MDN eyes Eritrean targets (September 19, 2005)

Channel sampling on the contiguous Seroa and Seroa Hill exploration licences in Eritrea have turned up two new mineralized targets for MDN Northern Mining (MDN-T).

Two 2-metre channel samples on the Dangish occurrence yielded 4.2 grams gold and 11.9 grams gold per tonne, respectively. A steeply dipping quartz vein at the outcrop has been the target of artisanal workings.

At the Injahai prospect, channel samples returned up to 20 metres running 6.6 grams gold, 15 grams silver, 0.6% copper 0.3% lead, and 1% zinc. Injahai comprises an 800-sq.-metre quartz outcrop atop a hill of predominantly granitic composition.

In all, channel sampling targeted 10 outcrops. Follow-up work on Dangish and Injahai is planned for the third quarter.

The 192-sq.-km Seroa and Seroa Hill licences are situated north of the Eritrean capital of Asmara, along the north-northwest striking Anseba River fault structure. They host several areas of intense hydrothermal alteration, breccia formation, and quartz veining.

MDN recently privately placed 517,250 shares at 45 apiece for proceeds of $232,762. Each share is accompanied by one warrant good for another share at 75 per share for five years.

The company will apply the proceeds toward exploration in Tanzania and Eritrea. The company holds majority interest in 25 adjacent mineral licences in Tanzania, and majority interest in four licences in Eritrea.

MDN’s 75%-owned subsidiary, Eritrean Minerals, resumed work in Eritrea earlier this year after a 5-month hiatus imposed by the government in late 2004.

In early September 2004, the company along with other operators Nevsun Resources (NSU-T), Sunridge Gold (SGC-V), and Sanu Resources (SNU-V) all received orders from the Eritrean Ministry of Mines to halt exploration until further notice.

In February, MDN said it had been invited by the government to continue its exploration programs. At the time, the company quoted the mines minister as saying, “the government of Eritrea had no intention to change the business rules stipulated in the Mining Proclamation and is committed as ever to undertake its contractual obligations towards the success of the partnership.”

In the end, the government increased the amount of equity interest it can purchase in a project to 30% from 20%. The government also collects a 5% royalty on precious metals and a 3.5% royalty on other metals and non-metallic minerals.