Mining Indaba

Mining Indaba (Mining Indaba Cape Town, February 6th– 9th, 2012) attracts mining analysts, fund managers, investment specialists and financiers from around the world.

Corporate presentations on the newest and most successful projects provide the foundation for institutional portfolio growth and asset diversification.

Government and agency presentations update policies and incentives for potential partners. Attendance is limited to professional investors and industry.

Speakers are by invitation and include top global economists, industry analysts and mining management.

Delegates who participate in the Mining Indaba conference develop essential knowledge, and experience first-hand the rewards and risks of investing in more than 130 mineral-rich countries around the world.

They personally meet the policymakers of these nations, and hear case studies of successful and unsuccessful ventures.

Mining Indaba provides companies with an ideal platform on which to build shareholder base, and with exposure to the most influential professionals specializing in natural resources worldwide. More information can be found

Mr. Michael Hopley, President & C.E.O. of Sunridge Gold will be speaking on Tuesday, February 7th, 2012 at 4:38pm in Hall 4

Also take the chance to meet Sunridge Gold Corp and Nevsun Resources Ltd.’s Cocktail Reception on February 8th, 2012 from 5:00pm to 8:00pm at the Westin Grand Cape Town Hotel in Vasca Da Gama Room.

Mining Indaba, Cape Town – Sunridge Gold & Nevsun Resources

Red Sea

By Kesete Ghebrehiwet

The Southern Red Sea region is a land of opportunities as well as a land riddled with challenges. The putting in place of service rendering institutions in such a hostile climatic area is indeed beyond compare opportunity to the inhabitants of the region. Much of the development undertakings that have been registered in this area of the country require not only huge material costs but resistance of the people who engage themselves towards the realization of a better tomorrow.

Situated in the south east of the port city of Assab, Abo is one of the villages in the Southern Red Sea region. One who travels through this route never hesitates to make a tour and observe the service rendering institutions of that respective locality. Grapping one’s attention, a healthcare center and a kindergarten that are giving services to the inhabitants of Abo, indeed, prompt one to learn the progress that have been registered in the health and education sectors.

Sister Eden Hailu, head of Abo healthcare center, describes the overall healthcare services that have been rendering and particularly the prenatal and postnatal services at nominal prices. She said that giving vaccines to children by visiting their respective locality and conducting health related awareness raising programs have been part of the routine activities of the healthcare center. As the inhabitants of the area have been aware of the benefits of the delivery services that have been rendering at healthcare institution, a number of pregnant women have been availing themselves of the services.

A few meters away but within the premises of the healthcare center one could see a kindergarten which is giving regular pre-school services to the children of Abo and its environs. What is really impressing about the kindergarten is that a pre-school teacher who is in her twenties has been working there for the last 3 years. In these three years, Sister Natsnet Kidane has become fluent speaker of the Afar language. Pointing out that it is really a blessing to teach in a place which enables you to acquire a much different cultural and linguistic knowledge; she expressed her satisfaction to teach the children at ease with their mother tongue and also with a great passion.

Agricultural undertakings of the Abo-Kiloma administrative area are also very encouraging. Taking into account the arid and semi-arid climatic condition of this respective area, it is very easy to understand that conducting such agricultural activities depending on rainy seasons is really a very demanding task. But, farmers around this administrative area are doing their best in cultivating varied types of crops and vegetables. In about 6 heaters, one could see date palm plantations and other crops, vegetables and fruits and other plantations such as watermelon, pepper, tomato, onion, sorghum, maize which are at good condition.

Despite being an arid place, the Abo-Kiloma administrative area is rich in underground water which just requires no more than 2 meters drilling to find fresh water that could be utilized both for agricultural and for household activities. Thus, if the farmers of this locality exert concerted efforts water deficit could not become a hindrance. The palm dates in particular just need watering only for about three months for they could absorb the underground waters by themselves. So, it is a timely issue for the Ministry of Agriculture and other concerned bodies to take part in utilizing the potentials at disposal and provide the farmers with necessary pesticides.

Any passer by who knew the Southern Red Sea region some years back is obliged to admire the distribution of educational and potable waters supply in such a wider areas of the region. Beylul administrative area which is situated a few km away from the main Assab-Idi route is part of the Southern Denakalia administrative area. Even though it still needs a fence, the healthcare institution of this area is also giving full medical services. What is really worth mentioning is, however, the solar energy powered water supply project. Besides securing its sustainability through judicious utilization, the inhabitants of Beylul have been giving due care in protecting the project from any sort of damage.

Generally, the service rendering institutions that have been put in place in different areas of the Southern Region are very appreciable. But, Berasole administrative area still needs to have such services. Some healthcare institutions that have been constructed in such area have not been equipped with medical instruments and there is also a deficit of medical professionals.

Traveling to the southern Red Seal region one could not miss the region’s potential of producing wind energy. Wind turbines that have been erected in Assab have, for instance, been generating almost 1/3 of the city’s total demand. Wind energy suppliers equipment that has been put in place in many of the villages of the Southern Red Sea is in fact vivid example of such potentials. But, its sustainability would be endangered for proper renovation and maintenance has not been made for long.

Shabait

/CE

 By Amanuel Biedemariam

Late Monday on January 16, 2012, Ethiopia reported two Germans, two Hungarians and an Austrian were killed in a deadly attack in Ethiopia’s North-Eastern Afar region. During the attacks, a Hungarian and Italian were wounded while two Germans had been kidnapped. The unsuspecting tourists were attacked, wounded, captured and killed inside Ethiopia. This incident was unfortunate for those who lost their lives, those that suffered through it and, for their families. This incident was also devastating for the tourism industry of Ethiopia and those who depend on it for their livelihood.

Regardless of how the genocidal regime of Meles Zenawi tries to characterize the incident or who it claims has perpetrated the killings, there remains one fact it cannot deny. The incident took place inside the borders of Ethiopia. And it happened while under the protection of Ethiopian authorities.

