Established 1835

A supplement to Mining Journal

Eritrea

Asmara Geocongress
2010
September 22-27

Anyone interested in attending the Asmara GeoCongress 2010 in Eritrea
and requiring assistance with air flights, hotel bookings or Visas should
contact the GeoCongress Administrator (Betty Tesfay) for further details at:
info@emec.yahoo.com. We look forward to welcoming you to Eritrea.

Jointly sponsored by Eritrean Mining and Exploration Companies (EMEC) and Eritrean Ministry of Energy and Mines

Cover_01Eritrea.indd 2

www.emeceritrea.com
18/08/2010 13:14

COUNTRY OVERVIEW

Hot spot in the Arabian Nubian Shield
The people and government of Eritrea are resolutein their endeavour to rebuild the country’s economy,
and to secure social and economic progressE

RITREA joined the world community of
independent states in May 1993 following
a 30-year war for liberation ending in
May 1991. A UN-supervised referendum,
held in April 1993, enabled the Eritrean
people to state unequivocally to the world theirstrong choice for freedom and independence.
Since immediately after independence, thegovernment of Eritrea has been engaged inrehabilitating the war-torn economy and improving
the standard of life of the people. This was effective intaking the annual growth rate of the economy to 7%
until it was curtailed by the border dispute with

Message from Ahmed Haj Ali,
Minister of Energy and MinesON BEHALF of my ministry and thegovernment of Eritrea, I am pleased
to welcome you to this supplementfrom Mining Journal, which will giveyou background information on
Eritrea and the investment opportunities in theminerals sector, including profiles of the explorationand mining companies operating in the country.
Geological works and recent remote-sensing
investigations proved that Eritrea possesses
favourable geological settings.
The greenstone belt of Eritrea, which hosts
precious and base metals, covers 70% of
the country. The discovery of the Bisha
high-grade zinc-copper-gold deposit, andsubsequent announcements
made by several other explorationcompanies operating in Eritrea, havedemonstrated the potential the nation
possesses for major mineral deposits.
A liberal economic policy withcompetitive tax regimes, full guarantees
and protection of investments, untapped
geological terrains, highly motivated,disciplined and hard-working people, anPublished in August 2010 by:
Aspermont UK
Albert House, 1 Singer Street
London EC2A 4BQ
Tel: +44 (0)20 7216 6060
Fax: +44 (0)20 7216 6050
E-mail: editorial@mining-journal.com
Website: www.mining-journal.com
Supplement author: Mebrahtu Ogbazghi,of the Ministry of Energy and Mines of Eritrea
Supplement editor: Chris Hinde
Design and production: Tim Peters
Printed by Stephens & George
Merthyr Tydfil, UK© Aspermont UK 2010

Ministry of Energy and Mines
Asmara, Maekel
Eritrea 5285
Tel: +291 1 120089
Fax: +291 1 127652
www.moem.gov.er

administration free from corruption, a safe and freecountry, make Eritrea an ideal destination forinvestors. The incentives provided to investors will bebriefly spelt out in this supplement.
The Eritrean mining law provides simple
procedures for the submission andprocessing of licence applications.
I sincerely hope that this supplement,
although not exhaustive, will guide you andenable you to make some meaningfuldecision on how to invest in the Eritrean
minerals sector.You are always welcome tocontact us for further enquiries.
Hon Minister of Energy and Mines
Ahmed Haj Ali

CONTENTSCountry Overview / Message from the Minister 2-8
Company profiles: Andiamo Exploration
9
Bisha Mining
10
Chalice Gold
11
Er-Libyan Mining Share Co
12
London Africa
13South Boulder
14
Sunridge Gold
15
Geological maps
Back cover
Cover design: T Peters/Aspermont UK

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Mining Journal special publication – Eritrea

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neighbouring Ethiopia which started in May 1998.
Located in the north-eastern part of Africa, Eritrea
is bounded by Sudan to the west and north, andEthiopia and Djibouti to the south, with the Red Sea
on its east coast. Eritrea covers a land surface area of
about 125,000km2, including hundreds of coral islandsin the Red Sea, and has a population of about four
million people. The country is home to nine ethnic
groups, all with a strong sense of national unity.
Tigrinya and Tigre are the most widely spoken
indigenous languages. English is commonly used in thebusiness community, while Arabic and Italian are alsofrequently encountered.
The topography of Eritrea is exceptionally varied:the 1,200km-long coastal plain, which is only a few
metres above sea level; the escarpment, which rises
steeply to the central highlands at more than 2,500m
above sea level; the low-lying western and southwestern parts of the country, which lie at less than
500m above sea level; and the rugged mountain chainsthat run from the central plateau to the extreme
north of the country.
The climate in these different terrains varies from
arid, through semi-arid, to temperate. The meanannual rainfall in the coastal areas is less than 300mm
per year, while, in the highlands and the western
lowlands, rainfall ranges between 500 and 1,000mm.
Eritrea’s infrastructure is centred on a well-developed communications network linking the capital city,
Asmara, to the regions of the country, including thetwo main sea ports of Massawa and Assab, and to theneighbouring countries. Asmara and Massawa haveinternational airports, which also serve internal flights.
Inevitably, the ravages of war have left their markon the infrastructure, and the reconstruction of theprime facilities has been a high priority. Part of therailway has been rebuilt after years of abandonment,
and it is now functional from Asmara to the port of
Massawa. Telecommunications facilities have also beenrenovated and developed, and mobile phones are now
widely used in and around the major towns.

ERITREA’S GEOLOGY AND
MINERAL POTENTIAL
The geology of Eritrea comprisess Precambrianbasement rocks overlain unconformably by predominantly Mesozoic sedimentary rocks, and by Tertiary to
Quaternary volcanic and sedimentary rocks.
Precambrian basement rocks
Basement rocks in Eritrea underlie more than 60% of
the country’s surface. The basement rocks of Eritrea
form part of the Arabian Nubian Shield (ANS), exposedin north-east Africa (Egypt, Sudan, Eritrea and Ethiopia)
and in Saudi Arabia, northern and north-western partsof Yemen, and parts of the western Middle East. The
shield is believed to represent a ‘mega-suture’ between
the ancient east and west Gondwana.
Achaean and Paleoproterozoic continental crustal
rocks make up the older components of the shield
August 201016/08/2010 16:43

COUNTRY OVERVIEW

Silhouetted buildings at NGEx Resources’ operation in Asmara. Inset: Chalice drilling at Zara
and occupy a very small part of the basement rocks.
The major part of the shield consists of Neoproterozoic (c 870-670Ma) continental-marginal and juvenile
intraoceanic magmatic-arc rocks.
In Eritrea, the basement
rocks have not been wellstudied despite their highmineral potential. The two
geological maps so far
completed cover the westernpart of the country (Geology ofGash River Area) and thesouthern part of the country(Geology of Mai Dima/KohainArea). Compilation of geologicalmaps at a scale of 1:250,000 has
recently been completed for four map sheets.
Other studies, based largely on satellite image
interpretation aided by limited ground controls,suggest that the rocks can be subdivided into four
tectonic blocks or segments, separated by tectonic
boundaries. Three of these blocks – the western,
central and eastern segments – underlie northern andcentral Eritrea, while the fourth,
the Danakil segment, occurs inthe south-eastern part of thecountry.
The western segment, theBarka Terrane, is exposed in thenorth-west and underlies theBarka lowlands. It comprises
amphibolite, amphibolite-facies
pelitic schists containing kyaniteand staurolite, quartzites andmarble.
The central segment, known as the Hagar Terrane,
extends from the Barka River to the Adobha Abi
valley in the east, and comprises several large elliptical“Eritrea possesses a
geological setting thatis favourable for bothprecious-metals andbase-metalmineralisation”

bodies of various tectonic units
dominantly composed of oceanic andaccretionary wedge materials.
Occasionally, layered sequences ofchloritic schists are seen, inter-layered
with epidotic and chloritic metabasalts,
occasional thin and discontinuous
marbles, and manganiferous andferruginous cherts. The Hagar Terranedisplays an east verging thrust contact
with the adjacent segment to the east.
The Hagar Terrane is known to beprospective for chromite, platinumgroup elements, nickel, gold andcopper mineralisation.
The eastern segment, the Nakfa Terrane, isbounded by the Adobha Abi valley in the west andby the Red Sea escarpment to the east. It is madeup of calc-alkaline volcanic and volcaniclastic rocks
View of Chalice’s Zara operation

Mining law and the licensing procedure
The legal framework governing the conduct of allmining and related operations within the territory of
Eritrea is embodied in the mining law, which
comprises the Minerals Proclamation (No68/1995),
the Mining Income Tax Proclamation (No69/1995)
and Regulations on Mining Operations (Legal Notice
No19/1995), all of which were promulgated in March
1995.
The mining law was prepared to satisfy the key
policy which is that all mineral resources in Eritrea
are public property, and hence the State has a duty
to ensure the conservation and sustainable
development of these resources for the benefit of
the people. It also provides a favourable environment
for foreign direct investment into the mining sector.
Due recognition is made of the significant rolethat foreign investment and skills can play in thedevelopment of this sector, and of the capitalintensive, long-term, and risky nature of mining
investments. The law also recognises the importanceof regulations to ensure the proper protection of
the natural environment, and strongly urges
operators to comply with sound principles ofresource management and land use.
The Eritrean mining law is up to date, attractive
and competitive, as it provides considerable benefits
and incentives to investors. For example, the law
provides for:
■ The right to exploit any commercial discoveries
made pursuant to a valid exploration licence.
■ The right to sell locally or export, free of all

