From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Thu Nov 19 2009 - 08:12:47 EST
INTERVIEW-Nevsun targets late 2010 for Eritrean gold
Thu Nov 19, 2009 11:56am GMT
* Has invested $93 million so far, budget for $250 million
* Nevsun mine will be the first to produce in Nov 2010
By Jeremy Clarke
ASMARA, Nov 19 (Reuters) - Canada's Nevsun Resources pumped $21.7 million
during the third quarter into its Eritrean Bisha project, the project's
general manager said on Thursday.
Set to become the nation's first producing mine, Bisha's 27 million tonnes
of ore is believed to contain 1 million ounces of gold, 700-800 million
pounds of copper and 1 billion pounds of zinc.
Apart from small-scale artisanal mining and some minor extraction by
Italians during the colonial era, Eritrea's mining potential is largely
unexploited.
"We are by far the most advanced project in the country. November 2010 is
the big drive for gold production," Stanley Rogers, Bisha general manager,
told Reuters.
"In the last quarter we increased spending to a new high and doubled the
number of people we have on site to 400. This is inevitable as we near
production," he said.
"Actual expenditure on the Bisha project so far is $93 million, with a
current budget of $250 million. It is on track and roughly half way through
development," Rogers said.
The Bisha mine, which lies to the west of the capital Asmara toward the
border with Sudan, was the first mine to operate in Eritrea for 70 years,
Rogers said.
"We were the first to build a relationship with the government, which paved
the way for other companies to follow us," he added.
The Eritrean government has a 40 percent stake in the project.
There are more than a dozen foreign companies exploring in Eritrea, with
licenses held by groups from Australia, Canada, China, Libya and the United
Kingdom.
For background on Eritrea's mining future (Editing by William Hardy)
C Thomson Reuters 2009 All rights reserved
Q+A-Eritrea's mining potential, players and risks
Thu Nov 19, 2009 11:53am GMT
By Jeremy Clarke
ASMARA, Nov 19 (Reuters) - Eritrea is seen on the threshold of a mining
boom, with hopes it may boost its agriculture-based economy. But question
marks remain over security and sanctions, keeping foreign investors on their
toes. [ID:nLJ358670]
WHAT'S THE HISTORY?
* Apart from small-scale artisan mining and some minor extraction by
Italians during the colonial era, Eritrea's mining potential is unexploited.
The main interests are gold, zinc and copper.
* Now more than a dozen foreign companies are exploring in Eritrea, with
licences held by groups from Australia, Canada, China, Libya and Britain.
* Most recently, Australia's Gippsland Ltd (GIP.AX:
<http://af.reuters.com/stocks/quote?symbol=GIP.AX> Quote) was last month
granted three prospecting licences for north-western Eritrea near the
Sudanese border.
WHO IS GOING TO PRODUCE FIRST?
* Eritrea's most advanced project is Bisha, run by Canada's Nevsun Resources
Ltd (NSU.TO: <http://af.reuters.com/stocks/quote?symbol=NSU.TO> Quote). Its
27 million tonnes of ore are believed to contain 1 million ounces of gold,
700-800 million pounds of copper and 1 billion pounds of zinc.
* Nevsun spent a record $21.7 million on the project during the third
quarter.
* The project most likely to start producing after Bisha is Zara, run by
Australia's Chalice Gold Mines (CHN.AX:
<http://af.reuters.com/stocks/quote?symbol=CHN.AX> Quote). The mine, also
expected to hold 1 million ounces of gold, just completed a scoping study.
Production is expected in 2011.
ECONOMIC LIFELINE?
* Analysts say Eritrea's economy can expect a welcome boost if its mineral
potential is effectively harnessed. The agriculture-based economy has
suffered from irregular rainfall and the global economic crisis, with aid
agencies fearful of widespread food shortages and hunger.
* Asmara is supportive of the industry -- it holds a 40 percent stake in the
Bisha project -- and welcomes building a base of skilled local workers. But,
analysts say, Asmara will not see a profit on its investment until 2012 at
the earliest.
* In a rare interview, President Isaias Afwerki told Reuters last month that
the industry was unlikely to affect the lives of ordinary Eritreans. "It
would be very damaging to expect improvement in the economy because we are
mining gold," he said. [ID:nLL161440]
WHAT ARE THE RISKS?
* Security -- Last month three Eritrean miners working for Chalice were
ambushed and executed on a remote road northwest of the capital. Officials
say it was an isolated incident, not a targeted attack. Relations with
Ethiopia and Djibouti remain hostile. Some bigger miners were scared off by
the 1998-2000 border war with Ethiopia that killed 70,000 people.
* "Resource curse" -- Geologists insist on the sector's potential, but
Asmara cautions it must be developed slowly to prevent the so-called
"resource curse" whereby oil and minerals have spawned corruption and
violence elsewhere in Africa.
* Sanctions -- The momentum towards imposing sanctions on Eritrea for its
alleged role in war-torn Somalia has grown in recent months. It remains
unclear how they may effect foreign companies, but according to one analyst,
any disruption to the burgeoning mining industry would put pressure on
Asmara.
- Sources: Reuters, industry sources, Eritrean government, company websites
(Editing by William Hardy)
C Thomson Reuters 2009 All rights reserved
----[This List to be used for Eritrea Related News Only]----