On the 19^th of January, The Voice of America (VOA) aired an interview with Information Minister of Ethiopia Bereket Simon, and in it, the Minister openly admitted that Ethiopia does not and cannot control its borders. Ethiopia is a country under fire in every direction due to the reckless adventures of the minority regime inside Ethiopia and the region. In Ethiopia, rebellion is flourishing throughout the entire country. There exists the Oromo Liberation Front, The Oganden liberation Front in Eastern Ethiopia, AEDUF in the Afar region, there is the EPPF in the central region, the Benishangul in the West and the Tigray movement TPDM etc…operate inside Ethiopia for different reasons. Some are fighting for self-determination and the others for greater freedoms from the oppressive minority regime. 

This is how The Christian Science Monitor characterized Ethiopia’s claims. “This week, even before Ethiopian officials knew how many people had died, or even when the fatal shooting of five European tourists in its remote northeastern region of Afar had taken place, they were sure of one crucial detail: It was Eritrea’s fault.” 

It is convenient for Ethiopian authorities to claim Eritrea did it for many reasons. It is easier. It deflects attention away from Ethiopia’s ever-exploding internal civil struggles. It is within the strategic objective of trying to label Eritrea, as a country that sponsors all the anti-regime activities as terrorist activity and within that context, all the rebellion in Ethiopia is considered terrorism and, the rebels’ terrorists. 

But here is the problem with that assumption and claim. If Eritrea is capable to develop all that activity inside Ethiopia, what that means is Meles’s regime has effectively lost control of Ethiopia. The authorities in Ethiopia have lost control of the entire country. 

The various movements in Ethiopia have been there for decades fighting for their rights. The OLF was there before the regime came to power; the Ogaden has been mired in conflicts for decades, and so have the Afars. These groups are fighting for denied rights by Ethiopia. They are not terrorist organizations. In fact, in contradiction to Meles’ claim that these groups are terrorist the US never labeled the OLF or others as terrorists. In fact, they have offices in the US. Meles and his cronies know this fact.   

In this case, the blanket claim by the regime that Eritrea is at fault in order to cover up its internal problems backfired in many major ways. First off, the regime looked defeated by playing a victim. Secondly, it lost any credibility that it may have had internally and globally because, the truth came-out swiftly and contradicted their fabrications making them look pettier. Thirdly, it gave AEDUF, the rebel group, international exposure they never had and, advertised Ethiopia’s internal conflicts to the world. Fourthly, and most importantly, the minority clique gave the world unadulterated evidence that the regime has lost its legitimacy. The genocidal regime, in order to score a political point against Eritrea threw all discovery mechanisms-out and actually got in the way of the evidence-discovery process thus denied the world access to truth.  As The Christian Science Monitor reported, “They were sure of one crucial detail: It was Eritrea’s fault” before any meaningful information was extracted.

This is clear evidence that the regime is not about finding-out truth to protect the Ethiopian people and the tourists. The regime was not concerned about the tourism industry of Ethiopia. This is a major PR disaster for the tourism industry of Ethiopia. By infusing Eritrea in the killing, the illegitimate regime magnified the level of negative attention into all tourism related activities of Ethiopia. This was in effect advertising that announced; come and tour Ethiopia and you might earn the chance to be killed, wounded and captured. Just imagine, can anyone dare take the volcanic tour in the Afar region after this?  The answer is NO. That means the people in the Afar region will suffer because an industry or a means of income was taken away from them. This is not a sign of a caring government. 

The rebels quickly gave their condolences to the families, facilitated the release of those captured and, claimed those that died were killed by Ethiopian authorities. This put the minority regime in a spot and forced it into a defensive position. 

Here is the reality, prior to his fall, the Mengistu regime was losing large swath of territories, to then rebels, the current regime, in the same manner the minority regime is losing now. This incident provided a great opportunity for the world to see that Ethiopia is burning from within with fire that is ready to consume the entire nation fast. Through the hasty announcements, the regime inadvertently advertised to the world that it doesn’t control the Afar region. This is also true throughout the entire country. 

Every action the government takes now is strictly designed to elongate its life. In the West, the regime uprooted over 70,000 Gambellans from their villages destroying their way of life. The illegitimate genocidal regime has done this in every territory in Ethiopia. The genocides in Gambella and Ogaden are recorded in detail with evidences by major humanitarian organizations.  

Ethiopia has seen consistent growth in its tourism industry for decades. This will definitely damage it. The minority regime has managed to stay in power by oppressing the various nationalities that it wants to label terrorist now. All these people are doing is demand their rights.  However, instead of resolving the internal issues peacefully the regime resorted to force. In time, the rebellion has gathered enough momentum and it is ready to engulf the nation. The minority regime, fully aware it can no longer contain it, is trying desperate approaches such as labeling the entire nation terrorist. Individuals that oppose the regime are labeled terrorist and tried. The Diaspora is not spared because the regime makes it a point to sentence them in absentia.

This is a regime on the brink. Certainly, tourism needs peace to flourish and in Ethiopia, peace is dissipating like water in the desert sand. The regime’s acceptance by Ethiopians and people in the region is almost nonexistent. People are anticipating when and how the big shoe will drop. In this climate it is very difficult to commit to any investment in Ethiopia and certainly those that have money are sending their hard currency abroad because they are not certain of the future. This is the reason why it is easy to predict the fall of the minority regime eminent. That is why the former Ambassador Herman Cohen said that the hegemonic minority rule of the Tigray People’s Liberation Front (TPLF) is difficult to sustain, as Ethiopians are demanding freedom and democracy.