August 201002-08Eritrea.indd 3

duties and taxes and without being required toobtain any other authorisation or permission
from any other government agency, all minerals
produced pursuant to a mining licence.
■ A simple and fair taxation system which
recognises the risky nature of mining investments,and hence allows:– accelerated depreciation (straight line method
over four years) of all capital and preproduction
costs; write-offs of exploration expenditure
incurred anywhere in the country;– the carrying forward of losses;– a generous reinvestment deduction (5% ofgross income); and no dividend tax;
– a nominal rate of import duty (0.5%) on
machinery, equipment and spare parts necessary
for mining operations; and– low royalty rates as well as an option for the
reduction, suspension or waiver of the royalties
in appropriate circumstances.
■ Equitable foreign exchange regulations,permitting; free and unrestricted repatriation of
earnings; retention of a portion of foreign
currency earnings abroad in external accounts;
and maintenance of foreign currency accounts inbanks in Eritrea.
■ A simple ‘one-stop’ licensing system enabling all
the formalities for all types of licences for mining
operations to be completed by a single
government agency (the Department of Mines
within the Ministry of Energy and Mines).

The mining law permits these licence types:■ Prospecting Licence, valid for one year andnon-renewable.

■ Exploration Licence, valid for an initial three
years, but which may be renewed twice for
additional terms of one year each, with an
option for further renewals in appropriate
circumstances.
■ Mining Licence, valid for 20 years with optional
10-year renewals.
Licences are exclusive and grant their holders anautomatic right to obtain an Exploration Licencefrom within a Prospecting Licence, and a Mining
Licence from an Exploration Licence, subject to thefulfilment of the obligations under the preceding
licence. Although the maximum area that a single
licence can cover is fixed at 100km2 for a Prospecting Licence, 50km2 for an Exploration Licence and
10km2 for a Mining Licence, simultaneous possessionof multiple contiguous licences is permitted.
Applications for licences may be made byindividuals or legal entities of any nationality andare made on specified forms that can be obtained
from the Department of Mines of the Ministry ofEnergy and Mines, and must be accompanied by anon-refundable processing (registration) fee andsupporting documents. Successful applicants are also
subject to a payment of licence fees and the firstyear’s rental upon the issue of a licence. The rate ofthese fees is governed by regulation.

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Exploration by
NGEx Resources

COUNTRY OVERVIEW
conformably overlain by a metasedimentary sequenceof chlorite schists, grits and polymict conglomerates
with occasional pelitic sericite schists and carbonates.
The metavolcanic rocks are intruded by variably
deformed plutonic to hypabyssal calc-alkaline bodies.
The sequence is cut in places by post-kinematic
granites and gabbros and is also transected by several
narrow shear zones sub-parallel to the regional strike.
The Nakfa Terrane is considered to represent arelict island arc assemblage. Several VMS (Volcanogenic
Massive Sulphide) base-metal deposits and gold
showings are associated with this tectonic unit.
The southern segment, the Danakil Terrane, iscomposed of metamorphic rocks, which may begrouped into three formations:
1. Migmatitic hornblende biotite gneisses.
2. A phyllitic formation consisting of schists,
conglomeratic phyllites, crystalline limestones andgraphitic schists.
3. Post-tectonic granitoids.
The recently compiled geological map of the wholecountry at 1:1,000,000 has divided the Precambrianbasement rocks into seven domains, five groups andthree formations, and represents a detailed
presentation of the rock units of the country.
Mesozoic Sediments
The lower Mesozoic sediments are represented by
the Merbet (Adigrat) sandstone which outcrops in thesouth and in the Danakil area, and is commonlyintercalated with siltstones and haematitic layers. It
lies unconformably over thin layers of conglomeratic
sandstones which, in places, appear to possess thecharacteristics of a glacial deposit.
Overlying the sandstone is the Jurassic Adailo(Antalo) limestone. This unit is exposed over a large
area in the Danakil and is made up of limestones thatare compact, partly shelly, fossiliferous and layered.
Intercalations of quartzitic layers are present in thelower part, while towards the upper part thesequence becomes mainly gypsiferous to dolomitic.
The upper sandstone forms pockets of sandstones
preserved from erosion. Commonly, this sandstone ismedium to coarse-grained but partly conglomeratic,
light-coloured, and dominantly quartzitic.
Tertiary Volcanics and Sediments
The Tertiary volcanics can be split into three units:
1. The plateau-forming Tertiary basalts that are
predominantly olivine basalts with intercalations ofintermediate lavas and tuffs.
2. The lower Afar stratified basalts composed ofbasaltic lava flows and tuffs usually found intercalated with sediments of the Danakil formation.
3. The Afar basalts composed of recent lava flows andvolcanic cones, with minor acid to intermediate
volcanics, mainly trachytes, rhyolites and ignimbrites.
The Tertiary basalts are actively exploited for
aggregates.
The Tertiary sediments lie along the Rift escarpment and in central Afar. Three sedimentary
formations have been identified: the Danakil, Dogali
and Desset formations. The Danakil and Dogali
formations are of late Tertiary age and are composed
mainly of limestones intercalated with conglomeratic
sandstones and siltstones. They are overlain bycalcareous sands with coral reefs, partly consisting of

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Mining Journal special publication – Eritrea

02-08Eritrea.indd 4

Nevsun Resources’ Bisha property
pebbles of volcanic origin, and gravels with sand, silt
and clay horizons. The Desset formation comprises
sandstones, clays and fine beds of anhydrite and halite
unconformably overlying the Dogali formation in thenorthern part of the coast, while the Red Series
containing coarse clastic freshwater sediments
occupies the southern part of the coast.
Quaternary sediments
A thick evaporite formation of bedded halite, gypsum,
anhydrite, potassium and magnesium salts, with shellmaterial, fills the basin in the Danakil Depression.
Deposits of sheet-flood terraces, silt, sand and gravel
are present in some places occasionally covered bywind-blown sands. Basaltic flows and related spattercones represent Quaternary volcanic activity in the
Danakil region.

ERITREA’S MINERAL POTENTIAL
Although Eritrea has a long history of mining, modernmining only began at the start of the 20th century
following the Italian colonisation of the country.
Following the Second World War, mining and related
operations continued,
although intermittently.
In the early 1970s, thisresulted in the developmentof the short-lived modernmine at Debarwa, before theindependence struggle forced
its closure. Overall, in termsof mineral potential
assessments and geologicalwork, much of the country
remains unexplored, despite
the several recent discoveries
already made.
Eritrea has demonstrated
potential to host significant
VMS deposits after the
discovery of the Bisha, Bisha
North West, Harena and Hambok massive sulphide
deposits in the western lowlands, and Koken in thenorth-western lowland. The recent progress at Emba
Derho, Adi Nefas and Debarwa in the central
highlands are additional examples, along with the
Seroa and Harab Suit areas.
The potential for shear-hosted gold deposits is also
shown from the gold discovery in Zara (at the Koka
prospect), where exploration work was conducted
over a small area along a major shear zone. The
country is not well explored and it is widely expectedthat there are many economic mineral deposits indifferent prospective areas still to be discovered.
Eritrea possesses a geological setting that isfavourable for both precious-metals and base-metalmineralisation. Industrial minerals are also found invarious parts. The range of identified potential
deposits covers gold and other precious metals,
polymetallic massive sulphide types and quartz-veinand quartz-stockwork types of deposits. There is anindication of the occurrence of nickel and chromite
mineralisation associated with the ultrabasic rocks inthe far north.
Occurrences of potash and sulphur evaporates
have been recorded in the past in the Danakil
depression near the east coast, south of Massawa.
Various construction materials, including marble andgranite, are found in several parts.
Gold
Recent exploration activities have proved that gold
occurrences are widespread in many parts and thecountry hosts a great potential for developing moregold deposits. In addition to the previously known
areas of primary gold occurrence in the central
highlands (which includes the Hamasien gold field) andthose of Shillalo in the south-western lowlands, aswell as those of southern
Eritrea, exploration activity
in the last decade has shown
the presence of potentially
economic gold deposits in thewestern lowlands and in thenorthern part.
Gold is often associatedwith base metals, as at Bisha,
and at the gold showings
in the Haykota area. There
are also examples in thesouth-east at Tesseney, and innorthern Eritrea (represented
by the demonstration of
about 1Moz gold at Zara).
The average head grades
in most of the historic veingold mines active during the Italian colonial period(up to the late 1950s), were reported to be as high as
25-45g/t, with reasonably good recoveries.
Eritrea’s gold mineralisation is usually hosted inquartz veins and stockworks, and in particular in shear
zones associated with felsic volcanic rocks, dioritic
intrusions and in schists that are frequently
sub-parallel to the strike of the pronounced cleavageof the host rocks.
Occurrences of gold within exhalative VMS
deposits, and in the weathered and supergene zones
overlying them, are becoming more evident with therecent additional discoveries of gold in Debarwa and
Adi Nefas, and nearby in Gupo and Adi Rasi (in thecentral highlands), and at Bisha and Harena (in thewestern lowlands).

