Sub-Sahara Resources Limited announced that a Scheme Booklet for the planned merger with Chalice Gold Mines has been filed with the Australian Securities and Investments Commission (ASIC).

A Scheme Booklet contains detailed information how the proposed merger of both companies is going to be arranged. The consent of Australian regulators for transaction of this nature requires the approval of the Australian Stock Exchange Limited (ASX) and the Australian Securities and Investments Commission.

Further, Sub-Sahara has been granted a loan facility of $450.000 from Chalice Gold Mines Limited in order to fund continued development at the Zara Project (Koka Deposit) in Northern Eritrea.

The $450.000 loan is given interest free until 01.09.2009; thereafter the ANZ rate for loans over $100.000 plus 3% will apply.

Chalice Gold Mines has proposed to Sub-Sahara share holders 1 Chalice Share for every 10.73 Sub-Sahara Share.

The merger is set out to combine the strong cash deposit of Chalice with Sub-Sahara’s 69% ownership of the Zara Gold Project in Eritrea.

Further, Chalice is planning to increase the ownership stake on the Zara Project to 80% once the merger has been completed. The time table for the merger is delayed by three weeks at this stage, because the initial plan to file the Scheme Booklet with the ASIC was the 11.05.2009.

This might postpone the finalization of the merger slightly, which will be also subject to third party and Sub-Sahara shareholders approval, towards mid - August - 2009.

Being in the middle of an economical downturn is definitely not going to be a very easy situation for many people around the world. Nevertheless, it is a periodic occurrence, which is necessary to put things right in a world living too often beyond its means.

Eritrea has been on the track of self-reliance since the independence gained from Ethiopia in the beginning of the Nineties. In many fields, such as humanitarian aid, foreign investment exposure and transport infrastructre, it chose directions apart from the norm of other African countries.

Of course this is the harder way to go for a nation and often difficult to comprehend, because it requires sacrificing in first instance. Moreover, for many years Eritreans have lived far below their means for the sake of their nation and national identity. While others, which now have to come into terms with the bubble burst, used to know no limit.

Thus in times of recession individuals, corporates, national economies and the world tend to lay out their cards newly because it resembles a period of chance, thoughtfulness and self scrutiny.

This is also a chancel for Eritrea to enter into a new relationship in respect to international trade. Especially as a nation, which has a big tourism potential, is soon to enter into the mining industry and is opening its sea ports for free trade.

On the preparations for the upcoming Eritrean National Day on the 24th May 2009, the President of Eritrea has explained to Reuters News Agency, how the country is going to approach these challenges.

“The Norwegians would like to talk about 150 years from now. The Nigerians may want to exploit all their oil resources in 10 days or 10 hours or maybe 10 years, and that’s it, you’re finished. This is a resource of generations.” (President Isaias Afwerki of Eritrea on Reuters News Agency)

The President believes that economical stimulation has to be sustainable in order to fit a nations characteristic of infrastructure. Therefore, he suggests that instead of a tempting short term approach, Eritrea should seek for a more adequate pace to manage the exposure to a free market and a influx of foreign investment. This would be the only way how to best serve Eritrea’s interests for todays and the coming generations ahead.

Alem Kibreab, from the Eritrean Ministry of Energy and Mines told Reuters, that another eight companies have been awarded licences for gold mining in Eritrea.

The new entrants are named as Andiamo Exploration and London Africa from Britain, Land and Energy and Zhongchang Mining from China, The Mining Share joint venture from Lybia and Eritrea, South Boulder and Gippsland from Australia as well as Spice Minerals from India.

Further, he informed Reuters that Eritrea’s first mining project, which is the Bisha Mining venture will start producing gold around the third quarter of 2010.

Alem states, that Eritrea is well aware of the negative side effects a gold boom could cause for the country, referring to historic exploitation of Africa’s mining resources by short term focused decision making.Thus Eritrea would aim for a sustainable and long term approach in developing the mining sector, which is expected to have important multiplier effects for the development of other industrial areas in the country.

Eritrea’s gold ventures appear to be promising and first signs where the road might lead to, can be observed from Nevsun Resources and its Bisha project in the near future. In March 2009 capitaleritrea reported about Nevsun’s ownership structure as well as the financial result it made for 2008.

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Chinese News Agency Xinhua reports that Chinese Ambassador to Eritrea Shu Zhan is expecting trade and cultural relations with Eritrea to be strengthened further. Shu points out that China has already aided a hospital, two schools and one human and social science institute to Eritrea and that trade volumes of China with Eritrea have reached $31 Million in 2008, which was a 7.6% increase compared to 2007.

The statements of the Ambassador follow previous steps taken by China and African countries to improve bilateral trade relations. For example, in August 2008 the China Development Bank signed a credit agreement worth $50 Million with PTA Bank, which stands for Eastern and Southern African Development Bank. The shareholders of the PTA Bank are Eritrea, Burundi, Comoros, Rwanda, Seychelles, Somalia, Ethiopia, Egypt, Djibouti, Kenya, Tanzania, Seychelles, Somalia, Sudan, Uganda, Zambia, Zimbabwe. The credit was supposed to support industrial sectors, which require heavy investment such as mining, telecommunication and infrastructure and was a result of the Bejing Summit of the Forum on China-Africa Cooperation in 2006. China is also involved in the gold mining projects in Eritrea with companies such as Donia Resources & Co (capitaleritrea).

On the first of May, Sub- Sahara Resources NL released the latest update on it’s Koka Gold Mining Deposit. The company owns a mining licence, which covers 147m² in the northern part of Eritrea in a project called the Zahra joint venture.

Independent consultants to Sub-Sahara Resources, have prepared a report that estimates the deposit to 5.04 million tonnes of gold with an average grade of 5.8 g/t for 944000 ounces of Gold from a cut-off of 1.2 g/t.

Sub-Saharan officials point out that despite the drop of the average grade of gold from 6.3 g/t to 5.8 g/t, the gold deposit in Eritrea remains to be a robust and promising recourse.

In order to strengthen its position and expand it’s operation Sub- Sahara intends to merge with Chalice Gold Mines Ltd in order to be able to raise capital for further investments into the gold project in Eritrea.

The Gold Mining Industry is emerging in Eritrea (capitaleritrea) rapidly and might become the future backbone for further economical prospect in Eritrea.

The Zara joint venture is currently in the process of applying for a licence to explore 468m² of area in northern Eritrea.

For the past few years African countries exporting mining products were in a good bargaining position, due to a strong world demand and high prices. This has recently changed due to the world recession and declining commodity prices. The shift places big western companies in a better bargaining position, which is in general terms nothing to worry about, as it reflects the rule of a free market economy.

However, those big players tend to overstep the mark if the African continent becomes desperate for income in times of world crisis. Many countries want to cash-in quickly on deals, they tend to undersell their treasures to the western companies contracting them for many years.

As a new entrant to the mining industry Eritrea should act wisely and assure that it gets a fair deal with the western companies (capitaleritrea article). Many African countries have been exploited in the history and the wealth has hardly benefited the origin of the natural resources, speaking of the country and the people. There are many examples, such as Nigeria, Kongo and many more who can serve as proof that foreign companies are only aiming for profit maximisation, but hardly for sustainable trade with the host country. This is exactly what African countries try to avoid by consolidating their efforts to put pressure on multinational companies and investors. Read more from the Business Daily.