Conclusion

It is ironic a terrorist regime is trying to label Eritreans, the Somalis and the entire Ethiopian population terrorists with fabricated trumped charges. By doing so the regime is asking the international community for a mandate to rule with iron fist as a king maker of the region. This is also clear evidence that this futile ambition has put the regime at odds with all the people in the region. One thing the regime has done clearly is that it is challenging the publics of the region with blood in every turn. Hence, it is crucial for the people of Ethiopia, Somalia and Eritrea to come together and rid of the vermin finally. And I am certain this will happen soon because the people of the region are saying enough to the genocidal, illegitimate regime of Meles Zenawi. In order to hasten his demise and to help end the little Batustans he created, it is everyone’s responsibility to stop cooperating with this criminal and end his reign before more harm could be done.

Awetnayu@hotmail.com

QATAR

Doha, January 22 – QNA reports that HH the Emir Sheikh Hamad bin Khalifa Al Thani held a session of official talks at the Emiri Diwan this afternoon with Eritrea”s President HE Isaias Afwerki.

Talks during the session dealt with bilateral ties between the two countries and means of promoting them in various fields besides a number of regional and international issues of mutual concern.

The session was attended by a number of Their Excellencies the Ministers, while it was attended on the Eritrean side by Their Excellencies the members of the accompanying official delegation.

HH the Emir hosted a luncheon banquet in honor of HE the Eritrean President and the accompanying delegation.

/CE

Port Massawa Eritrea

By Berhane Woldu

Eritrea’s Strategic Location along the Red Sea provides ideal exposure to one of the world’s busiest shipping lines and established linkages to other areas of the region and beyond.

The port of Massawa is a transit point for goods to the Middle East, European and Asian Markets. The development of the port is poised to bring about potential gains to trade.

The establishment of a Free Port Zone at Massawa is further expected to boost trade prospects within the already established Middle Eastern and African Markets. The Massawa Airport is equally capable of facilitating traded goods in transit to regional and global destinations.

Investment in exploration activities for reserves of oil, natural gas, and otherminerals provide a potential source for the expansion of export receipts. Eritrea’s natural mineral resources include gold, copper, potash, zinc, oil, natural gas, cement, gypsum, granite, marble, ceramics, limestone and iron ore.

The Bisha Mining Company, which is a mining conglomerate between the government and a Canadian company (NEVESUN), has started production in early 2010. The company produced more than 390,000 oz of gold during the first year of operation and expected to produce more than 450,000 oz in the second year. Copper production will begin in the second year and peak at 184-million pounds of copper in the fifth year of operation. The mine will begin producing zinc in its sixth year. There are many more mining contracts on the making. The potash mine in Danakil Depression with a planed output of up to 10,000 ton a day life span of over 150 years, the Zara and Dubrba gold mining Eritrea stands to share in hundreds of billions of dollars in mining profits.

PRIVATE SECTORE DEVELOPMENT

The private sector is seen as the major development partner, an engine of growth that will help jump start the economy and eventually lead to long-term growth in the Governments development agenda- as explicitly indicated in the Macro Policy document (1994). The Government has achieved so much at adopting favorable monetary and fiscal policy, reduced regulatory framework and bottlenecks by offering incentives and avoiding trade and other related barriers to attract private sector investment and to expand exports.

In line with the macro-policy objectives, a revised investment code was issued in 1994. The main objective of the investment code is to promote investment in Eritrea as well as develop and use the country’s natural resources. Within this broader objective, the investment code intends to achieve objectives including, the promotion of exports, encouragement of competitive import substitution industries, enhancing transfer of new technology, securing equitable regional growth, development of small-and medium-scale enterprises, and expansion of employment opportunities (GOE, 1994: 5).

The Eritrean investment code also provides various incentives for domestic and foreign investment. The investment code further outlines that there will be no taxes on declared dividends; any corporate profit that is set aside for reinvestment will be taxed at the rate of 20%. Furthermore, there shall be no exchange controls for remitting dividends and capital gains, and foreign investors are free to repatriate their profits.

The investment code provides various benefits to investors. For instance, profit and dividends of investors, payments for a foreign loan, fees, royalties, or proceeds received from liquidation of investment and/or expansion, and payment received from the sale of transfer of shares will be remitted in accordance with the rate of exchange prevailing at that time. There is no minimum threshold value of investment. Moreover, with the exception of domestic retail and whole sale trade, import, and commission agency that requires bilateral agreements of reciprocity with the country of investor, all areas of investment are open to all investors both foreign and domestic (GOE, 1994:6). Foreign capital may establish any enterprise on its own or in partnership with local capital.

Moreover, the investment code guarantee, that capital and other associated foreign-owned assets will not be nationalized without due laws. To this effect, Eritrea has also signed the convention establishing Multilateral Investment Guarantee Agency (MIGA) and the convention on the Settlement of Investment Disputes between States and Nationals of other States(GOE, 1998: 20). It established, The Investment Center, which is the legal body responsible for the promotion of investment. Issuance of certification to investors with a maximum delay of 10 days (GOE, 1994:15), Land Proclamation that provides usufruct rights for the long-term up to 99 years has been issued since 1994 and is expected to facilitate the allocation of land for investors (GOE, 1994; IMF, 1996:9).

Significant progress has been made since independence regarding the liberalization of trade policy.

The 1994 Legal Notice 18/1994 reduced the number of import tariffs to twelve. Capital goods, raw materials, and semi-processed goods have only a2 % tariff. Basic goods duties range from 3 to 20%.

In addition, customs procedures were simplified. In the mid-1990s, the government began major investments in infrastructure, roads, electricity, dams, and port operations to support the further development of exports.

To expand the market for import and export potentials the country entered into active membership in regional organizations such as IGAD and COMESA.