“Eritrea has
demonstrated potential
to host significant VMS
deposits after the
discovery of the Bisha,
Bisha North West,
Harena and Hambok
massive sulphide
deposits in the western
lowlands”

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COUNTRY OVERVIEW

Sunridge’s Debarwa property

Base-metal deposits
NNW to NNE-trending horizons of gossans,exhalative cherts and altered felsic rocks that are
indicators of massive sulphide mineralisation arerecorded in many parts. The ore minerals of these
massive sulphide deposits are predominantly
chalcocite in the supergene zones, with predominant
pyrite with lesser amounts of sphalerite, chalcopyriteand bornite in the underlying sulphide zones.
A major belt of massive sulphide deposits with goldand base-metal mineralisation passes through Asmara.
It includes, as well as the historically known Debarwa,
the newly discovered Adi Nefas, Emba Derho andmany other localities. These lie within a roughly
50km-wide belt over a strike length of 250km,
extending for over 50km north of Asmara to the
Ethiopian border to the south. Emba Derho isemerging as a large but low-grade copper-zinc depositwith some associated gold, and a mineral resource has
been established, possibly amenable to large-scale
open-pit mining. Extensive drilling has definedNI43-101-compliant resources at Debarwa and Adi
Nefas.
The belt that includes the Bisha, Bisha North West,
Harena and Hambok VMS deposits in the western
lowlands has already demonstrated the presence of apotential world-class deposit, but is also being actively
explored for further discoveries.
Other evident and similar indications lie further
north and south of these. A belt of copper mineralisation is in the Raba-Semait area, sulphide-richgossanous outcrops at Mount Tullului (Bedeho) in
Sahel, northern Eritrea and in the Mt Seccar and Sheib
areas in the eastern lowlands. The most notable is, ofcourse, the Bisha high-grade zinc-copper-gold deposit.
This volcanogenic massive sulphide deposit isexpected to yield a total of 1.06Moz gold, 9.4Moz
silver, 734Mlb copper and 1,075Mlb zinc.
Industrial minerals
Evaporite sequences outcrop at Colluli, south of Badain the Danakil Depression, containing potash, sylvite
and gypsum. Substantial deposits of the latter are also
found in the Desset area, north-west of Massawa.
Large deposits of common salt also occur at several
August 201002-08Eritrea.indd 5

places along the Red Sea coast.
Considerable quantities of high-quality silica arefound at Merbet, already exploited for glass
manufacture. In addition, deposits of silica sand withfeldspar occur in various wadis of Eritrea. High-purity
feldspars occur in pegmatites at Lahazen, 35km southof Massawa. Sub-economic deposits of mica, once
exported by the Italians, are found south-east of
Lahazien.
Large deposits of kaolin occur in the lateritic
horizon in parts of Teraimni, at Adi Koteio close to Adi
Kwala, Adi Keih, Zeghib, Adi Hawusha, Adi Ahderom
and west and south-west areas of Himbirti. Extensive
deposits of the raw materials for cement manufacture
occur close together at Adailo, near Tio, with all theconstituents being present, including limestone, marl,clay and gypsum.
Barite occurrences have been identified around theHeneb, Meter and Gharsa wadis north-west of Mersa
Gulbub. Barite veins also occur associated with faults
in the sediments of the Dogali and Desset Formations.
Other barite deposits of economic significance, with
reported grades of 95-97%, are known to exist at
Debarwa and Ketina. Gypsum deposits are also foundin the Desset plains.
Construction materials
Large deposits of marble occur as belts running
north-northeast in the Gogne area extending from
Gogne to Goranda, and in the Adobha area. Othersignificant marble deposits occur at Afhimbol,
Amberbeb and Mt Kuruku (in the upper valley ofBarka). The Kertse-Komte and Debri black and grey
marble deposits occur south of Decamhare and havebeen previously exploited over many years. Recrystallised limestone deposits with variegated colours occur
in the Dichinema area, in the south west.
Granites of various colours and textures are
exposed over large areas. Granites of dimension stonequality, currently being exploited, occur at Geleb (pinkgranite), and in the Arato, Korbaria and Tukul areas(grey granite). The Mai-mine granite and Elaberedgranite are also suitable candidates for dimension
stone. A narrow outcrop of coral limestone extends
along the coast from the headland of Ras Kassar tothe coastline of Tio. Immense deposits of limestone
occur in the Adailo-Aitosh area south-west of Tio.
Geothermal potential
The possibility of the economic exploitation ofgeothermal heat for power generation occurs in the riftarea, associated with volcanic activity. Alid, Nebro andDubi are the main target sites where geothermal
activity is known to be intense. Lower-temperature
activity also occurs at Mai Wuui, 30km west of Massawa.
Geothermal activity, evidenced by fumaroles and hot
springs with extensive alteration of the adjacent ground,
are abundant in the Alid geothermal field.
Studies so far in this area indicate the possible
presence of a high-temperature reservoir below thesurface. The geothermal manifestations at Nebro andDubbi are also promising, but further study will beneeded to estimate the reservoir temperature.

Explorationand mining
Exploration started in liberated Eritrea in 1996
straight after the promulgation of the Mining Law.
The level of participation by foreign companies
has increased significantly following the discoveryof the high-grade VMS deposit at Bisha. There are
16 mining and exploration companies operating in
Eritrea from Australia, Bermuda, Canada, China,
Libya, the United Arab Emirates and the UK.
These companies collectively operate 34
projects. They include some advanced explorationsites (where mineral resources have been
established, and, in some cases, where scopinglevel and feasibility studies are completed) toearly-stage prospecting projects (wherereconnaissance mapping is being carried out).
The total area covered by exploration andmining activites is near 14,000km2. As a result of
exploration during the past ten years, mineral
resources have been identified containing over
3Moz gold, 41Moz silver, 1,600Mlb copper and
4,200Mlb zinc.
In addition to these resources, the level ofinterest to secure new ground by existing as well
as newcomers is increasing.
Recently, for example, Newmont Ventures Ltd,a subsidiary of Newmont Mining Corp, has shown
interest (through an agreement in principle with
Chalice Gold Mines Ltd) to enter into a regional
venture to explore for gold in Eritrea. The area
applied for which the subject of the venture
covers about 24,000km2, and is subject toapplications for grant from the Eritrean
government. Under the proposed venture,
Newmont would fund an initial US$1 million
reconnaissance exploration programme using its
proprietary exploration techniques.
oil and gas in 1921 in the Dahlak Islands. Extensive
geological investigations were conducted and elevenshallow holes were drilled by Agip in the area
between 1935 and 1940.
In the early 1960s, Mobil, Gulf Oil, Shell and others
carried out seismic surveys and drilled eight holes.
Following Eritrea’s independence, four deep wells
were drilled which confirmed oil and gas indications.
Three were drilled by Anadarko in the late 1990s in
partnership with Agip and Burlington Resources.
Limited seismic work and the exploration drilling of asingle well was carried out by Perenco and KNOC
(Korea National Oil Corp) in 2005.
16 mining and exploration companies
are operating in Eritrea

Oil and gas
Even though the oil and gas potential in Eritrea is not
well-defined, the opportunity to make a discovery
appears to be high, particularly within the pre-salt
formations. An Italian company began exploration for
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COUNTRY OVERVIEWDEVELOPMENT-STAGE COMPANIES■ Sunridge Gold Corp

The number of companies that have reached thedevelopment stage have increased in recent years as
investor confidence returns.

Sunridge Gold is a junior Canadian mineral exploration and development company which holds threecontiguous exploration licences – namely Medrizien,
Debarwa and Adi Nefas. The licences partiallysurround Asmara and hence collectively are known
as the Asmara project. The work so far by Sunridge
has resulted in the definition of four NI43-101compliant resources on the Asmara project withtotal combined metal content of 1,280Mlb copper,
2,500Mlb zinc, 1.05Moz gold and 31.8Moz silver.
The largest deposit is the 63Mt Emba Derho
copper-zinc-gold VMS deposit located 12km
north-west of Asmara. An independent positive
preliminary economic assessment study wascompleted in June 2009. This shows the deposit has
the potential to become a large open-pit mine,
producing 60Mlb (27,000t) of copper, 133Mlb(60,000t) zinc and 21,000oz gold per year.
Recently, Sunridge, with the aid of PEG Mining
Consultants Inc, has produced a strategic production
study with the aim of defining methods of developing
all four deposits together. These deposits include: thelow-grade Emba Derho; the high-grade Debarwa(30km south of Asmara); and the high-grade Adi Nefas
VMS deposit, along with the Gupo gold discovery
immediately north of Asmara.
From a metallurgical perspective, this study has
attempted to describe the processing options
available for several mineralisation types from each of
the Asmara project deposits.
The Debarwa deposit is believed to have excellent
prospects, with the option of low-capital direct
shipping ore (DSO) providing early returns, along witha longer-term (nine-year) production scenario
improving the economics further. However, this study
will need to be carefully reviewed and approved byregulators.
As well as the above-mentioned developmentareas, Sunridge possesses a large area with many
as-yet undrilled targets warranting further exploration
work. In October 2009, Sunridge signed a jointventure exploration funding agreement with aleading copper producer, Antofagasta Minerals SA.
According to the agreement, the latter committed
itself to inject US$10 million into exploration over a
five-year period to earn a 60% interest in part of thecompany’s Asmara project, now known as the
Exploration Areas.
The development areas (including the four
already-defined resource areas) are excluded fromthis agreement, and Sunridge will advance them toproduction on its own. Since this was signed, several
targets have been assessed and some drill-tested.
The Daero Paulos drilling programme, consisting of
12 widely-spaced diamond drill-holes, returned only a
few narrow zones of mineralisation. The other target
is the Adi Rassi copper-gold prospect, about 8km
south-east of its Debarwa high-grade copper-gold
VMS deposit. The drill programme consisted of atleast four holes totalling 1,200m of diamond drilling.
As well as the above drilling programmes, a regionaltarget-generation programme is under way covering
all parts of the Exploration Areas defined in theagreement with Antofagasta. Stream geochemical
sampling, satellite imagery analysis and local geologicalmapping are the main tools being used and it is hopedthat this work will result in the generation of new drill
targets over the next few weeks.

