http://www.proactiveinvestors.com/sponsors/650/sunridge-gold-0650.html
SUNRIDGE GOLD ARTICLES AND NEWSARCHIVE
02/04/2014
Sunridge Gold's Asmara project sees interest from Chinese, says CEO Hopley
in HRA Advisories interview
Wed 1:25 pm by Deborah Bacal
"With the large amount of copper, zinc and precious metals that we have
defined to date on the Asmara project it's a fairly obvious thing to say
that Asian companies, but particularly Chinese companies, have shown a lot
of interest."
Sunridge Gold's (CVE:SGC) CEO Michael Hopley is seeing significant interest
from the Chinese for its Asmara copper-zinc and precious metals project in
Eritrea, he said in a recent interview with Eric Coffin of Hard Rock
Analyst (HRA) Advisories.
The junior company is one of only two additions to the HRA list in the past
few months, with Coffin saying that Sunridge has "significant takeover
potential".
"The resource market is strengthening. New mines are needed and money is
moving to advanced stories that are "financeable".
"Sunridge's Asmara project has the high IRR and NPV relative to market
value that makes it an attractive project for both financiers and larger
mining companies looking for acquisitions," wrote Coffin in a recent
newsletter to subscribers, which highlighted the interview with Sunridge's
Hopley.
In a difficult financing environment, Sunridge realized that it would have
to re-engineer Asmara to maximize near-term cash flows and minimize the
peak capital outlays to bring the project into full production. It did just
that last year, staging the project so that high grade copper ore and heap
leachable gold could be accessed early and at modest costs.
The cash flow from these early operations would then be leveraged to help
finance the larger, long-life mining operation. The new model yielded a net
present value of US$692 million at the project, and an IRR of 34%, using a
10% discount rate.
"That places Asmara at the high end of potential returns for new mining
projects. It looks very financeable and it also makes an attractive
acquisition target for a large mining company," said Coffin, the editor of
HRA Advisories.
"Keep in mind that Sunridge's market value is about $50 million and the
company is debt-free. This leaves plenty of room for a potential bidder to
offer a good return to current shareholders and leave plenty on the table
for itself. That combination is the reason HRA initiated coverage when the
deal with ENAMCO was announced."
In February, ENAMCO --- the Eritrean National Mining Corporation ---
finally formally agreed to acquire its maximum 30% participating interest
in Asmara, in addition to its existing right to get a 10% interest that
will be carried to production by the participating partners. In return,
ENAMCO will pay Sunridge US$18.33 million, bearing interest, payable in
stages, prior to production from the property.
The Eritrean company will also pay Sunridge one third of all project
development costs back-dated to July 2012, which is estimated at about US$4
million. ENAMCO will also contribute one third of ongoing expenses on the
project, including for both exploration and development.
"We are moving ahead as if we are going to do this ourselves and that's
what we will continue to do unless we get what we feel is a decent offer,"
said Hopley in the interview.
"But as you know we're working in a country in Africa that the Chinese are
very comfortable with; they do quite a bit of business there. With the
large amount of copper, zinc and precious metals that we have defined to
date on the Asmara project it's a fairly obvious thing to say that Asian
companies, but particularly Chinese companies, have shown a lot of
interest.
"That is particularly true since we came to the agreement with ENAMCO.
Obviously, we'd like to sell out at a huge premium. I mean that's always
the best exit strategy for a junior company, but in this market it's hard
to know whether that prize will ever come to fruition, so we have to see."
Both Sunridge and ENAMCO are now working towards completing a shareholders
agreement, which is expected to take less than three months and will govern
the management and funding of the project. Asmara will be held 60% by
Sunridge, with the remainder to be held by ENAMCO.
The Asmara project, which has a three phase start-up plan, is pegged to
produce an average annual rate of 65 million pounds of copper, 184 million
pounds of zinc, 42,000 ounces of gold and 1 million ounces of silver over
the first eight years. All work is focused on bringing the project to
production in 2015.
The permitting process for the mining license -- which is expected to take
9 to 12 months -- was also kicked into high gear late last year, with the
submission to the Ministry of Energy and Mines of the project's Social and
Environmental Impact Assessment report.
Sunridge also has ongoing exploration that it plans to start in April for
its earlier stage projects, such as Kodado and Adi Rassi, with intentions
to upgrade the resources there and increase their size.
The junior gold company has a 52-week trading range of 12 to 31 cents, and
is currently changing hands at 25 cents, giving it a market cap of $52.45
million. So far this year, the stock has climbed over 51%.
To read the interview with Hopley and Coffin in full, please click here.
Register here to be notified of future Sunridge Gold articles.Get up close
and personal with and Freyja Resources in Vancouver on April 15. Register
here >>
Received on Thu Apr 03 2014 - 16:51:23 EDT