INVESTMENT ENVIRONMENT

Peace and security are the main pillars of a true and conducive investment environment in Eritrea. The economic policy underlines the necessity to have a market lead economic system. The private sector should have the upper hand in all economic sectors with the government to intervene in major public shares. The following are some of the steps taken for a better investment environment:

• The Eritrean Investment Center was created in 1998 to promote the country as an attractive investment destination. The investment center approves investment projects, and aims to promote and facilitate investment activities in Eritrea.
• The Business Licensing Office (BLO) was established to create a centralized, “One-Stop”, licensing center to facilitate the speedy formation of business ventures as well as the issuance and renewal of licenses.
• Key investment opportunities in the fisheries sub-sector provide a potential of 90,000 sq.km of fishing ground, with an estimated annual production potential of 65,000-70,000 tons of fish and other marine produces.
• The manufacturing sector produces a variety of products with particular emphasis on processed food and dairy products, alcoholic beverages, glass, leather goods, marble, textiles and salt.
• Recent developments in the mining and quarrying sectors.
• Investment opportunities in the service sector include tourism, transport, energy and water resources, communication and financial services.
• Offshore oil and natural gas exploration are specific areas of potential investment in the energy sub-sector.

INVESTMENT INCENTIVES IN ERITREA

The investment policy of Eritrea provides the following incentives to foreign and domestic companies.

• Both local and foreign private sector investors are allowed to participate in all sectors of the economy with no restriction and discrimination
• Priority foreign exchange allocation given to exporters
• Up to 100% retention of foreign currency earning
• No taxes on dividends declared
• Capital goods, intermediates, industrial spare parts and raw materials are subject to nominal customs duty of 2%
• Raw materials and intermediate inputs are subject to 3% sales tax; however, all sales taxwill be rebated on all materials and inputs that have been used for export production
• Exports are exempted from export duties and sales taxes
• Any loss incurred during the first two years of operation by an investor may be carried forward for three consecutive years
• Marginal tax rate on personal income from 2%-38%: on non-corporate profit from 2%-38%; on corporate profit from 25%-35%; on commercial agriculture from 2%-320%; and on rent income from 1%-48%
• Profit derived from mining activities will be taxed as per the mining legislation; and
• Corporate profit that is set aside from reinvestment taxed at the rate of 20%.

/CE

Below an excerpt of an interview with Kwong-Mun Achong, a mining analyst with Northern Securities with a focus on both precious and base metal equities. He previously worked at a Canadian bank owned dealer and at a U.S.-based brokerage. Achong Low obtained both his Master of Business Administration and Bachelor of Science degree in mechanical engineering from the University of Toronto. The full interview was published by The Gold Report.

TGR: In a report, you suggest that Sunridge Gold is one of the more misunderstood stories in the junior gold sector. What misconceptions about Sunridge would you like to correct?

KAL: The biggest misconception is that Eritrea is a bad place to do business. I visited the property in November and saw firsthand that it is a very determined country working to put additional business-friendly policies in place. The people are very friendly and hard working. The United Nations Security Council clouded that view when it put further sanctions on the country in December after some neighboring countries accused it of supporting militant groups, but I think the accusations are politically motivated. Russia and China both abstained from the vote. Also, Russia went on record saying that the evidence of Eritrea’s link to the planned attacks in Addis Ababa was not conclusive.

TGR: But there is unrest in the region. Are you factoring that into a discount rate?

KAL: Definitely. Whether it’s true or not, the market does perceive additional risk in Eritrea. We only use a multiple of 0.4x our net asset value whereas other companies in our space could get from 0.5–1.0x.

TGR: What were your thoughts about the Asmara project when you visited?

KAL: It is very close to infrastructure. You can drive to the site in a matter of minutes. The topography is very supportive of open-pit mining as it is very flat with lots of room to put the mill facilities and tailings pond. It’s also very close to a willing workforce.

TGR: Are there any majors operating in Eritrea right now?

KAL: None that I know are active in the area. There are a number of Chinese companies with interest including the Shanghai Construction Group that recently bid for Chalice Gold Mines Ltd. (CXN:TSX; CHN:ASX), though the others have nothing as advanced as Sunridge or Nevsun Resources Ltd. (NSU:TSX; NSU:NYSE.A).

TGR: Does Nevsun have the cash flow to pull off a takeover?

KAL: For sure. It is producing a lot of gold at one of the lowest cash operating costs in the industry. Last year it produced about 380 thousand ounces of gold and the cash costs for the first three quarters were about $285/ounce (oz). However, I’m not sure that, if it were to expand, it would want to get another asset in Eritrea.

TGR: On the one hand, you’re saying there’s not as much risk as people think, but in this example, you are intimating that there is still a significant amount of risk there?

KAL: There is perceived risk. If a company like Nevsun has a main asset there and it’s not getting the full value that it should for it, then there’s no need to wait around for the market to clue in. It can just take its cash and go after something that the market will recognize.

TGR: What should move Sunridge stock to your 12-month target price of $1/share?

KAL: Of its four main deposits, it has combined three of them into one prefeasibility study due out in about four months. The fourth deposit, the Debarwa deposit to the south of Asmara, has a feasibility study due in the next couple of months. As the market sees that there is real economic benefit to these projects and there is a clear line to their production, Sunridge should get rewarded for that.

TGR: Debarwa is really the crown jewel here, right?

KAL: It’s the highest grade and it may be the closest to production, though I think the crown jewel is Emba Derho, with 62 Mt of VMS.

TGR: What’s the resource there?

KAL: It’s almost 600,000 oz gold, 1 Blb copper and 2 Blb zinc at Emba Derho.

TGR: What’s the estimated production timeline there?

KAL: It could be as early as 2015. After the feasibility is completed, it could start applying for its permits. Sunridge has already started talking with government officials, so I don’t think that will take as long as it has for other companies, like Nevsun.

TGR: Are there any other companies that you would like to discuss today?

KAL: It’s not one that I cover, but it is in a very stable country: Seafield Resources Ltd. (SFF:TSX.V:). It is advancing its Quinchia gold project in Colombia. It is expecting a resource update at its Miraflores deposit by the end of this month and a PEA in a few months. Quinchia currently has 2.5 Moz in global resource and with the new management appearing settled, the relative valuation and news flow makes this stock one to watch.

TGR: Do you have some parting thoughts for our readers?