■ Bisha Mining Share Co (BMSC)BMSC is a joint-venture company owned by Eritrea’s
National Mining Corp (ENAMCO) and Canada’s
Nevsun Resources Ltd. Its main mineral properties
include the Bisha property in the west. Bisha contains
a high-grade gold, copper and zinc deposit and othersatellite deposits. The Bisha mining licence was
granted to BMSC in January 2008 after exploration,
which started in 2002, and which produced a positive
feasibility study. The project is positioned to become
the country’s first modern mine, with production
projected to return payable metals of 1.06Moz gold,
9.4Moz silver, 734Mlb (333,000t) of copper and1,075Mlb (488,000t) zinc.
The milestones achieved in constructing plant andother facilities, which at the time of writing are morethan 60% complete, suggest the project continues tobe on schedule and on budget. Bisha is advancing welltowards plant commissioning phase late in 2010. Theball and SAG mills have been assembled and fullinstallation is expected to be complete soon.
Structural steel and plate-work; power generation andpipe lying; pre-strip mining and ore stockpiling are due
to be complete within the third quarter.
The construction of the tailings facility started inlate 2009 and installation of the impermeable liner
should be completed in the last quarter this year.
After a short commissioning process and after
reaching commercial production, the company
expects to produce over 100,000oz of gold eachquarter at a cash cost of less than US$250/oz.
With over 95% of procurement completed, theactual capital cost is expected to be within the budgetof about US$260 million. With these low operating
costs, Bisha is anticipated to have a much higher-thanaverage industry profitability and cash flow, and themine is expected to generate significant cash flow for
the company and for the government.
In February, BMSC decided to fund the project byequity instead of debt financing, and this has enhanced
the estimated cash flow by eliminating finance costs
and debt repayment. Nevsun’s financial position, alongwith ENAMCO’s financial contribution, will carry the
project through to positive cash flow in the firstquarter of 2011. The Bisha mine will be a low-costgold producer for the first two years and a low-cost,high-grade copper and zinc producer for theremaining ten-year mine life. Further resource
potential exists at depth and from nearby discoveries
within the company’s licensed areas.

Metal production within the first two years is
estimated at 900,000oz of payable gold, followed byover 500Mlb of payable copper in years 3-5 and an
additional 1,000Mlb of payable zinc and 200Mlb ofcopper for the remaining projected life of the mine.
BMSC has entered into metal sales contracts for
its future gold and copper production. Pricing for all
metals will be fixed at spot rates at the time ofdelivery. Gold will be refined in Switzerland andCanada by two major international companies, while
the copper concentrate will be shipped to major
smelters in Europe and India. The metal sales
contracts are considered to be a milestone and to beanother vote of confidence in the project and Eritrea.
Recent exploration by Nevsun has focused on the
Harena deposit, which is one of the other two VMS
deposits identified, and which lies 9.5km south-west
from the Bisha Main deposit. Harena is contained
within Nevsun’s exploration licence, contiguous tothe mining licence.
In late 2009, 17 infill diamond drill-holes werecompleted to confirm the previously identified
discovery. Harena was originally chosen as a potential
exploration target based on an alteration anomaly
defined from Landsat imagery. A subsequent airborne
EM survey defined a moderate conductor over alimited strike length on what was interpreted as thesame stratigraphic horizon as the Bisha Main deposit.
Diamond drilling in 2005 intersected various
widths of oxide and sulphide mineralisation over a
strike length of 400m confirming the presence of asatellite VMS deposit. As a result of the company’sefforts to advance the Bisha Main zone throughfeasibility and development, the Harena area was left
until late 2009 for further exploration. BMSC views
the Harena deposit as a likely source of supplemental
feed for the processing plant at Bisha, and it willprobably provide valuable cash flow as an extension
to the life of mine, without having to absorb start-up
capital expenses.

Drilling at Emba Derho

6

Mining Journal special publication – Eritrea

02-08Eritrea.indd 6

August 201016/08/2010 16:43

COUNTRY OVERVIEW
Drilling at Koka

Koka open pit
Item
Total waste

41.93Mt

Total ore

3.39MtStrip ratio (LOM)■ Chalice Gold/Sub-Sahara Resources
A prospecting licence was originally granted in 1998
to Dragon Mining in a locality known as Zara in thenorth west. After a one-year regional reconnaissance,
the licence was converted to an exploration type.
Since then, all operation and management has been
assigned to Australia’s Sub-Sahara Resources, which
has been actively exploring in Eritrea for the past nine
years. The initial properties that Sub-Sahara secured
contained the VMS prospects surrounding Asmara but
this entire land package was sold to joint-venture
partner Sunridge in 2007.
Since then, Sub-Sahara has focused on the Zara
project, and was rewarded with definition of over1.0Moz of gold at the Koka prospect with an average
grade of 6.31g/t gold. During the credit crunch, thecompany had to halt all operations for almost a year

August 201002-08Eritrea.indd 7

Quantity

12.4

LOM grade (Au)

6.53g/tTotal gold mined

712,000oz

Total mining cost

US$154.6 million

Total cost (mined)

US$3.41/t

and reduce its employees. Sub-Sahara was then takenover by Chalice Gold Mines Ltd, which now funds the
project completely.
A scoping study has been completed for the Koka
gold prospect. Underground mining by sub-level caving
was considered but rejected in favour of open-pit
mining on the basis of operating cash flow. The open-pit
option arose from the nature of the mineralisation andthe additional dilution introduced by the undergroundmining method. Some of the parameters that define theopen pit are shown in the table above.
The company recently announced it has completed
the feasibility study for the Koka deposit. This
document, with a Social and Environmental Impact
Assessment (SEIA) and Environmental Management
Plan (EMP), will be submitted soon to the ministry.
The findings of all studies are planned to bepresented at a workshop organised by the company inAsmara. All main stakeholders will be invited to
discuss the results.

■ NGEx/Sanu Resources Inc
Based on previous exploration works, Sanu continues
its exploration activities in the Kerkebet andMogoraib exploration licences targeting VMS deposits.
Generally, most of the work Sanu has accomplished
are database entry, geological mapping and map
compilation, and some follow-up and prospecting
works in the Kerkebet and Mogoraib licences. The
most notable achievement is the discovery of theHambok deposit in the Mogoraib licence area
immediately south-west of Bisha, along with promising
drill intersections in Aradaib at the Kerkebet licencearea and north of Bisha.
The Hambok project has initial NI43-101 measured
and indicated resources containing 69,000oz gold,
231Mlb copper and 531Mlb zinc, as well as inferredresources containing 104,000oz gold, 319Mlb copperand 652Mlb zinc.
Moreover, prospecting and further work includes
detailed mapping, a detailed magnetometer survey anddiamond drilling carried out covering about 350km2
south-west of Koken, Aradaib and Serarat, and southof Halay in the Kerkebet licence area. Sanu also holds
two prospecting licences, to be converted to
exploration. After the rainy season, the company plans
to fly an airborne geophysics over all its properties incollaboration with Thani-Ashanti.

Mining Journal special publication – Eritrea

7

16/08/2010 16:43

COUNTRY OVERVIEW

EXPLORATION COMPANIESThe Ministry has received applications covering a total
surface of about 30,000km2. This is a clear indicationthat Eritrea is becoming an exploration hot spot.

■ Andiamo Exploration Ltd
Andiamo is a UK junior exploration company; still a
private company. Andiamo was granted a 723km2
exploration licence in the Haykota area in July 2009,
having already identified targets from satellite images
and from previous work in the area in 1998 by
BRGM/La Source. Andiamo started work on the
ground two days after receiving the licence.
The area lies immediately south-west, and on strike,with Bisha, and is adjacent to NGEx/Sanu’s Mogoraib
exploration licence to the north, and to Erilib’s area
to the south. It is considered to be highly prospective
for shear-hosted gold and for VMS-type mineralisation,
and already several substantial gossans along an
exhalite horizon have yielded encouraging assay values
for gold and base metals.
Andiamo has been very active on the ground since
the granting of the Haykota exploration licence,
undertaking regional and detailed geological mapping,extensive geochemical sampling and geophysicalsurveys. A small drill rig has been mobilised recently
to site to test some of the geophysical and geochemical anomalies. This first programme aims to consist of
shallow ‘aircore’ (which is smaller-diameter
reverse-circulation) boreholes to provide indications
as to whether more extensive drilling is merited.
Regional programmes covering the entire licencearea will continue, including further geochemistry,geological mapping and geophysics.

