 members of the U.N.’s Security Council with Libya voting against the resolution and China abstaining.

Eritrea denies allegations that it is supplying al Shabaab rebels with money and arms to fight a U.N.- backed transitional government in Somalia.

In early October, Sunridge entered into an agreement with Antofagasta Minerals, in which the latter will fund US$10 million of exploration over five years to earn a 60% interest in the exploration areas of the Asmara project.

The exploration agreement excludes Sunridge’s existing development areas made up of four advanced deposits: Emba Derho, Debarwa, Adi Nefas and Gupo.

The 700-sq-km Asmara project in central Eritrea lies to the north, south and west of the capital city of Asmara. The Eritrean government has a 10% free carried interest in the project.

“At this time we do not know anything more than that which is reported in the press and our press release,” wrote Don Halliday, Sunridge’s executive vice president, in response to emailed questions from The Northern Miner. “We do think, at this time, that it will not impact our exploration work as it is a travel restriction against government only. We have had discussions with Antofagasta and they are planning to go ahead with the planned 2010 programs. We are currently funded, $8.3 million, for the programs for 2010 and are not seeking additional funds.”

Meanwhile Nevsun Resources (NSU-T, NSU-X), which has operated in Eritrea for more than ten years, says the U.N. sanctions “should not have any direct impact on the company or its Bisha project” but concedes it is “uncertain” whether they could “indirectly impact” debt facilities the company announced earlier this year.

Nevsun says it has “contemplated alternative finance sources if the sanctions do eventually negatively impact the debt facilities.”

In July, Nevsun signed a $235- million debt package with a combination of senior and subordinated loans from a lending group made up of seven institutions from Europe and South Africa.

With a 40% stake, the Eritrean government is a partner in developing the Bisha mine, and Nevsun says it has a “strong relationship” with the state.

Bisha is a high-grade VMS deposit in western Eritrea that was discovered in 2003, brought to feasibility in late 2006 and moved into development at the start of 2009. It is on track to start operations in the fall of 2010.

The mine has a projected 10-year mine life and its gold will be refined in Switzerland and Canada by two major international companies while the copper concentrate will be shipped to major smelters in Europe and India.

Metal production within the first two years is estimated at about 900,000 oz. of gold, followed by over 500 million lbs. of copper in years 3-5, plus an additional 1 billion lbs. of zinc and 200 million lbs. copper in years 5-10.