KAL: Investors need to take the speculation out and do additional due diligence because it’s a stock-picking market. Investors need to look for companies that have good news flow, really good management and an asset that is good enough to put into production when they invest in it.

TGR: Thanks.

Kwong-Mun Achong Low is a mining analyst with Northern Securities with a focus on both precious and base metal equities. He previously worked at a Canadian bank owned dealer and at a U.S.-based brokerage. Achong Low obtained both his Master of Business Administration and Bachelor of Science degree in mechanical engineering from the University of Toronto.

Want to read more exclusive Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Exclusive Interviews page.

Foreign Office

London: The Foreign Office said on Friday that Dr Amanda Susannah Tanfield has been appointed Her Majesty’s Ambassador to the State of Eritrea.

She will succeed Mrs Sandra Tyler-Haywood who will be transferring to another Diplomatic Service appointment. Dr Tanfield will take up her appointment during April 2012.

Dr Tanfield joined the FCO in 1998 after ten years as a scientist in the Ministry of Defence. Her career to date has focused on multilateral security issues such as arms control and drugs and crime, including in a regional context.

On her appointment as Her Majesty’s Ambassador to the State of Eritrea, Dr Tanfield has said:

“I am honoured and delighted to have been chosen as Britain’s next Ambassador to Eritrea, which is a beautiful country, though not without its challenges. I look forward to developing the UK’s bilateral relationship with Eritrea and to getting to know its people and culture.”

Curriculum vitae

By Martin Zimmerman

In recent days, Eritrea is once again pushed into negative headlines: In the Afar region of Ethiopia, European tourists were abducted and murdered. Two German, two Hungarians and Austrians did not survive the journey to the Ethiopian-Eritrean border area.  For another two German and two Ethiopian companion perhaps the horror continues: These were kidnapped, like the Ethiopian government spokesman Bereket Simon told.

This raises the question of why tourists always ignore the longstanding travel warnings for this area. In recent years there has been several robberies and kidnappings, most ending without tragedy. Before any investigation and immediately after the cruel deed has been known, the Ethiopian government spokesman named the culprit: the Eritrean Government.

But not enough. The Ethiopian propaganda machine gets going and suddenly the subject is no longer “just” murdered and kidnapped tourists, but rather, Eritrea being also accused of instigating a plot in January 2011, to disrupt the annual summit of the African Union (AU) in the Ethiopian capital. The current incident was a deliberate action, according to Simon, because in the next week in Addis Ababa AU starts again a great conference: “Eritrea wants to destabilize the entire region,” the Ethiopian foreign minister goes on in a piece of his allegations. Another target of the attack, which he accuses the government in Asmara-trained bandits of, is suipposed to be the Ethiopian tourism industry.

The international media echoe the Ethiopian version of the drama in the Afar region -, the facts hardly checked by a newspaper, in spite of the well documented hgistory of the Ethiopian propaganda. Some newspapers even noted that Ethiopia and Eritrea were involved in a border dispute, Eritrea supported Somali Islamists militarily, and Ethiopia accusations of Eritrea of terrorist acts. All this in a time, when Ethiopia finds itself exposed to harsh international criticism because of massive human rights abuses and forced displacement.

The facts and the failure of critical journalism

Eritrean government officials, including Girma Asmerom, Eritrea’s ambassador to the African Union immediately reported that the charges are “an absolute lie and a fabrication”. It had become a habit of the Ethiopian government, to blame Eritrea whenever something happens in Ethiopia, said Asmerom. This is however barely mentioned in the media. The Ethiopian propaganda machine following its scheme of “Something will always stick!” in its efforts to discredit Eritrea time and again.

This is just the continuation of Ethiopian politics, making Eritrea responsible for all internal and external political conflicts in the country: the ongoing war in Somalia, that is fueled by Ethiopia as well as attacks of various independence movements in Ethiopia -now a raid in the Afar region. Such attacks were proven of not having been controlled by Eritrea in the past, on the contrary, in the effort to liberate Europeans who were kidnapped by a tribe Afar, Eritrea played a crucial and positive role.

Facts are: alleged Eritrea’s attacks in Ethiopia have been found so far to be manufactured for propaganda purposes, as its false claims of the support of the Islamist Al Shabab in Somalia.

Example 1: On August 30, 2011 on Wikileaks labelled ‘secret’ telegram from the U.S. Embassy in Addis Ababa published October 6th, 2006. The message has been sent to the U.S. State Department, the headquarters of USCENTCOM, IGAD, the CIA, CJTF, DIA, and NSC. The notification (Reference ID 06ADDISABABA2708) referred to a series of three planned terrorist attacks on 16 September 2006 in the capital of Ethiopia, the Eritrean authorities responsible for the security and the Oromo resistance made. Contents of the secret dispatch: The media reported that the Ethiopian intelligence The National Intelligence and Security Service (NISS) claimed together with the anti-terrorism task force of the federal police that the bombs as part of a coordinated terrorist attack on the Oromo Liberation Front (OLF ), the oldest national liberation movement in Ethiopia, and the Sha’abiya (Eritrea) were applied to disrupt the democratic process. In the – unsuccessful – attacks in Kara Kore-District three suicide bombers were killed. The bombs had gone off prematurely in the preparation in an illegally constructed buildings and two of the men died in the explosion, the third a little later in the hospital, the release of the security authorities.

In the dispatch of the report of an informant and secret messages of the message source was quoted as blaming the security forces of the Government of Ethiopia for the assassination. On 20 September 2006 contacted Dr. Merera Gudina, former leader of the Embassy of the ONC. In his report he stated that the deceased was not killed when a bomb, but rather have been in the hands of government cadres were imprisoned and tortured. The men had been picked up a week earlier by police and arrested. The police would have brought them into the house and raised near the explosives. It remained unclear, whether the men belonged to the ONC or OLF.

