|Wed May 2, 2012|
Sunridge Gold Announces Positive Pre-Feasibility Study for the Asmara North Project, Eritrea
|Sunridge Gold Corp. (SGC:TSX.V/SGCNF:OTCQX) is pleased to announce the completion and positive results of an independent pre-feasibility study (the "Study") by lead engineer Snowden Mining Industry Consultants Inc. ("Snowden") for its 100% owned Asmara North project in Eritrea. The Study has concluded that operating all four deposits of the Asmara Project (Emba Derho, Adi Nefas, Gupo Gold and Debarwa) as an integrated operation with ore being processed at a single central mill is technically feasible and is the optimum economic situation (see Project Map at end of this release). The Study recommends that the project be advanced to a feasibility study.|
Base Case Highlights:
Michael Hopley, President and CEO of Sunridge Gold states, "We are very pleased with the results of the prefeasibility study - the outcomes have certainly exceeded our expectations and provide significant shareholder value. We are particularly pleased that the Study has outlined an operating scenario in which all four deposits of the Asmara Project are developed in an integrated way with all ore being processed in a single centralized mill near the Emba Derho deposit. This is a major step forward for the project. We have started work on the recommended feasibility study."
Mining and Production
The Study has concluded that mining and processing all four deposits of the Asmara Project (Emba Derho, Adi Nefas, Gupo Gold and Debarwa) into a single integrated operation with ore being processed at a single central mill near the Emba Derho Deposit is the optimum economic situation and is technically feasible. The Emba Derho, Debarwa and Gupo deposits will be mined by open-pit methods and the Adi Nefas deposit by underground mining methods.
Management estimates that initial production at Asmara North will commence in the first quarter of 2016. This allows time for completion of the feasibility study, permitting, financing and construction.
During the 13.25 peak years of base metal production (Phase II, beginning in Year 2 through Year 15) the Asmara North mine is projected to produce an average of 57.3 million pounds (26,000 tonnes) of copper, 143.3 million pounds (65,000 tonnes) of zinc, 24,000 ounces of gold and 787,000 ounces of silver per year. Production is divided into three phases as follows:
Phase I (Year 0 -- Year 1.25)
Phase II (Year 1.25 -- Year 14.5)
Phase III (Year 14.5 -- Year 15.25)
Table 1: Production Schedule
Metallurgy and Processing
All ore from the different deposits will be milled and processed in a single plant located at the Emba Derho deposit. Processing of the three ore types (copper supergene, primary copper and zinc and gold oxide) will utilize a common crushing and ball milling circuit which includes high pressure grinding rolls (HPGR) and three different processing circuits. The initial Phase I plant will process supergene ore at a nominal two million tonnes per annum rate by a conventional flotation process to recover copper and byproduct gold as a copper concentrate for sale to smelters. This is followed by Phase II processing of primary ores at a nominal four million tonnes per annum rate producing copper, zinc, and byproduct gold and silver as concentrates for direct sale to smelters. The Phase III plant reduces to a nominal two million tonnes per annum rate to extract gold and silver from oxide ore using conventional cyanide leaching and recovery by the carbon in pulp process to produce gold and silver doré. The tailing systems will be common for all three ore types.
The first year of production produces copper concentrate with gold and silver credits, continuing until Year 14 and the production of zinc concentrate will begin in Year 1 through Year 14. Gold and silver extraction to a doré product occurs in the last half of Year 14 and completes in Year 15.
Financial Analysis (all $ equals US dollars)
The base case uses constant metal prices of $3.28/lb copper, $0.99/lb zinc, $1,111/oz gold and $21.00/oz silver, which are derived from the 5 year average as of April 25, 2012.
Table 2: Sensitivity to Metal Prices
On site operating costs average $25.78 per tonne through life of mine.
Table 3: Average Operating Costs
Initial capital costs are projected at $489.3 million (including owner's costs and a contingency of $44.5 million). The expansion capital for Phase II and Phase III is an additional $69.4 million. During the life of mine there will be sustaining capital requirements of about $77.6 million and closure costs are estimated at $48.4 million.
Table 4: Capital Costs
When the mining license is granted, following completion of a feasibility study, the Government of Eritrea will have a 10% carried interest in the project and has the option to purchase up to a 30% working interest. It is not known at this time if the government intends to exercise that option and the economics and financial analysis of the Study assumes a 100% interest by Sunridge.
