Sunridge's Asmara copper-zinc project minelife jumps 50%

Sunridge plans to integrate four deposits with copper, zinc, gold and silver to increase the production potential of its Asmara project in Eritrea.

Author: Kip Keen
Posted: Wednesday , 02 May 2012

HALIFAX, NS (MINEWEB) -

In a new prefeasibility studySunridge Gold (TSX-V: SGC) pulled four deposits together into a single mining scenario at its Asmara copper-zinc project in Eritrea for the first time, giving it added minelife and net present value.

The key to the Asmara project still revolves around Emba Derho, Sunridge's largest single copper-zinc deposit with significant gold and silver credits. It last considered this as a stand-alone operation in a scoping study in 2009. But since then Sunridge has increased resources from three smaller satellite deposits, Debarwa, Adi Nefas and Gupo, each with different strengths in terms of mineralization.

Debarwa is especially high-grade in copper; Gupo is all gold; Adi Nefas is strong across the board; and Emba Derho, as before, is chiefly about tonnage - the heftiest - and copper and zinc.

The main effect in integrating the Asmara deposits into a single production scenario with a centralized mill is to add minelife, now 15 years instead of 10, and net present value (NPV). At similar, though not directly comparable metal prices, Sunridge pegged NPV at C$555 million as compared to C$324 million in 2009. (In the old analysis, also done at a 10-percent discount, the metal prices assumed were $2.95 per pound copper,
.95 per pound zinc, $835 per ounce gold and $14 per ounce silver. The new base case analysis assumed somewhat higher metal prices: $3.28 per pound copper,
.99 per pound zinc, $1,111 per ounce gold and $21 per ounce silver.)

The core of the project is still copper and zinc with metal production at similar rates as projected in 2009. Sunridge estimated somewhat higher production at 56.9 million pounds of copper, 136.0 million pounds zinc, 26,000 ounces gold and 695,000 ounces silver a year. Of course this production is now planned over a longer minelife. A notable addition to the mine plan, however, is oxide gold. Previously Sunridge did not consider oxide gold caps as part of production. But this time round in the Asmara prefeasibility study Sunridge pulled these into the works along with the Gupo gold deposit. In the last year of production Sunridge would process stockpiled oxide and partially-oxidized ore from Emba Derho and Debarwa along with Gupo oxides and sulfides.

Not surprisingly, given the increased scope of the project and industry-wide cost creep over the past few years, capital costs have grown considerably for Sunridge. The last time round in the Emba Derho-only scoping study, Sunridge pegged capital costs at C$332 million. Now Sunridge estimates the project will cost C$489 million to initially build. Then Sunridge projects it will spend an additional C$69.4 million on phased expansions, which it says it would fund through cash flow.

As for what's next, Sunridge said it was going ahead with a feasibility study of the Asmara project. It has also said it would produce a separate feasibility study of the Debarwa high-grade copper deposit as a stand-alone operation.