From: Biniam Haile \(SWE\) (eritrea.lave@comhem.se)
Date: Tue Sep 15 2009 - 12:55:32 EDT
The Financial Times
Eritrea readies first goldmine
By Barney Jopson in Asmara
Published: September 15 2009 17:46 | Last updated: September 15 2009
17:46
Eritrea, one of the most closed corners of Africa, has said its first
goldmine will begin production next year as the impoverished country
races to develop.
Its dictatorial ruling regime, which is in urgent need of dollars from
mining, has also awarded exploration licences to eight new foreign
companies eager to prospect close to Africa’s Red Sea coast.
War and government economic controls have limited the Eritrean private
sector’s ability to generate foreign currency income and the country is
one of the last unexplored frontiers in African mining.
In a break from its credo of self-reliance, the regime of President
Isaias Afewerki has turned to foreign companies for capital and
expertise to develop its gold, zinc and copper deposits.
The first commercial production is due to begin in the third quarter of
next year when the Bisha mine opens on a site in western Eritrea that
contains nearly 1m ounces of gold, said Alem Kibreab, director-general
of mines at the Ministry of Energy and Mines.
Bisha is being developed by Nevsun Resources, a junior mining company
listed in Toronto, which has a 60 per cent stake in the project. The
remaining 40 per cent is held by Eritrea’s state-owned mining company.
Beneath its layer of gold the site has about 700m pounds of copper and
1bn pounds of zinc.
The eight companies awarded new exploration licences this year include
Andiamo Exploration and London Africa from the UK; South Boulder Mines
from Australia; India’s Spice Metals & Minerals; and Zhongchang Mining
of China. A total of 14 foreign companies are now in the country.
Eritrea is “highly prospective ground”, said Kevin Tomlinson, managing
director of the mining practice at Thomas Weisel, an investment bank.
“It’s in a very prolific geological corridor that runs from Egypt along
the Red Sea, down through Sudan to Eritrea, and then to Somalia and the
northern tip of Madagascar. That’s where a lot of the pharaohs’ gold
came from,” he said.
Eritrea’s deposits are not likely to be larger than those in South
Africa or the Democratic Republic of Congo, but income from royalties,
taxes and new jobs could ease the government’s fiscal problems and
spread more wealth among its 5m or so people, many of them living on the
margins of survival.
The mineral resources were rendered inaccessible by conflict during a
30-year guerrilla struggle against Ethiopian rule, which eventually led
to Eritrean independence in 1993.
Big mining companies such as Anglo American secured exploration licences
after independence, but they quit Eritrea when a two-year border war
broke out with Ethiopia in 1998. They have not returned.
“After 2000 we remained with the juniors, and frankly I don’t regret it
because they are the ones who go aggressively for discovery,” said Mr
Alem. “But the problem is, when they make a discovery they need the
finance.”
The Bisha project was delayed by the effects of the credit crunch, but
in July Nevsun said it had secured a $235m (€161m, £143m) loan package
from seven institutions in Europe and South Africa, which will fund the
project through to production.
The Eritrean government secured a separate loan of about $80m from
China’s Exim Bank to raise its stake in Bisha from 10 per cent to 40 per
cent.
Eritrea’s second most advanced mining project, Zara, is moving ahead
after its majority shareholder, Sub-Sahara Resources of Australia, was
rescued from a liquidity crisis in a takeover by Chalice Gold Mines. It
is to begin production in 2011 or 2012, yielding nearly 1m ounces of
gold.
http://www.ft.com/cms/s/0/6cedd7d2-a214-11de-81a6-00144feabdc0.html
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