Example 2: The claim that Eritrea would destabilize the region relates mainly to the accusation that Eritrea supported the Islamist Al-Shabab militia in Somalia with money and weapons. The most recent accusation acoounting for UN sanctions against Eritrea – was recently moved to the realm of fables: In November last year, Eritrea was accused of supplying arms to Kenya Al Shabab. Three planes full of weapons were said to having landed in the town of Baidoa. The “UN Monitoring Group on Somalia,” could not prove this, and recently reported that such flights have taken place and “incorrect” the assertion …

Example 3: The border dispute. The fact is that relations between Ethiopia and Eritrea have been strained by this ongoing border dispute – the blame on which is, however, only to Ethiopia. Because for this border disput,there is a solution on the table since 2000. The International Court in The Hague ruled on the issue of border disputes to an arbitration, the two sides have in advance officially recognized within the framework of the Algiers peace agreement as final and binding. But Ethiopia refused to implement the peace agreement, illegally occupying Eritrean territories and threatening war, whenever it seems politically expedient internally.

 Source: Dehai and translated by Chrischi

afar

Stellungnahme zum Artikel

Von Christian Glaunsinger

Ihr Artikel zeichnet ein oberflächliches Bild der Problematik zwischen Eritrea und Äthiopien allgemein und in der Afar Region im Grenzgebiet zwischen beiden Ländern im Besonderen. Die Danakil-Senke und die gesamte Afar Region werden ausschließlich von nomadischen Stämmen durchstreift, die sehr eigenständig in dieser unwirtlichen und unwegsamen Region leben.

Diese Stämme überschreiten die Grenzen zwischen Eritrea, Äthiopien und Djibouti nach Belieben und sind dort nicht kontrollierbar -vergleichbar mit den Touareg der Sahara. Ein Überfall mit Entführung und Todesopfern kann dort nie ausgeschlossen werden. Welches Interesse Eritrea an solchen Vorgängen haben sollte, ist völlig unklar.

Das Gegenteil darf angenommen werden. Eine Stellungnahme der eritreischen Regierung fehlt in Ihrem Bericht. Äthiopien und Eritrea trennt kein Grenzstreit, denn dieser wurde vom internationalen Gerichtshof in Den Haag 2002 entschieden. Beide Parteien hatten diesen Schiedsspruch bereits 2000 im Frieden von Algier als verbindlich akzeptiert. Äthiopien verweigert die Umsetzung, hält eritreische Gebiete besetzt und droht mit Krieg, wann immer dies innenpolitisch opportun scheint.

Darüber hinaus ist Äthiopien dazu übergegangen, Eritrea für sämtliche innen- und außenpolitischen Konflikte verantwortlich zu machen: den anhaltenden und von Äthiopien angeheizten Krieg in Somalia ebenso wie Anschläge verschiedener Unabhängigkeitsbewegungen in Äthiopien -nun auch einen Überfall in Afar. Solche Überfälle wurden auch in der Vergangenheit nachweislich nicht von Eritrea gesteuert.

Die Regierung Äthiopiens wälzt so Verantwortung zu Unrecht auf Eritreas, denn es ist gerade Äthiopien, welches in der Region; namentlich Eritrea, Somalia und in eigenen Provinzen wie Tigray, Oromia und dem Ogaden seit Jahrzehnten für Instabilität und große Not verantwortlich ist. Dieses sollten deutsche Journalisten durchschauen, anstatt daran mitzuwirken.

Christian Glaunsinger

Interview: By The Gold Report

COMPANIES MENTIONED: AUREUS MINING INC. - CONDOR RESOURCES PLC - KIRKLAND LAKE GOLD INC. – NYOTA MINERALS LTD. – RAMBLER METALS & MINING - SUNRIDGE GOLD CORP. - TORO GOLD LTD

Christopher Welch, a mining analyst with Ocean Equities, has been crisscrossing the Atlantic for most of the last year. He tells The Gold Report in this exclusive interview that recent trips have bolstered his conviction that mining plays in Africa are being overlooked, but it’s not too late for investors to get in on the ground floor.

The Gold Report: Most of your coverage universe at Ocean Equities consists of precious metals juniors with exploration- or development-stage projects. Why do you cover these types of companies?

Christopher Welch: It’s the end of the market where our expertise has the biggest effect, particularly since my colleagues and I are either geologists or experienced industry professionals. We can look at ground where we know it’s going to be prospective. We can look at the very early-stage exploration results and know if they are encouraging.

We still cover some big, producing companies. One of our biggest companies under coverage isKirkland Lake Gold Inc. (KGI:TSX), which is a growing intermediate producer. But we’ve had such an effect on the junior exploration end because that’s where our strengths lie.

TGR: Most of your companies have sub-$100 million (M) market caps with gold and/or copper projects based in Africa, Canada or Nicaragua. What criteria do you use to choose these small-cap companies?

CW: We look at management, the ore body, exploration results, the geology of the region and country risk. We don’t have a mandate to follow specific parts of the world, although we know where we feel comfortable operating. If it’s a country where one of the research teams feels quite happy jumping on a plane, spending a few days in a tent on the ground and looking at the grassroots exploration data, that’s a country we wouldn’t mind doing business in.

TGR: You regularly go and visit these projects?

CW: Taking a job as a mining analyst is essentially getting a ticket on a plane somewhere. I’ve been crisscrossing the Atlantic for most of the last year. Our technical expertise and professional experience mean that when we get to the ground, we know what to look for. It’s not a case of taking drilling results on trust. We look at the drill core and can see what’s good. It’s a lot of gut instinct and knowing what feels right. You can look at the lay of the land and say, “Yes, I can see the deposits here. I can see that this could be an open pit or the plant could go here, and there are no environmental or social issues.” You have to get in and kick the tires to add value.

TGR: Do you believe that African mining stories are underrepresented in investors’ portfolios?

CW: Yes. Over the last 10 years, contemporary exploration techniques have been applied to parts of Africa that were considered high risk, like Eritrea, Ethiopia and Liberia. However, there have been large-scale risk profile changes in these countries.