Land Energy, on the other hand, has been issued
with an exploration licence on a highly prospective
area west of Barentu, capital of Gash Barka region.
The area is contiguous with, and to the east of,Andiamo’s exploration licence. The town of Gogne issituated at the centre of the licence. Both companies
have focused on collecting stream sediment and soil
samples from the entire licence area.
The samples were sent to China for laboratory
analysis. Both companies have also applied for moreground in Eritrea. Land Energy has shown interest in
potash mineralisation alongside South Boulder’s area,and Huakan is looking for two more precious- andbase-metal prospects.

■ Eritrea-China Exploration and Mining
Share Co (ECEM)
ECEM is a joint venture between a Chinese company
and the Eritrean ENAMCO. The principal property of
ECEM is the Augaro exploration licence, which covers
1,000km2. The licence area is named after the Augaro
deposit, recognised as the biggest gold mine during
the Italian colonial period.
Previously, the licence was briefly held byAnmercosa, the exploration wing of Anglo Americanplc, and then by Nevsun Resources before it wasabandoned. ECEM has conducted detailed geologicalmapping and drilling in the Augaro exploration licencearea. Unfortunately, no promising results have been
produced and ECEM has opted to bring in Sahar
Minerals from Bermuda as a joint-venture partner totake over exploration of the licence area.

Donia and its affiliate Zhong Chang Mining Co Ltd(also from China) hold multiple licences, including four
for iron ore and three for base metals. Exploration
work has included geological mapping, geochemical
sampling, trenching and a magnetic survey. Investigation for iron ore, however, produced poor results and,after a thorough review of all projects by a new
management team, the company decided to relinquish
those licences. The precious- and base-metal
prospects have been retained and further explorationis committed.

■ China Africa Huakan Investment Co andLand Energy Group (China) Ltd
Both companies are newly arrived from China, andwere granted exploration licences in late 2009.
Huakan holds ground at a locality known as Seroa,
north-west of Keren (capital of the Anseba region),
historically known for its gold occurrences.

8

Mining Journal special publication – Eritrea

02-08Eritrea.indd 8■ Sahar Minerals Ltd
Sahar is a Bermuda-based privately held explorationcompany established in early 2009. After an extensive
evaluation process, the company secured two
properties in Eritrea in February 2010, namely theAugaro gold-base metal project (held in a JV
structure) and the Harab Suit gold-base metal project,which is 100% held in an exploration licence area.
Exploration programmes have begun on bothprojects subsequent to the licence agreement. The
management is looking forward to fast-track drillingon both properties.
Core samples recovered by South Boulder■ Eritrea Libya Mining Share Co
Eritrea Libya Mining (Erilib) is a special joint-venturearrangement between Eritrean and Libyan companies
formed early in 2009 and issued with two exploration
licences in June 2009. The Nefasit exploration licencecovers 1,636km2 and lies east of Asmara at the top of
the escarpment. The Fanco-Guluj licence is in thewest of the country and covers 1,151km2.
On both properties, Erilib has identified multiple
targets based on previous works and extensive
regional investigations consisting of geologicalmapping, geochemical sampling and geophysicalsurveys. Follow-up work continues and target areas
for drilling are being identified.

■ London Africa Ltd■ Beijing Donia Resources Co

massive sulphide (VMS) environment and are similar
to the geological setting of the large Bisha Cu-Pb-ZnAu-Ag deposit 200km along strike to the south. The
presence of widespread copper mineralisation,
combined with some high lead values in bedrock
samples, significantly upgrades the prospectivity ofGippsland’s Adobha tenements. Accordingly, Gippsland
applied to convert them to an Exploration Licence,and has formally requested more prospecting ground.
These applications have been processed and approved.

This is a London-based private company and was
granted a prospecting licensee in June last year known
as AK1-11. The area covered by this licence is1,555km2 and lies in the Anseba and Gash Barka
regions. During the one-year prospecting period,
London Africa was able to identify multiple targets
that warrant further exploration. According to thelaw, the licence has been converted to an exploration
one, which will permit London Africa to assess theproperty, initially for three more years until renewal.

■ Nubian Resources plc/Gippsland Ltd
Recognised as Gippsland by the ministry, the company
holds prospecting licences at the Adobha valley innorthern Eritrea. Interesting results from two fastreconnaissance sampling programmes, the first one ofwhich was aided by helicopter, have led the company
to generate target areas for further investigations.
The rock types found in the project area areconsistent with those expected in a volcanogenic■ South Boulder Mines Ltd
South Boulder is an Australian exploration company
looking for potash in the Danakil depression near theborder with Ethiopia. The depression and its
surroundings are believed to host several evaporatehosted mineralisation types. After the necessary
preparatory works, such as upgrading of road andother infrastructure, and establishment of a camp, thecompany started a drilling programme in late June.
This is a significant milestone for South Boulder, andrepresents the first drilling programme undertaken on
the prospect in 42 years.
The four to five drill-hole programme is designed
to confirm historic shallow potash drilling intercepts
and to provide data to enable an initial JORC
resource calculation to be made. The first holeintercepted the upper portion of a potash layer
starting at about 65m vertical depth. White carnallite
potash mineralisation has been identified from visualand physical field tests. The full chemical compositionof the mineralised intervals will be determined fromlaboratory chemical analyses.

■ Thani Eritrea Ltd
Thani Eritrea is a new partner in the exploration
ventures of Eritrea, coming from the Emirates andSouth Africa (through Anglogold Ashanti’s interest in
the joint-venture agreement). It holds 1,863km2 of
exploration ground in two localities, namely Kerkasha
in Gash Barka (immediately south of Barentu) and
Akordat North in the Anseba region (sandwiched
between London Africa and Sanu). Exploration on the
ground has not yet started but the company isplanning to run airborne geophysics over the entire
area.
August 201016/08/2010 16:43

PROFILE

Andiamo in Haykota – elephant country
Exploration is focused around the targets of Ber Gebey and Yacob Dewar
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T

305000306000HE Haykota area is quite literally
LEGENDelephant country, being home toAndiamo Chip Rock _Au g/tonn
Africa’s most northerly migratory herdkj 3.1 - 6.1of elephants. But, this is also mining$ 1.7 - 3.0
0.9 - 1.6
‘elephant country’.
P 0.4 - 0.8!
The 723km2
Ber Gebey Gossan
0.0 - 0.3
Haykota exploration
Soil Sampling Points
Contourlicence is located someStream
45km southwest
Andiamo License
Au(ppb)Krigingalong-strike from the182-493
Bisha mine, and appears
67-182
to be underlain by
48-67
32-48
similar geology.
27-32
Andiamo’s principals
25-27
23-25
have been well aware of
21-23
the region’s potential for some 15 years, and finally
19-21
secured the exploration licence in July 2009.
17-19
15-17
In the first year, work focused on the two known
14-15
VMS prospects of the gossans at Ber Gebey and Yacob
12-14
Dewer, which lie 3.4km apart and are directly on
10-12
8-10
strike. Careful geological mapping has been following
6-8
the exhalative horizon and further targets are
4-6
2-4
emerging as the local detailed geological map
0-2
develops.
P
0
P!
!
$
P
!
It is also fortunate that this area was covered by
the valuable geological map of the Eritrean-Norwegian
joint project. Andiamo particularly values meticulous
geological observations made on the ground.
The Haykota area has attracted considerable
attention in the past, with some valuable work carriedout by, for example, BRGM for La Source Développement in 1998.
Au
Recent results of geochemical soil sampling forgold, copper and zinc
are compelling, andinclude high bariumand lead values
1,000
Metersindicating close
305000306000proximity to an ancient
exhalative centre. These
are backed up by gravity
western margin of the Bisha belt.
anomalies, together with
A strong regional foliation strikes
Yacob Dewer Gossan
consistent mineralisanorth-north-east across the area. Contempotion from surface sample assays.
rary and later intrusives are present, and traversing
The Haykota area now benefits from goodthe licence is a distinctive shear zone, which appears
infrastructure, including: the sealed road from theto be mineralised. Large numbers of artisan miners
licence all the way to Asmara; excellent field camp
have been active in the area in the past and theirfacilities; new bridges, providing easy access to theworkings are very evident at some locations.
southern area; and mobile phone communications.
The regional capital of Barentu is a short drive away
FUTURE WORK
to the east. There is expected to be ample groundwaWork is continuing in two ways: an intensive
ter to provide process water.
exploration programme around the identified targets
The licence area is prospective for both of theof Ber Gebey and Yacob Dewar; and a regional effort
common mineralisation styles in Eritrea: VMS
to identify further targets, both for VMS mineralisation
deposits and later orogenic gold deposits. Stream
and for gold. The same proven techniques will be used,
sediment geochemistry and recent outcrop sampling
but probably supplemented with airborne or groundindicates that the southern part of the licence area
EM, magnetometer and radiometric surveys.
holds the highest potential for gold deposits, while thenorthern part is clearly a target for outcropping and
STRONG MANAGEMENT
buried VMS mineralisation, including gold-enriched
Very experienced and respected geologists run
near-surface mineralisation.
Andiamo, with extensive knowledge of both Eritrean
The geology underlying the licence area is of felsic
geology and VMS-style mineralisation. The team also
to mafic volcanic sequences, including flows and tuffs,
has many years of experience of the global capitalwith a distinctive marble horizon identifying themarkets for junior exploration companies.

