Mining Journal > Production and Markets > Eritrea awards more mining licences and sees gold output in 2010

Eritrea said on Tuesday eight more foreign companies had entered its mining sector with a clutch of new exploration licences in a nation seen on the cusp of a minerals boom that could motor its needy economy.

Alem Kibreab, director general of mines for the energy and mines ministry, added the Horn of Africa nation's first and flagship project - the Bisha mine - should start producing gold by the third quarter of 2010.

"Despite its small size, Eritrea is going to be on the map of mining countries," he told Reuters, adding that reserves identified so far were only the "tip of the iceberg".

Foreign companies agree on the potential, but Eritrea insists the sector must be developed slowly and carefully to prevent the so-called "resources curse" where oil and minerals have spawned corruption and violence elsewhere in Africa.

A new round of licences awarded earlier this year had brought the total number of foreign companies exploring or about to explore in Eritrea to 14, Alem Kibreab said.

He named the newcomers as Britain's Andiamo Exploration and London Africa; China's Land and Energy and Zhongchang Mining; the Eritrean-Libyan Mining Share; Australia's South Boulder and Gippsland; and India's Spice Minerals.

Gold, copper, zinc and potash are the main interest. "We know that the juniors are the ones who aggressively come for exploration," he said. "We are comfortable not only with the size but the diversification of countries."

Eritrea's most advanced project, run by Canada's Nevsun Resources Ltd with a 40% stake for the state, is Bisha. Its 27Mt of ore are believed to contain 1Moz of gold, 700-800Mlb of copper and 1,000Mlb of zinc.

"Construction has started. Most of the workers' quarters are ready. We strongly believe that by the third quarter of 2010, we will start production," Alem Kibreab said, adding that feasibility and environment impact studies had been lengthy.

For the first two-and-a-half years it will produce gold, with output of 450,000oz/y expected. Then it will turn to copper, followed by zinc in a probable 10-year life.

"Bisha is unique. You rarely find a project with gold on top, then copper, then zinc, like that," Alem Kibreab said.
"If we get the gold price at today's price, it will be beneficial, obviously," he said, adding the mine was planned with a lower price of between US$400-US$600/oz in mind.

Next up will be the Zara project, run by Australia's Sub-Sahara Resources, and the Asmara belt, headed by Canada's Sunridge.
   Zara is believed to hold 1Moz of gold.

Asmara belt has some 70Mt of ore thought to contain between 500,000-1Moz of gold, 2,000Mlb of zinc and 700-800Mlb of copper, Alem Kibreab said.