South Boulder Mines Eritrea

By Tim Boreham, The Australian

We suggest that 99 per cent of the room wouldn’t raise their arms, and those who do are fibbers or fertiliser tragics. Given the Big Australian’s ballsy ploy, we’ll be hearing much more about the potassium-rich substance that is as crucial to growing food as phosphate.

For the uninitiated — that is, the 99 per cent — potash is the catch-all name for various potassium salts. Most fertilisers consist of three core elements — nitrogen, phosphate and potassium — with the consistency varying according to the type of crop.

Potash global consumption stands at 50 million tonnes a year and unlike most raw materials Australia doesn’t produce an ounce of it. Production is dominated by Russia’s Silvinit and Uralkali, rumoured merger partners that account for more than half of global production. Traditionally, Germany has been the leading producer.

South Boulder Mines (STB) chief Morry Hughes says there are barriers to developing potash deposits, including their depth: the last new mine started in Germany in the late 1980s. But on the plus side they’re usually uniform in quality and also extensive. Potash Corp, the biggest single producer, acts as oil’s equivalent of an OPEC swing producer, curtailing or increasing production according to demand trends.

The global potash price has been favourable, hovering at about $US340 a tonne. This compares with the average $US620 a tonne at the 2008 peak, but is well up on the $US175 a tonne level of 2006.

As with phosphate, potash pricing was meant to be immune from the global financial crisis, despite the perception that fertiliser is immune from the cycles because everyone has to eat.

In truth it is more complicated: corn and palm oil growers created a spike in demand when oil prices soared because their product was being used for biodiesel.

Locally, there are three or four resource juniors playing in potash, although not necessarily exclusively in that commodity.

South Boulder Mines has been better known for its Duketon nickel venture in Western Australia with Independence Gold, but it’s also appraising its “world class” Colluli potash project in Eritrea.

South Boulder had a tenement at Lake Disappointment, next to fellow potash hopeful Reward Minerals (RWD), but native title difficulties sent the company scouring the world.

It settled on the emerging mining province of Eritrea, where potash has been used for centuries.

“We have been involved in potash for some time, which not many people have given us credit for,” Hughes says.

But with BHP getting into potash in a humungous way there are more investors coming on board. He estimates between 20 per cent and 25 per cent of South Boulder’s share base has been attracted by potash.

In a 50-50 venture with Rum Jungle Uranium, Reward is working two exploration leases over a 150km expanse in central Australia, from Lake Amadeus to Karinga Creek.

“An analogous model would be the Great Salt Lake in Utah, the largest potassium sulphate producer in the US, [or] the Dead Sea.”

Speaking of Utah, Transit Holdings (TRH) has earned a 75 per cent interest in a tenement spanning 390sqkm, in the state’s sparsely populated southeast. The parties are aiming for an “exploration target” of 2.3 billion tonnes.

Completing our potash troika, Elemental Minerals (ELM) recently started drilling on its Sintoukola project in the Republic of Congo, part of a four-year effort to take it to bankable feasibility stage.

PTA BANK

The Eastern and Southern Africa Development Bank (PTA Bank), a financial arm of COMESA, has continued making profits. The President of the Bank, Dr. Michael Gondwe revealed this at the 26th Annual Meeting of the PTA Bank held in Mahe, Seychelles, on July 23, 2010. The bank he noted, made a profit of over USD18 million in 2009 up from USD12.5 million in 2008.

While officially opening the meeting, His Excellency the President of the Republic of Seychelles, James Michel commended the Bank for its’ good performance despite the harsh operating conditions. The Head of State added that the Bank’s support for Seychelles, especially in the petroleum sector, was greatly appreciated by the country.

The President called on Member States to enhance support to the Bank to enable it continue being supportive of business growth. “It is important for us to enhance capacity of regional institutions such as the PTA Bank if they are to continue playing a catalytic growth in our economies,” said the Head of State.

During the meeting, the Vice President and Minister of Finance for the Republic of Seychelles, Hon. Danny Faure was elected the new chairman of the PTA Bank Board of Governors for the next financial year. Hon. Faure takes over the Chairmanship of the Bank’s topmost policy organ from Hon. Sufian Ahmed, the Minister of Finance of the Federal Democratic Republic of Ethiopia.