Liberia is one of the best countries in Africa because of its transparency. There is now a combination of overlooked resources with safer governments, so it’s just another scramble to get into these countries and establish companies that can turn natural resources into profits for both the company and the host country.

If you’re not exposed to the African mining story, you haven’t missed the boat, but it’s something you should look at quickly.

TGR: Are you concerned about another Charles Taylor, the former president of Liberia accused of war crimes, coming to power in these countries after you’ve invested heavily in them?

CW: Charles Taylor’s regime was definitely a product of ignorance of the Western world to what was going on in that part of Africa. Now there is more free press in Africa and there are a lot of African businesspeople who are involved in making their countries better. I know that all the issues across Africa aren’t solved, but we won’t go to a country where we think there could be a risk. We have a very good understanding of what’s going on across Africa. African risk can’t be painted with a broad brush. Every region globally has its drawbacks. Some might say that laws in British Columbia are perhaps overly onerous on environmental licensing, for example.

TGR: An interesting company in Ocean’s stable is Sunridge Gold Corp. (SGC:TSX.V). Tell us how you came across it and why you picked that one.

CW: It’s definitely one of the more encouraging companies in that region because it’s so undervalued. I constantly ask, “Where am I going to go next to find the overlooked or the best deposit?” That part of the Arabian-Nubian Shield really comes to the fore as the most overlooked part of the globe to find volcanic massive sulphide (VMS) deposits that have good grades. They don’t always have the biggest scale, but the grade means that the mines that get developed can be quite profitable.

If you take just one of the components of Sunridge’s project portfolio, its contained zinc for example, it has a greater gross in-situ metal value than the market cap of the company. So we think that Sunridge offers great potential.

TGR: What were your thoughts after visiting the Asmara gold project?

CW: My colleague was there recently as part of a larger trip around Eritrea and was very encouraged with what he saw. He said it looked very positive. Sunridge is in the prefeasibility stage on the Asmara project, which is part of a group of projects around the capital city.

TGR: Do you think that it will spin some of those assets out into a separate company?

CW: I think it will keep all of them under the same umbrella. It doesn’t have a huge footprint in Eritrea. It’s big, but manageable. Those projects will do very well when they combine and share infrastructure. Eritrea does need a fair amount of infrastructure to get up to the standards required for the mining. The company will likely build something centralized to take concentrate from different parts of its portfolio.

TGR: Is it a takeover target?

CW: It’s definitely enticing. It has ground in a great country with great prospects. Any sort of mid-tier company that’s looking to bolt on some high-grade VMS targets and near-term gold production capacity should be looking at it.

TGR: Are there plans to take Toro Gold Ltd., a private junior with a gold project in Senegal, public?

CW: It’s something the company would like to do, but not at the expense of shareholders. It has quite a market-savvy management team. It has done exceedingly well to get its Mako project on its feet. Recent results for Mako show great grades: 3 grams of turnover into sections of up to 40 meters. It’s one of the best grassroots discoveries in that part of Africa. There are definitely plans to take it to market, but it has to be done at the right time. I hope it will be within the next 12 months, but it’s up to the company to say.

TGR: Initial tests have shown that Toro’s deposits host free gold.

CW: The bottle roll test results are very encouraging, but the ultimate metallurgical process has yet to be determined. It looks like there is very little arsenic in the area, so it should be free gold. Toro has a large amount of ground, but it still has to do early-stage reconnaissance exploration, so there’s a lot of growth there. It’s in a part of Africa, which we call the Kenieba Window, which has been overlooked.

TGR: Many of our readers follow the junior mining sector quite closely, but few would have heard ofNyota Minerals Ltd. (NYO:AIM; NYO:ASX), which is conducting a definitive feasibility study on its Tulu Kapi deposit in Ethiopia. Nyota is about to announce a measured resource for the Tulu Kapi project in H112, as well as a maiden resource for other claim blocks in the area. Tell our readers about that story.

CW: It is in the same geological terrain as Sunridge, on the western half of the Arabian-Nubian Shield, which is very old rocks that have been somewhat agitated by the rift in the area. It’s in a very geologically prospective part of the world, but it’s been overlooked simply due to the historic Ethiopian-Eritrean conflict that’s now resolved.

Nyota is progressing on its Tulu Kapi project. The new chief executive, Richard Chase, who took the reins in mid-2011, really has a good handle on what could be quite a robust open-pit project. It has a mineable grade after internal dilution of over 2 grams/tonne. Tulu Kapi is going to be quite a good story.

Nyota is also going to be the first public company to receive a mining license in Ethiopia. It put in its application in Q311. Ethiopia is very prospective, particularly parts of the western highlands. We’ve seen many major mining companies coming into the country to try and grab ground and capture the essence of the geology of Ethiopia. Nyota has this fantastic, early-mover advantage in that it has a large land package with known targets, but also it has the key to good exploration—high-level operating geologists with Ethiopian backgrounds who can go and do the grassroots exploration very well. Nyota has a great future ahead of it.

TGR: A lot of investors still perceive Ethiopia as a risk. Does it give you a measure of confidence given that a number of larger mining companies are coming into that country?

CW: Yes, it does. The Internal Finance Corp. (IFC) of the World Bank has been a shareholder in Nyota for a long time, and the IFC has perhaps one of the most rigorous sets of due-diligence tests for its investments. The area of Ethiopia that Nyota is operating is lush, green pasture. It poured with rain the entire time we were there. Ethiopia has a good future ahead of it. It acknowledges its natural resources could be a key for developing and expanding its growth prospects. Personally, I don’t think the risk in Ethiopia is that high.

TGR: What are your preferred countries in Africa for mining development?

CW: Ethiopia, Eritrea and parts of Sudan are the most overlooked for ease of operation. Mali and Burkina Faso are developing into good countries to operate in, but my pick of the bunch is Liberia.