306300.000000
309000.000000

CONTACTS
Andiamo
Dr Tim Williams
London, UK
E-mail: tim@andiamoexploration.com
Tel: +44 (0)20 7790 5543
Mobile: +44 (0)7952 778702
Dr Seife Berhe
Asmara, Eritrea
E-mail: seife@andiamoexploration.com
Tel: +291 1 184662
Mobile: +291 713 2049
Bill Fisher
Toronto, Canada
E-mail: bill@andiamoexploration.com
Tel: +1 416 690 0232
Mobile: +1 647 271 4505
Website: www.andiamoexploration.com

Mining Journal special publication – Eritrea

9

18/08/2010 13:16

PROFILE

Bisha mine start-up
eagerly anticipatedEritreans expect the Bisha gold oxide mine to heralda significant boost to their national economy

B

ISHA Mining Share Co (BMSC) is an
Eritrean company formed to develop
and operate the Bisha mine in western
Eritrea. The company is owned by
Nevsun Resources Ltd (60%) andEritrean National Mining Corp (40%).
Nevsun expects positive net cash flow during thefirst quarter of next year, and the strong government
support is reflected in its independent purchase of a
30% contributing interest in the project.
Eritreans consider the Bisha mine as something
special, and keenly await the start of production (duebefore year-end). This will be the first significant minein the country for at least 75 years, and is consideredthe vanguard for a swiftly developing mining industry.
The open-pit mining operation, which lies 150km
west of the Eritrean capital, Asmara, has been likened
to a layered cake. The gold oxide layer at the top will,over a two-year period, provide a 900,000oz boost to
project economics. Thereafter the underlying

supergene copper and copper-zinc sulphide layers will
supply eight years of economic benefit.
The total expected production is 1.06Moz of gold,
9.4Moz silver, 734Mlb copper and over 1,000Mlb ofzinc. A contiguous exploration licence gives room for
future discoveries within an area of over 133km2.

TRAINING IN PLACE
Caterpillar has been providing training to the Eritrean
mining staff. The equipment manufacturer has supplied
the off-road mining trucks and excavators and is using
both simulators and real-time input. Similarly, Atlas
Copco, the supplier of the mine’s production-drillingrigs, has been involved in training the drillers. Courses
for the process plant operational staff will be startsoon.
This large volcanogenic massive sulphide (VMS)
deposit, rich in base and precious metals, is being

mined by in-house staff using open-pit methods; there
is some potential to go underground after perhaps
seven years. The uppermost layer, containing goldoxide, will be processed by a conventional gold
recovery plant, consisting of a primary crushingcircuit, two-stage milling plant, CIP leach train, Anglo
American Research Laboratories (AARL) elution
circuit and a tailings-storage facility. Oxide ore fromthe open pit will be stored on a run-of-mine pad
before being crushed and milled at a rate of 2.0Mt/y,or 167,000t/mnth.
A Phase II construction programme will begin in
2011, when a flotation section will be added to theprocess plant for copper production. Anotherflotation plant will be added later for zinc sulphideproduction. In later years, copper-zinc sulphide
concentrates will be transported by road to the portof Massawa where a US$30 million storage andship-loading facility is due to be constructed soon.
The Bisha project is based on an excellent
resource for which the mining and extraction
methods employed are industry standard. It would be
difficult for it not to achieve a financial success. Whatmakes this project of greater interest relates to its
interaction with the State and people of Eritrea.

DEVELOPING TRUST
To start up in a country lacking a mining industry
required a development of trust and understanding
with respect to the commerce of mining. From thiscan come agreements, policies and codes of practicethat are acceptable to all parties.
The formation of BMSC as the mining vehicle
from the exploration success of Nevsun, and theintroduction of Eritrean National Mining Corp, hasbeen a great success.
Demands for funding and agreements on
international standards for social and environmental
requirements have been met. The future looks goodfor the expansion of BMSC’s business in Eritrea.

CONTACTS
Bisha Mining Share Co
61, Mariam Gimby, Asmara
Eritrea PO Box 4276
Tel: +291 112 4941
Nevsun Resources Ltd (Head Office)Suite 800, 1075 West Georgia Street
Vancouver, BC,V6E 3C9, Canada
Tel: +1 604 623 4700 Fax: +1 604 623-4701
Toll Free: +1 888 600 2200
The Eritrean National Mining Corp
PO Box 918, Green Building, Dembe Sembel,
Asmara, Eritrea Tel: +291 1 151441

10

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August 201016/08/2010 12:21

PROFILE
The location of the Koka
deposit and Zara projectin Eritrea

Chalice Gold: ‘firstmover’ advantage
The potential of the Koka deposit and Zara projectplace Chalice in a strong position for fast growth
Koka: 100% Project Finance (US$m)*C

HALICE Gold Mines Ltd (CHN: ASX)
is an aggressive exploration anddevelopment company dedicated tobuilding shareholder value throughfocused exploration, discovery anddevelopment of high-quality gold and base-metal
projects in Africa and Australia.
The company is recognised as having been
one of the ‘first movers’ in Eritrea, and is on
track to development of its Zara gold project.
Chalice has also recently completed a positive
feasibility study for the high-grade Koka deposit,
and is undertaking an aggressive exploration
programme for gold and base metals to expand
its existing resource base in the underexploredArabian Nubian Shield.
A combination of a robust gold resource at
the Koka deposit, and the potential for further
gold and base-metal discoveries within the Zara
tenement block, places Chalice in an excellent
position for rapid future growth.

AGGRESSIVE EXPLORATION
Based in Western Australia, Chalice owns a 100%interest in the strategically positioned 615km2 Zara
gold district, which remains virtually untouched bymodern exploration. The district contains numerous
artisanal gold-mining sites and gold geochemical
anomalies which present high-priority targets for
immediate follow-up. Based on these sites, and othertargets being generated through continuing
exploration, Chalice expects to build on its existing
Koka gold resource quickly to maximise the project’s
economic potential.
Chalice is well funded, with sufficient financial
resources to carry out an aggressive exploration programme. This is further supported by a
Board of Directors and management with awealth of expertise in the mining andexploration sectors, both in Africa and Australia.
Koka under the shadow of the Spear.
Inset: corecutting

Drill crew

(Unleveraged)

Life-of-mine EBITDA
Average annual EBITDA
NVP(5%) after-tax cash flows
IRR after tax
Payback period (years)

Gold price (US$/oz)
900
1,200
1,500
381
589
797
54
84
114
99
196
293
22%
35%
45%
2.8
2.1
1.8

* The Eritrean government has a statutory 10% non-contributing interest with its share of pre-production andcapital expenditure being repaid from production cash flow

EXPLORATION POTENTIAL

Drill core sample

KOKA GOLD PROJECT
The mineral resource and ore reserve estimate (June 1,2010) for the Koka deposit has been calculated inaccordance with the JORC Code by AMC Consultants
Pty Ltd, using a 1.2g/t gold cut-off (see below).
Category
Indicated Resource
Probable Reserve

Mt

Gold
Contained
grade (g/t) gold (’000 oz)
5.0
5.3
840
4.6
5.1
760

Chalice recently delivered a positive
independent feasibility study for the Koka
deposit; permitting is scheduled to be completein the first half of 2011, to be subsequently
followed by development. In parallel, the company
is looking to grow its gold resource base throughaggressive exploration of its extensive land
package.

The Zara project lies within an auriferous provincethat was virtually unexplored before 1998, when thefirst prospects were located by artisanal miners. Since
then, numerous other gold prospects have been
identified and several have seen considerable past andpresent artisanal mining activity. Exploration to datehas focused on the Koka deposit largely, with very
limited drilling at satellite and regional targets, offeringsignificant exploration upside in the unexplored
tenement block of 615km2 surrounding Koka.
A programme of geological mapping, rockchip sampling and bulk-leachable extractablegold (BLEG) stream sediment samplingundertaken over the original Zara tenements
has identified several previously unknown areasof interest that will require priority follow-up.
Recently completed extensions of thesesurveys to the equally prospective northern andsouthern tenements has identified further areasof strong gold anomalism.
An extensive drill programme is under way
on the Konate prospect, a Koka-style microgranite-hosted quartz stockwork deposit 5km
south of Koka.