Speaking at the occasion, the Hon. Faure called on his fellow Governors to continue contributing to the Bank’s programme “as we build a strong institution that will make a positive impact on our development agenda.”

Governors, comprised of shareholder representatives, deliberated on the business of the Bank. Top among them was adopting the Bank’s 2009 Annual Report. The Governors also adopted resolutions giving policy directions to the Board and management of the Bank. A new steering committee composed of Zambia, Sudan and the African Development Bank (ADB) was elected by the Governors.

The shareholders of the Bank are: The African Development Bank, Burundi, The People’s Republic of China, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Tanzania, Uganda, Zambia and Zimbabwe.

Further to Chalice’s ASX Release of 13 July 2010 of the results of the Feasibility Study for its Koka Gold Project in Eritrea, East Africa, the Company is pleased to provide the full Project Summary from the Feasibility Study for reference by investors and shareholders.

The full Koka Gold Project Feasibility Study Summary is appended to this release and is also available on the Company’s website. The key financial outcomes of the Feasibility Study, which was undertaken by Lycopodium Minerals Limited (“Lycopodium”) with inputs from prominent industry consultants AMC Consultants Pty Ltd (“AMC”) and Knight Piésold Pty Ltd (“KP”), are set out in the announcement of 13 July 2010.

The highlights of that announcement were:

• Average life of mine total cash operating costs of US$338 per oz of gold
• After?tax NPV5% of US$196 million, life of mine EBITDA of US$589 million and an after tax IRR of 35% at current gold price of ~US$1,200/oz
• After?tax NPV5% of US$99 million, life of mine EBITDA of US$381 million and an after tax IRR of 22% at base case gold price of US$900/oz
• Average annual gold production of approximately 104,000oz per year with gold production totalling 731,000oz
• Forecast mine life of seven years at a mill throughput of 600,000 tonnes per annum, rising to 700,000 tonnes per annum from year 5
• Open pit Ore Reserves of 4.63Mt grading 5.1g/t for 760,000oz contained gold with a waste to ore ratio of ~10:1
• Estimated start up capital cost of US$122M

As advised in the previous announcement, the Company will now proceed to apply to the Eritrean Government for a Mining Licence in respect of the Koka Deposit. In parallel with this application, the Compan will assess its various funding options for development of the Koka Project.

The full Feasibility Study was recently presented to the Eritrean Ministry of Energy & Mines as the first step in the Company’s application for a Mining Licence for the Koka Gold Deposit. Lycopodium Minerals Limited, AMC Consultants Pty Ltd and Knight Piésold Pty Ltd have consented to the release of the Summary of the Feasibility Study.

Tim Goyder

Executive Chairman

See full report here: Summary Report

On 26^th of July CASTELBUONO, Italy  had an amazing line up of Olympic Marathon gold medallist Samuel Wanjiru of Kenya against four-time world road running/half-marathon champion Zersenay Tadese of Eritrea. But less than three kilometers into the 85th Giro Podistico Internazionale de Castelbuono where Wanjiru was reduced to a walk, Tadese had an insurmountable lead, and the race was essentially over.

Wanjiru, as like Tadese was running this 11.3 km road race over a snaking and hilly 1130m cobblestone circuit for the first time, who later felt a little tightness in his chest. After the first lap, in which Tadese had already established a lead over primary chasers Vincent Kipruto and Abreham Cherkos, Wanjiru had already fallen well behind. He did not appear amongst the leaders in the Piazza Margherita (where the race starts and finishes) on the third lap, but later jogged slowly into the piazza before being helped to the sidelines by race officials.

Wanjiru  Later said “I feel (something) in my breathing,” coughing and pointing to his chest. “Yesterday, I noticed a problem.”

Tadese looked like he had no problems. The world half-marathon record holder was leading by 19 seconds after the fifth of ten laps. Race announcer Paolo Mutton rallied the crowd every time Tadese rounded the fountain in the piazza to head out on another lap. Tadese did his best to put on a good show.

Tadese was crowded and cheered on by a group of Eritreans that had came to see him. He added by saying. “The course is very hard” “Its good its the first time I run here, I win and I’m very happy.

