Sunridge Gold is good to go
It's been a very active decade filled with milestones for Sunridge Gold, and now following the September signing of a comprehensive permitting agreement with its partner, the government of Eritrea, the Canadian junior is set to begin production in 2016.
In this interview with The Gold Report, President and CEO Michael Hopley discusses the riches of his company's copper, gold, zinc and silver deposits and looks forward to becoming as successful as Nevsun has been.
The Gold Report: Why did Sunridge Gold Corp. choose to work in Eritrea?
Michael Hopley: We chose Eritrea because of the tremendous opportunity it presents. Members of our geological team had worked on Nevsun Resources Ltd.'s very large volcanogenic massive sulfide (VMS) Bisha deposit in western Eritrea. They were aware that there were several other large VMS deposits in Eritrea that had not been properly explored.
TGR: How big is your Asmara project?
MH: VMS occurrences appear in clusters, in districts that are tens of kilometers long and wide. Asmara is essentially a VMS district we've had to ourselves. We have so far defined six deposits all within a 30–45 minute drive from Eritrea's capital, Asmara.
The crown jewel and the center of gravity of the Asmara project is the Emba Derho deposit. This is a 70 million tonne (70 Mt) resource containing over 1 billion pounds (1 Blb) copper and 2.1 Blb zinc, 506,000 ounces gold and 19.5 million ounces silver.
There are two other small deposits within 7 kilometers of Emba Derho: Adi Nefas and Gupo Gold. Adi Nefas is a small deposit, just slightly less than 2 Mt, but it is very high grade: over 10% zinc and 1.8% copper. It also averages 3.3 grams per tonne (3.3 g/t) gold and 115 g/t silver. This would be the only underground mine at the project. Gupo Gold has an Indicated gold resource of 952,000 tonnes at 1.53 g/t and an Inferred resource of 1.8 Mt at 1.85 g/t.
Our fourth major deposit is Debarwa, 45 minutes to the south. It contains 3.3 Mt, with over 200 million pounds (200 Mlb) copper, 70 Mlb zinc and significant gold and silver. Debarwa is also significant because it hosts the DSO Zone—Direct Shipping Ore—which averages 16% copper with gold and silver.
Geotech Drilling at Debarwa. Photo courtesy of Sunridge Gold.
TGR: You have two pipeline projects as well, correct?
MH: Yes, these are Adi Rassi and Kodadu, which are not as advanced as the four in the feasibility study. Adi Rassi contains a 16 Mt resource at 0.5% copper and 0.3 g/t gold. Kodadu is a 1 Mt resource at 1.25 g/t gold and 1.6 g/t silver.
TGR: What is your experience in the mining business?
MH: I'm a geologist by training and have been in the business for more than four decades. I've been associated for the last 10–15 years with junior companies based in Vancouver, notably, Bema Gold Corp., Arizona Star Resources Corp. and Tournigan Energy Ltd. So I have extensive experience with running public companies, and I have been running Sunridge for 11 years.
TGR: Tell us about the qualities of your executive team.
MH: We have a lean, agile, multitasking team of which I'm quite proud. There are essentially four of us in Vancouver. Greg Davis, our vice president of business development, has been with us since 2007. He worked at Bisha for two years, so he understands Eritrea and VMS deposits. Scott Ansell, our vice president of project development, has been with us since 2009. He was a project manager at Bisha and was formerly director of engineering studies at Amac. David Daoud, our exploration manager and an expert on exploring VMS deposits, was part of the Bisha discovery team and joined us in 2005.
TGR: Asmara is owned 60% by Sunridge and 40% by the Eritrean National Mining Corp. (ENAMCO). How supportive a partner has the government of Eritrea been?
MH: We had lengthy negotiations regarding the structure of the joint venture company and what the government would pay for with its initial 30%. Now that we have agreed on terms and conditions, the government is very supportive and has delivered its promised money on time. It's a good relationship.
TGR: Talk about the significance of your Sept. 11 agreement with the Eritrean Ministry of Energy and Mines.
MH: It's hugely significant for us. Four very work intensive years of prefeasibility studies, feasibility studies, environmental impact studies and social engagement programs have culminated in this agreement, which permits Emba Derho, Adi Nefas, Gupo Gold and Debarwa. We can now move forward to production next year.
TGR: Asmara will be developed in phases. How will this work?
MH: Our feasibility study delineated a three-phase startup of Asmara. This is a rather excellent and unique way for a junior such as Sunridge to develop such a large project. Debarwa will be the catalyst. It has 116,000 tonnes DSO of 16% copper and 3 g/t gold just 20 meters beneath the surface. This DSO has the qualities that are highly coveted by smelters, and mining it will allow us to stage the startups for phases 1, 2 and 3.
TGR: So the earlier phases will pay for the later ones?
MH: To some degree. Phase 1A, the DSO, could pay for phase 1B, the gold heap-leaching operation at Debarwa. Whether we go ahead with phase 1B will depend on the gold price. In any event, 1A will generate $50–60 million ($50–60M), which will most likely be used to jumpstart phase 2, which has a capital expenditure (capex) of $200M+.
TGR: How much cash does Sunridge have?
MH: About $1.3M. That doesn't sound like much, but we also have substantial credits from ENAMCO, our JV partner. Our expenses are small, and ENAMCO will fund the next $5.5M of the project. In addition, our partners owe us $13.3M, which we will begin receiving after phase 1 financing is finalized.