CONTACTS
Chalice Gold Mines Ltd
Dr Doug Jones, Managing Director
Level 2, 1292 Hay Street
West Perth, WA 6005
PO Box 2890 Perth 6001
Australia
Tel: +61 (0)8 9322 3960
Fax: +61 (0)8 9322 5800
North American IR contact:
Dr Toni Davies
Mobile: +1 (416) 566 4378
E-mail: tdavies@chalice.com
E-mail: info@chalicegold.com
Website: www.chalicegold.com

August 2010

Chalice_Gold_11Eritrea.indd 11

Mining Journal special publication – Eritrea

11

16/08/2010 12:22

PROFILE

Encouraging exploration results
Eritrean-Libyan Mining Share Co is capitalising on its
two exploration licences, granted just over a year ago

E

STABLISHED in February 2007,
Eritrean-Libyan Mining Share Co (Eri-Lib)
is owned equally by Eritrean National
Mining Corp (ENAMCO), representing
the Eritrean State, and Libyan African
Investment Co (LAICO), representing the Libyan
State. The company’s main aim is to promote anddevelop Eritrea’s mineral resources.
Eri-Lib’s two exploration licences (Fanco-Guluj andNefasit) were granted in June 2009. The Fanco-Guluj
licence area covers 1,424km2 and Nefasit 1,636km2.
Both properties are being explored, and several gold
and volcanogenic massive sulphide (VMS) exploration
targets have already been identified.

TWO MINERALISED AREAS
1. Fanco-Guluj licence area
The Fanco-Guluj licence area is on strike with the
Bisha volcanic belt and has similar geology andindications of VMS mineralisation. There are also
extensive artisanal mining activities within theprospect areas.
The Fanco-Guluj area comprises meta-volcanicand meta-sedimentary rock assemblages, which are
cut by syn- to post-tectonic intrusives. The major
structural trend strikes NE-SW, and dip generally to
the SE. There are numerous strike-slip shear zones
with dextral sense of movement, which trend N-S.
Sericitisation, silicification, carbonitisation andpropilytic alteration is pervasive, especially within themetabasalts and the foliated quartz porphyry granitic
rocks. Gold occurs both as placer and primary goldin quartz veins, floats and in sheared gabbro areas.
However, gold in gabbro seems to be associated withthe alteration zones, mainly sericite, and quartz
chlorite schists.
The presence of abundant carbonates,sericite andsilica suggests that hydrothermal fluids rich in CO2
and H2O have infiltrated into the gabbroic andmetabasaltic rocks. Exhalatives are common in the
project area which are indications of possible VMS
occurrences.
The geochemical results show good gold values
at 0.3-4.2ppm. Geophysical surveys (gravity andmagnetic) were conducted at Melhoy, Assuna andMeriet. The results show high-gravity anomalous
zones, which could be related to linear structures,
mineralised zones or lithology.

Location map of the licence areas
2. Nefasit licence area
The Nefasit licence area lies east of the Asmara VMS
belt, which hosts the Debarwa, Adi Nefas and Emba
Derho ore deposits. There may be similar VMS
mineralisation present within the Nefasit property.
The geology of the Nefasit concession area iscomposed of syntectonic granitoids, low-grade
volcano-sedimentary rocks, gabbros and diorites,
overlain by recent volcanic rocks, laterites andQuaternary alluvial-colluvial sediments.
The area is one of the most tectonically active
regions of Eritrea, which is manifested by major stepfaults, horsts and grabens related to the opening of
the Red Sea.
Following the assessment of Rift Resources andRudis reports, Eri-Lib launched regional mapping andalso conducted detailed geological mapping at someprospect areas.
The presence of major shear zones and related
quartz veins,was found to carry gold values ranging
from 2.87-11.18g/t. It is also believed that the shear
zones host epithermal gold mineralisation. Extensive
artisanal mining activities are continuing at Ayet.
The main copper mineralisation at Mt Seker isexpressed by malachite-stained outcrops that range
from a few per cent to about 40% of the outcrop. It isalso affected by abundant vuggy and fractured quartz
veins. Results from Mt Seker have shown anomalous
values of copper (2.0-5.9%) and zinc (171-612ppm).
Similarly, rock-chip assay results show that theAsus-Metkel Abyet malachite occurrences are rich in
Fe, Cu and Zn mineralisation.
There is good correlation of the geophysicalanomaly with the geochemical anomaly at thesouthwestern part of the survey area.

CONTACTS
Eritrean-Libyan Mining Share
Omran Ekheil
General Manager
PO Box 8980
Asmara, Eritrea
Tel: +291 1 180345
Fax: +291 1 180346
E-mail: ek20012002@gmail.com

12

Mining Journal special publication – Eritrea

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August 201016/08/2010 12:42

PROFILE

London Africa turns prospects tonumber of gold andexploration Abase-metal
prospects

L

ONDON Africa Ltd is a private company(registered in England and Wales) set up
in 2005 to apply for prospecting andexploration licences in Eritrea. The
company, with offices in London andAsmara, is focused predominantly on the country’s
gold and base-metals potential.
In June 2009, the company was granted prospecting
licences totalling 1,562km2 in the Akordat-Orota
region of central Eritrea. These licences were the first
awarded to any foreign mining company in almost four
years, and were the first to be awarded to a British
company.
The company’s prospecting licences were selected

are now the focus of
London Africa’s work

based on a detailed interpretation of numerous
ASTER (Advanced Spaceborne Thermal Emission and
Reflection Radiometer) images. These highlighted anumber of possible clay alteration zones associatedwith mineralisation.
Follow-up up work by London Africa on thesetargets has resulted in some interesting gold and basemetal prospects, which are now the focus of thecompany’s exploration work.
In July 2010, in accordance with the Eritrean Mining
Law, London Africa converted its prospecting licences

Results ofthe gravity
surveyat KofotGerger

Signing the exploration licences (July 2010)
to exploration licences, dropping 25% of its originalland position (to 1,168km2), yet retaining all its
precious- and base-metals prospects.

KOFOT-GERGER VMS TRENDThe prospects in this Volcanic Massive Sulphide trend
display both VMS and skarn-like features:■ Copper and gold are anomalous in malachite-richgossans and gossanous zones.
■ 3.2km continuous copper anomaly in soil samples(200m spacing) with coincident >0.5mgal, 1.7km
long residual, ground-based, gravity anomaly.
■ Rock-chip samples from the outcropping gossans
have returned grades up to 4% Cu and 4.58g/t Au.

GOLD VEIN SYSTEMS■ Yakare: Polymetallic gold anomaly.Visible

Results of the copper-insoil anomaly coincident
with gravity anomaly

Typical quartz
vein of gold

Outcropping gossan at
Kofot-Gerger

pyrite, galena and malachite associated withthe gold mineralisation.Vein samples have returned
grades of up to 2.56g/t Au.
■ Tanenay: Extensive auriferous quartz vein
system, up to 3km strike length and more than
20m-wide vein system in a regional structure.
Vein samples have returned grades of 55g/t, 15g/t,
11g/t, 4.39g/t, 2.99g/t and 1.16g/t Au.
■ Hawagu: Hosted near a major regional structure,along cross faults and openings parallel to themain structure. Best sample results have been up
to 5g/t Au.
■ Tablet: Hosted along the same major structure.
High-grade gold anomaly. Up to 231g/t Au fromquartz vein sample.
■ Engerne: Low sulphide gold vein. Up to 100g/t
Au from rock-chip sampling. Results from 25
samples include: 100.91g/t, 25.93g/t, 13g/t, 7.99g/t
and 2.77g/t Au.

CONTACTS
London Africa Ltd
5th Floor, 23 King Street
St James House
London, SW1Y 6QY, UK
Tel: +44 (0)20 7389 0581
London Africa (Eritrea) Ltd
Room 403, 4th Floor
SA Building, Warsai Street
Asmara, Eritrea
Tel: +291 (1)11 1165
E-mail: info@londonafrica.co.uk
Website: www.londonafrica.co.uk

August 2010

LondonAfrica_13Eritrea.indd 13

Mining Journal special publication – Eritrea

13

05/08/2010 09:09

PROFILE

Potash success highlights potential
Progress by South Boulder
at its core potash projectin Eritrea has brought thejunior to the attention of
investors across the globeR

ECENT success by South Boulder at its
core potash project in Eritrea hasbrought the junior to the attention of
investors across the globe The next 12months should be exciting for South
Boulder Mines Ltd, with exploration stepping up agear in Eritrea and at its Duketon nickel and gold
projects north of Laverton in Western Australia.
South Boulder’s work in Eritrea has highlighted
some of the untapped mineral potential. The company
applied in May 2008 for an exploration licence at thewholly-owned Colluli project to explore for potash.
The tenement was granted in July 2009.
As an early mover on Eritrea’s potash potential,
South Boulder could secure 906km2 of highly
prospective ground in the buried evaporite sequencesof the Danakil Depression (a remnant of the Red Sea).
The potash-bearing evaporite sequences formed
when part of the Red Sea flooded the depression andthe sea later evaporated when the basin was cut off
due to volcanic activity. This process continued manytimes over a 5-15 million-year period, resulting in abuild-up of evaporite rocks to over 800m in places.

COLLULI POTENTIAL
The Colluli project was originally explored in 1968 by
Kaiser Aluminium and Chemical, which completed 21
holes intersecting two shallow potash-rich layers. One
was a 1.7m-thick sylvite-rich zone only 25m deep
with grades averaging 12.5% K2O. The second was a
17m-thick carnallite-rich zone intersected at around390m depth with grades of around 17% K2O. At thattime as there was a major campaign of drilling andmining activity at the Musley and Crescent potash
deposits, about 15km south of Colluli.
South Boulder began its maiden mineralisationconfirmation drilling on June 24, and on July 6announced early success, with diamond-core drillingintersecting potash mineralisation at 65m deep.
Two holes have been completed so far. Hole
Collecting and analysing
core samples

14

Mining Journal special publication – Eritrea

SouthBoulder_Mining_14Eritrea.indd 14

Colluli potash■ 100%-owned, potentially‘world class’ project.