Behind Tadese there was Kipruto of Kenya and Cherkos of Ethiopia who were working together to catch up Tadese. But the pair were unable to gain any ground. Tadese was able to slow down on the final lap, enjoy the cheers of the crowd, and even high-five several fans before breaking the long blue finish tape in 34:20. Cherkos was able to pull away from Kipruto, the defending champion, in the final meters finished second in 34:31. Kipruto got third, who was seconds behind.

For Tadese, his next challenge is the Bogotá International Half-Marathon next month in Colombia, then he’ll train to defend his IAAF World Half-Marathon title in Nanying, China, in October. He said he had no plans to run a marathon in the fall.

newmont

The proposed joint venture would enhance Chalice subsidiary Keren Mining and Newmont explore and evaluate regional gold opportunities over about 24 000 km2 in the African country.

Chalice is already developing the 840 000-oz Koka Gold deposit, part of the Zara project in Eritrea.

Mr Chalice MD Doug Jones stated “We are very pleased to welcome Newmont as a partner in Eritrea. We see this venture as beneficial to both companies, providing Newmont with our in-country presence and knowledge base and Chalice with Newmont’s financial strength and cutting-edge technological expertise,”

Newmont would fund an initial $1-million dollar program for exploration of an area and after both parties would select areas that will be held in the venture.

Newmont would hold 75% of the joint venture, while the remaining 25% would be held by Chalice.

The parties would then contribute to exploration on a pro-rata basis, subject to process of making weaker or less concentrated. An interest falling below 10% would revert to a net smelter royalty interest of between 1% and 1, 25%.

If the joint venture declared a gold mineral resource that is greater than 500 000 oz, but less than one-million ounces, and the venture did not advance within 18 months, either party has the right to carve out from the venture.

Chalice could increase its interest in the joint venture to 30% if the Eritrean government elected does not exercise its rights under Eritrean law, to gather a further 20% in the event of mining.

Chalice would further have the right to gather any of the areas the parties decided not to pursue jointly, with Newmont having the rights of first refusal on the disposal of any of the areas that it took up.

Jones said on Friday that the joint venture was in line with Chalice’s commitments to Eritrea and its ongoing commitments to the country and its people.

“It also reflects the growing recognition amongst the gold majors that the Arabian Nubian Shield, which underlies a large part of Eritrea, is a highly prospective yet underexplored geological province, with tremendous potential for new gold discoveries.”

The joint venture would exclude Chalice’s Zara gold project, where a feasibility study was currently nearing completion and mining should go under way early next year.

Immegrants

This group consists of an Eritrean couple who wear saved from drowning in 2005 and two Somali mothers together with their one year old infant, they had arrived in Malta in 2006.

In Luxembourg the immigrants will be assisted to integrate through an assistance package which will include two Apartments to live in for a year, as well as a teaching program to the French Language. Their Progress will be noted and followed by the Minister for Family and Integration.

Last Year Luxembourg had taken part in the Frontex operations.
The Home Affairs Ministry thanked Luxembourg for the degree of integration with Malta and the International Migration Organisation for its flow of good assistance.

Less than a month ago, a group of around 100 immigrants who had also been based in Malta started a new life in France, they were also a part of EU Pilot Project.

Most immigrants find themselves outside the EU Member State without resettlement, documents and assistance. This is a good opportunity for them to progress and be a part of a society which accepts them.

Zara Project

Dragon Mining Limited announces that Chalice Gold Mines Limited (“Chalice”) has exercised its option to purchase the Company’s 20% interest in the Zara Gold Project, Eritrea. Settlement, which will occur in two days, will result in Dragon Mining receiving $8.0 million in cash and 2 million Chalice shares (current market value of $0.9m) which will be escrowed for 12 months.

In addition, Chalice has the obligation to pay Dragon Mining a further $4.0 million on the delineation of 1 million ounces of gold Reserves at the Zara Gold Project. On 4 June 2010, Chalice announced a maiden gold Reserve at the Zara Gold Project of 760,000 ounces from an Indicated gold Resource of 840,000 ounces.