The Study used the recently completed estimate of Measured and Indicated Resources for the Asmara Project as reported in the Company's press release dated April 10, 2012 (see news release for additional details).
Tables 5 and 6 below summarize the Mineral Reserves included in the Study broken down by both ore type and classification.
Table 5: Minerals Reserves by Ore Stream
Table 6: Mineral Reserves by Classification
The mineral reserves listed in Table 5 and 6 were created for Emba Derho, Debarwa and Gupo by generating Net Smelter Return (NSR) values (revenue minus royalty and smelting/selling costs) for each metal using Measured and Indicated Resources only. Metal prices used were $2.85/lb copper, $0.80/lb zinc, $1,150/oz gold and $18.50/oz silver. The net revenue of each block was compared to total cost. Each mining block becomes economical and included in the processing schedule and becomes part of the mineral reserves if it is above the total cost of processing, general administrative and applicable transport.
In the case of the Adi Nefas underground mine the mineral reserves were generated, using the same metal prices as above, through a sequential process of NSR calculation, stope optimization, stope design, and development design. Stope optimization was applied using Snowden's Stopesizor software which modifies the resource to reflect minimum mining width for the NSR. The outcome is a set of blocks that reflect this recoverable resource. Unplanned dilution was added to the model through adding a fixed width of over break waste into the planned stopes.
Social and Environmental Studies
Social and environmental baseline studies and stakeholder engagement programs are well advanced on all four deposits that are included in the Study. This work has been completed to comply with the Equator Principles and the International Finance Corporation Performance Standards for Social and Environmental Impact Assessment Studies, as well as the Eritrean Government "National Environmental Assessment Procedures & Guidelines". The work is being carried out by the Sunridge social and environmental staff and consultants (both international and national) and will lead to the publications of Social and Environmental Impact Assessments (SEIA) in June 2012 (Debarwa) and June 2013 (Asmara North) projects.
Project Location and Access
All four deposits included in the Study are located within a 30 minute drive on paved roads outside the capital city of Asmara with close proximity to power, water and an international airport. In addition, the Red Sea port city of Massawa is 120 kilometers east of Asmara via paved road.
Opportunities to further enhance the economic value of the Asmara North project will be investigated during the feasibility study which is targeted for completion in the first quarter of 2013. The following opportunities could significantly enhance the value of the project:
Pre-Feasibility Study Report
The Asmara North Prefeasibility Study is NI 43-101 compliant and was completed by Snowden Mining Industry Consultants Inc.("Snowden") and GBM Minerals Engineering Consultants Ltd. ("GBM") with work by Knight Piesold Ltd. for tailings facility design and waste management and Blue Coast Metallurgy for metallurgical work. The report will be filed on the Company's profile on www.sedar.com within 45 days of this press release.
The Asmara North Pre-feasibility study results were reviewed by Snowden under the direction of Study Manager, Anthony Finch, P. Eng an Independent Qualified Person. The scientific and technical information in this release has been reviewed and approved by Ian Jackson, C. Eng., of GBM, and Ken Brouwer, P. Eng., of Knight Piesold, both of whom are Independent Qualified Persons within the meaning of NI 43-101.
Michael Hopley, President and CEO of Sunridge Gold Corp. is the Company's Qualified Person responsible for the contents of this press release and has reviewed the information in the release and confirmed that it is consistent with that provided by the independent Qualified Person responsible for the Study.
Sunridge is a mineral exploration and development company focused on the acquisition, exploration, discovery and development of base and precious metal projects on the Asmara Project in Eritrea and exploration properties in Madagascar. Sunridge currently has approximately 117 million shares outstanding and trades on the TSX Venture Exchange under the symbol SGC. For additional information on the Company and its projects please view the slide show on our website at www.sunridgegold.com or call Greg Davis at the numbers listed below.
SUNRIDGE GOLD CORP.
Michael Hopley, President and Chief Executive Officer
For further information contact:
Greg Davis, VP Business Development
Tel: 604-688-1263 (direct)
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release contains forward-looking statements that are based on the Company's current expectations and estimates. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "suggest", "indicate" and other similar words or statements that certain events or conditions "may" or "will" occur. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from estimated or anticipated events or results implied or expressed in such forward-looking statements. Such factors include, among others: the actual results of current exploration activities; conclusions of economic evaluations; changes in project parameters as plans to continue to be refined; possible variations in ore grade or recovery rates; accidents, labor disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing; and fluctuations in metal prices. There may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.