■ Diamond-drilling programme underway, first
drilling since 1968.
■ Historic results defined two
shallow potash horizons,
with grades up to 17% K2O,
within ‘Houston Formation’sylvinite, carnallite and kainitite horizons.
■ High-grade ‘Houston Formation’ potash-bearing horizons intersected 15km from Colluli.
■ Potential to have low cap-ex and op-ex operation due to outstanding infrastructure location, solar
evaporation and the potential to utilise solution mining methods.
■ Recent drilling by Allana Potash confirmed shallow potash immediately south of the project area.

Other projects (Australia)
DUKETON GOLD
■ 100%-owned project in underexploredgreenstone belt (1,500km2).

■ New near-surface ‘Terminator’ prospectincluded 60m at 1.3g/t from 2m.

■ Mineralisation defined over 400m of strike, andopen in all directions.
Follow-up exploration under way to define and test
Terminator and other regional targets.

DUKETON NICKEL■ The Bulge ‘Rosie’ and ‘C2’ nickel sulphideprospects, 120km from Laverton.

■ Massive high-grade Ni-Cu-PGE mineralisation
at Rosie, including 5.2m at 9.13% Ni, 1.09% Cu,
0.21% Co and 7.09g/t 6PGEs.
Four rig follow-up drill programme under way to define
initial resource, and mining lease applied for in May
Col-001 intercepted 6.0m of rock salt with sylvite
from 59.2m, plus 10.1 of carnallitite from 83.2m and10.1m of kainitite from 93.3m. Hole Col-002B, 2.5km
north, intercepted 11.3m of carnallite from 56.6m plus
12.6m of kainitite from 67.9m. South Boulder believes
the intercepts suggest the presence of a “significant
shallow potash deposit”.
South Boulder recently described itself as “veryhappy with the progress its Eritrean team has made inwhat have been “very trying conditions”, noting thatthe government was “very supportive” of its activities.
South Boulder is completing a five-hole programme, and is expecting to drill around 2,000m.
Drilling will continue to September, with a target of
drilling enough holes to confirm the location andgrade of some of the potash, complete a NI 43-101
geological resource model and run some ‘back of theenvelope’ numbers.
South Boulder has gained confidence from work by
Allana Potash Inc (AAA.V) and Sainik Coal Mining Pvt,
which have defined (NI 43-101-compliant) resources at
the Musley and Crescent deposits, less than 15km awayfrom Colluli. South Boulder said it was “encouraged by
the prospectivity of the basin demonstrated in the past,and by these two companies”.

Colluli lies about 70km south of the coast, and the
major shipping routes into Asia and Europe. The
company also notes the potential to utilise the solar
evaporation process (it is operating in one of thewrold’s hottest places), which will be an advantage forthe cost of potash processing. There is also potential
to use the low-cost solution-mining techniques and totap geothermal energy identified near the project.

LOOKING AHEAD
The Eritrean project is potentially very large, butthere is only limited knowledge of potash in Australia.
South Boulder notes most of the technical expertiselies in Europe, North America and Russia (all financial
expertise is in North America). Thus, South Boulder isusing technical consultants from Germany, and looking
to tap the capital markets in Canada and Europe.
As well as its primary listing on the Australian
Securities Exchange, South Boulder is listed inFrankfurt and Berlin. The company has US$3.5 million
in cash, and US$2 million in listed investments.
Managing director Lorry Hughes said: “We feel
comfortable we have enough cash currently
meaningfully to progress our potash project, as well as
our gold and nickel projects in Western Australia.”
He added: “We are at a very exciting stage, andvery well leveraged to exploration success. We will
have a very good understanding of how significant thepotash and nickel deposits are within the next six
months because we’ll be drilling them both.”

CONTACTSSouth Boulder Mines Ltd
Australia Office:133-135 Edward Street,
Perth, WA 6000
PO Box 8355, Perth, WA 6849 Australia
Tel: +61 8 9227 1144 Fax: +61 8 9328 8302
Mobile: +61 400 038 439
E-mail: lorry@southbouldermines.com.au
Website: www.southbouldermines.com.au
Eritrea Office:Tel: +291 1 111162/63 Fax: +291 1 111164

August 201005/08/2010 09:09

PROFILE

Prefeasibility study announced

In addition, Sunridge and its strategic partner,
Antofagasta Minerals SA, are continuing aggressively
to explore and drill for new base-metal and gold
deposits along known VMS trends on the Asmara
project. Elsewhere, Sunridge’s Gupo deposit contains
189,000oz of gold in the Inferred category.

DEVELOPMENT STUDY
The ‘strategic production study’ for the four deposits
at Asmara examined the metallurgical characteristics
of each deposit, and involved a high-level evaluation of
the economics of combining development of thedeposits. The Asmara project’s four deposits are.
■ Debarwa: 4.5Mt (NI 43-101) Indicatedcopper-gold-zinc resource which includes a 1.4Mt
super-gene copper zone averaging 5.36% Cu,
1.54g/t Au and 33.9g/t Ag. The recent study
concluded that it is possible to selectively mine ahigh-grade portion (15-20% copper) of thesuper-gene zone for direct shipment to a smelter.
This will be the focus of the prefeasibility/feasibility
study to begin mining operations at Debarwa.

The polymetallic Asmara project hosts great potential
for Sunridge Gold Corp, which is advancing its status
4650001715000

4700004750004800004850004900004950005000005050001715000

Sunridge Gold 100% Owned Development Areas
Sunridge Gold - Antofagasta Joint Venture Exploration Area
1710000

1710000

Adi Nefas
LicenseAdi

1695000

Adi Teklaiu Trend1705000

1700000

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Adi Mussa

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1690000

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Gupo Gold

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copper-zinc-gold resource with a copper-rich zone
containing 38.4Mt averaging 1.02% Cu and 0.99%
Zn. A scoping study, completed in 2009, demonstrated strong economics and the company
intends to begin prefeasibility studies in the
December quarter this year which will include thesatellite deposits Adi Nefas and Gupo Gold.
■ Adi Nefas: 2.7Mt (NI 43-101) Indicatedhigh-grade zinc-copper-gold resource which
averages 8.38% Zn, 1.39% Cu, 2.85g/t Au and99.3g/t Ag. Adi Nefas, which is only 6km from Emba
Derho, will be part of the prefeasibility study.
■ Gupo Gold: 4.5Mt (NI 43-101) Inferred gold
resource which averages 2.99g/t Au. Gupo will be
examined as part of the prefeasibility study at
Emba Derho, and could potentially be combinedwith material from the gold-oxide cap at Emba
Derho, located 6km away.

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1670000

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166000001655000
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UNRIDGE Gold Corp (SGC/TSX-V) is a
Canadian junior mining company that has
been involved in exploration anddevelopment of base-metal and gold
deposits in Eritrea since 2003.
Sunridge is focused on the polymetallic Asmara
project, which covers about 1,000km2 in central
Eritrea, lying directly north, west and south of thecapital city of Asmara. The infrastructure is excellent,with roads, power and water available throughout the
project area, and access to the port of Massawa is
only 120km away by road and railway.
Sunridge has so far successfully defined four
mineral deposits at Asmara, and the company recently
announced that it will proceed with prefeasibility
studies on three of these deposits (Emba Derho, Adi
Nefas and Debarwa). This was after considering theresults of a study that examined the potential for
co-developing the deposits. The study’s author, PEG
Mining Consultants, recommended a central plant for
both base metals and gold at Emba Derho.
These three VMS deposits have a total (NI 43-101)
Indicated resource that contains:■ 1,280Mlb (580,000t) copper;■ 2,500Mlb (1.13Mt) zinc;■ 1.05Moz gold; and■ 31.8Moz silver.

1670000
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License1665000

Adi Rassix

1660000

NI 43-101 Compliant Mineral Deposits
Priority Target Areas
485000490000495000Roads
1655000
505000500000

UTM 37N wgs84
VMS Mineralized Trends
Gold Shear-zone Mineralized Trends

Asmara project map
The North Asmara Gold and Base Metals Projects

July 2010
EXPLORATION POTENTIAL

Since starting its exploration in Eritrea, Sunridge has
enjoyed great success. This was boosted late last year
when Sunridge entered into a strategic partnershipwith Antofagasta Minerals SA, whereby Antofagasta is
now funding exploration on the Asmara project. Drill
results are expected throughout 2010 from several
high-priority base-metal and gold targets.

Emba Derho copper-zinc-gold deposit

Drilling at Emba Derho

CONTACTS
Sunridge Gold Corp
Suite 1490 - 1075 W Georgia Street
Vancouver, BC
Canada V6E 3C9
Tel: +1 (604) 688 9478
Fax: +1 (604) 688 9458
E-mail: info@sunridgegold.com

August 2010

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Mining Journal special publication – Eritrea

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