As at 31 May 2010, Dragon Mining had $21.4 million of cash and gold concentrate receivables compared to $11.8m at 31 March 2010 as reported in the quarterly report. With the receipt of the $8.0 million, the Company will have total cash and receivables of $29.4 million.

The limited obligations of Dragon Mining comprise a working capital facility of 2 million euros ($2.8m) which is repayable in two equal tranches on 30 June 2010 and 31 December 2010. In addition, as a result of on-market purchases by the Company, the outstanding number of convertible notes amount to 9.2 million.

Executive Chairman Peter Cordin stated, “It is pleasing that with the final delivery in August 2009 into the original hedge to finance the Svartliden development, the Company has substantially improved its balance sheet and cash position.

We are well positioned to meet forecasted production of 70,000 ounces of gold for 2010 and continue to generate strong operating margins with the appreciation of the gold price and the weakening of the euro and Swedish krona. The strong cash position will allow the Company to grow and enhance shareholder value.”

The Company is focussed on increasing the Reserves and mine life of its existing gold mines in Sweden and Finland. Feasibility studies for the underground operation at the Svartliden Gold Mine in Sweden and Jokisivu Gold Mine in Finland are nearing completion with commitment to development expected in the third quarter of 2010.

In addition the Company will be able to commit further funding to enhance the value of its exploration properties, particularly at Kuusamo in northern Finland.

Eritrea

In a recent Exploration+Processing Magazine editorial, Stacy Davidson describes Eritrea with its 620 miles of coastline along the Red Sea as a historic centre of attention for various foreign powers, including the Ottoman Empire, Egypt, British Empire and Italy.

Nevertheless, Eritrea received the most attention from its larger neighbour Ethiopia, causing 30 years of oppression from the early 1960s to 1991 during the Ethiopian reign over Eritrea.

Eritrea fought a long and bitter independence war against Ethiopia and soon after the struggle had to face the challenge of rebuilding most of its shattered infrastructure and economy to serve the people of a new nation. According to Davidson, it was around this time that a Canadian gold and base metal explorer by the name of Nevsun Resources Ltd. shifted its focus towards southern Africa.

Nevsun’s history dates back to its founding year in 1965 in Vancouver as a minor exploration entity working on small mining projects geographically limited to North America. Nevsun’s expansion to markets abroad began in 1993 when it successfully started to identify properties with significant potential in Africa. The Kubi project in Ghana, under an agreement with Anglogold Ashanti, and Tabakoto mine in Mali were Nevsun’s first overseas ventures in 1999 and 2004. Both properties were sold between 2007 and 2008 as Nevsun wanted to focus solely on Eritrea, according to Nevsun CEO Cliff Davis.

In 2003 Nevsun made a discovery at Eritrea’s Bisha property, and it soon become apparent the Nevusn and the government of Eritrea would have a mutual interest to develop the property. Nevsun says that Bisha will be the first mine operating since colonial times in Eritrea and acknowledges the commitment of Eritrea’s President Isaias Afewerki to develop a mining industry to pursue Eritrea’s economic rehabilitation. The government holds a 10 percent free participating interest in the Bisha Mine and a 30 percent paid participating interest through the Eritrean National Mining Corporation (ENAMCO), which is a state owned mining company.

Eritrea’s government’s objective is to have a clean well-developed mining industry and Nevsun has not experienced any kind of corruption or underhanded dealings, says the company. “We got into Africa in 1993 and in 1997 received an enquiry about investing in Eritrea,” Nevsun CEO Cliff Davis recalls. “By 1999, we were actively engaged in Eritrea and exited about the potential we saw there.” Today Nevsun is nearly finished with the construction of the Bisha Mine and expects it to be in operation by the end of 2010. The Bisha project is a large precious and base metal-rich volcanogenic massive sulphide deposit, and it is fully financed and permitted. Nevsun says the mine will be a low cost gold producer for the first two years of its 10-plus mine life time.

The company expects to return payable metals of: 1.06 million ounces gold, 9.4 million ounces silver, 734 million pounds copper, and 1 billion pound zinc. Nevsun highlights that drill hole intersections have encountered mineralization to a maximum tested depth of 1300 feet, but further resource potential exists beyond depth and from nearby discoveries within the company’s licensed areas. Further, it believes that the mine life of Bisha could be far more than 10 years based on evidence from potential resources deep inside the Bisha mine.

Nevsun’s CEO projects that the company will employ at least 350 local employees and 50 expats when Bisha will reach full operational capability. He ads that Nevsun is employing around 600 local people and 100 expats during the current construction phase and committed to train and develop locals due to a lack of skilled human resources in the country. Nevsun has developed three scenarios of economic estimates from the mine, based on three types of metal prices:

1. With low metal prices, the company projects a 20 percent internal rate of return, payback within 2.8 years and $426 million net cash for mine’s life.
2. With medium metal prices, the company projects a 45 percent rate of return, payback within 1.6 years and $1.1 billion net cash for mine’s life.
3. If metal prices are high, it plans with 63 percent internal rate of return, payback within 1 year and $1.75 billion net cash for mine’s life.

In addition Nevsun continues to work at the nearby Harena deposit, which is within its current mining licence, to define its potential as mill feed for the Bisha plant. There are also plans to drill at other potential targets on the property, along with continued prospecting, mapping, sampling and ground geographical surveys in order to identify new targets within its license.  However, right now the company is focused on getting its Bisha plant into production according to its CEO.

PERTH (miningweekly.com) – ASX-listed gold explorer Chalice Gold Mines has declared a maiden ore reserve of 760 000 oz for its Koka gold deposit, in Eritrea.

The Koka gold deposit forms part of the Zara gold project, in which Chalice holds an 80% stake.

The Koka deposit was now estimated to host around five-million tons of ore, grading at 5,3 g/t gold, for 840 000 contained ounces. The project further hosted a probable ore reserve of 4,6-million tons, at 5,1 g/t gold for the 760 000 contained ounces.

Chalice said in a statement that the new resource and reserve statement for the Koka deposit was a critical component of the feasibility study currently being conducted. The feasibility study was expected to be completed by next month.

While the current feasibility studies were still under way, Chalice was aiming to start gold production at the Koka deposit during 2011.

Last week, Chalice said that it would raise A$9,1-million to buy the remaining 20% stake in the Zara project, from Dragon Mining.

Abidjan, May 27, 2010 – The AfDB has granted on Thursday, May 27, 2010 a concession worth USD 12.9 million to the Government of Eritrea, after signing an agreement to support the development of national human resources in the area of higher education.

“This contribution from the AfDB, which is part of the African Development Fund (ADF) for the period 2009-2011, is aiming at development of human capital, which is the key to economic growth and reducing poverty, “said Abu-Saba, Director, Agriculture and Agro-industries AfDB.

This kind of support for the higher education sector is the second project the AfDB attaches to Eritrea. It will contribute, according to Mr. Abu-Saba, capacity building of institutions of higher education.

“This project will provide resources for staff development, technical assistance and infrastructure development and lifelong learning,” said Abu Sabaa who hoped that relations between Eritrea and AfDB are both dynamic and successful in that support even more important are granted to countries to help achieve its goals of reducing poverty.

Martha Woldeghiorghis, Treasury Director-General at the Ministry of Finance of Eritrea, for its part has expressed his gratitude to the AfDB and hoped that cooperation between AfDB and the countries are fruitful.

This signature comes within the framework of the AfDB Annual Meetings, held in Abidjan (Côte d’Ivoire).

East Africa-focused Chalice Gold Mines would raise A$9,1-million through a share placement to major shareholder Franklin Resources and other institutional and sophisticated investors.

The company said on Monday that it would place more than 21,6-million shares, at A$0,42 a share.

Around 11,6-million shares would be taken up by Franklin Resources, while a further ten-million shares would be placed with investors. The placement would be made pursuant to the 15% allowance under the ASX-listing rules.

Of the funds raised, A$7,8-million would be used to purchase the remaining 20% interest in the Zara gold project, in Eritrea, from fellow listed Dragon Mining. The balance of the funds raised would be used for working capital purposes.

The Zara gold project has an estimated resource of one-million ounces of gold. The company was currently conducting a feasibility study, with a targeted first production in 2011.