Just to give due respect to Ellen Johnson Sirleaf, the president of Liberia, she’s done an awful lot to clean up the country. In particular, the Extractive Industries Transparency Initiative that she’s taken on board in Liberia has really set the country up to benefit from iron-ore price growth. It has potential to be the largest iron-ore producer on the continent.

Liberia also has gold in the north with Aureus Mining Inc. (AUE:TSX; AUE:AIM), which is developing the New Liberty project.

TGR: That really is fascinating given that country’s history.

CW: It just proves the point that the opportunities come up when you have on-the-ground, grassroots operating knowledge from people who go into the country and say, “Look, I know what you think about Liberia, but honestly, go, see, look. Go to the country, visit it and when you get there, you’ll see that it’s open for business.”

TGR: Condor Resources Plc (CNR:LSE) has the promising La India gold project in Nicaragua. The one eyebrow-raising fact about Condor is that it’s just a small junior with a relatively small market cap, but it has about 560M shares outstanding. Are you concerned by a management team that would allow that level of dilution?

CW: The large number of shares is just a legacy and something that the company can do something about quite easily. A chief executive has a lot of techniques in his arsenal to reduce that, and I dare say there will be some form of consolidation in the future. Condor is a company that’s changed dramatically over the last two years. It’s taken a small resource in Nicaragua and grown it to a substantial 1.6 million ounces. In 2009 Condor had a robust resource in Nicaragua but it suffered capital constraints due to the global financial crisis and then the El Salvadoran moratorium on mining. This was when it suffered the dilution. That is now water under the bridge and it is moving forward.

TGR: Perhaps the most promising part of that project is the central breccia zone. Tell us about what the company continues to find there.

CW: It’s one of the largest scale mineralizations. Condor has plenty with a narrow vein, but high-grade, gold currencies cross its property. What is going to make a huge difference for the company is finding the bulk tonnage deposits where it can do either open-pit development or larger-scale underground development.

Condor found the central breccia toward the end of last year when it put in a trench to look at the bedrock. The initial grades of that sampling were very encouraging. Subsequently, it put in two drill holes and the results are likewise encouraging. It also extended the trench, and we’re waiting for an update from the company on those results. All signs are that it found something significant with a larger scale to it.

It’s a very good sign for Condor that it’s found the central breccia, but there are other areas where bulk tonnage of mineralization exist, which it could exploit through larger-scale mining techniques.

TGR: There are also other mines nearby, which could lead to a takeover.

CW: Exactly. Obviously, I don’t think it’s something that Condor is going to aim for immediately. In our discussions with the company, it’s all for just keeping its head down. It has an objective, it has a strategy to achieve that objective and it’s going to take the La India project as far down the development track as it can.

But it’s an interesting part of the world. Obviously, there is a lot of gold in Nicaragua, which in Central America is one of the more stable areas to operate in. There are larger-scale operations in the country. Whether one of the other Nicaraguan players would be the one to take Condor out or whether there might be a rollup by another company, I don’t know. At the moment, Condor has a lot it can do to increase the value of its portfolio.

TGR: Rambler Metals & Mining Plc (RAB:TSX; RMM:AIM) just started producing gold from its Ming mine in Newfoundland and Labrador. It has already forward-sold some of its production to Sandstorm Resources Ltd. (SSL:TSX.V). It’s one of those that quietly came into production. How did you find out about this story?

CW: It has the trifecta of things I look for in a mining project: management, geology and a stable location. Newfoundland and Rambler have it all in spades. It did come into production quietly, but that doesn’t detract from the story. It’s just been overlooked. It’s in a part of the world that has the last of the low-hanging, high-grade fruit for the same reasons that we look at parts of the Arabian-Nubian Shield. That part of Newfoundland has the same VMS deposits with a strong grade. Rambler definitely has that in the Ming mine, which has very good grades of copper, gold and some associated silver as well.

Rambler took on a loan to keep the project moving forward at a time when gold prices were much lower than they are now, and it did seem like a very sound decision for the company to make at the time. Now that gold is at the price it is, you can look back and say, “Well, I don’t think it was a good move,” but you play the cards that you’re dealt. I think George Ogilvie, the chief executive of the company, has done very well to get it up and running. It’s in a gold production phase just because it can produce gold at the higher price. It’s giving some of its revenue of gold away, but the payoff of the gold line is not having a dramatic negative effect on its cash flow. Later on this year, it’s going to go into a copper production phase where it’s going to increase its revenue.

TGR: How did you discover it?

CW: It came in through one of the mine organizers and management of a company that we’ve dealt with for a good time and trust.

TGR: You’re going to keep that a secret.

CW: The mining industry is a relatively small game. There is no better commodity than knowledge and trust in certain mine managers.

TGR: Sprott Resource has put some money into that project as well. When you get players like Sandstorm and Sprott involved, obviously the numbers add up.

CW: I know Sprott did an awful lot of technical due diligence on the project, so it must be very comfortable. It’s a very good deal for Sprott, as well as for Rambler.

TGR: Looking at the small-cap mining sector into 2012, do you expect a rebound or are we going to see more headwinds?

CW: We’re going to get an overall flight to quality. There are a lot of projects out there that are going to stand out from the crowd. We’ll see some re-ratings and some heads pop out from the parapet to show themselves to be above-average mining plays.

The pullback in mining shares and mine management becoming more cautious are going to pay dividends for the mining companies in the mid term. One thing we know is that resources are scarce. It’s getting harder and harder to find the projects, particularly good gold and copper projects. We’ve lost another field season in 2011 and a lot of people brought their drill rigs home rather than overspend during a downturn, so it’s going to be harder to find the projects in the development pipeline that can fill the metal supply gaps that develop.

When demand comes back to Asia or North America, there won’t be a sufficient number of projects in the development pipeline to feed that demand.

TGR: Thanks for your insights.

Christopher Welch holds a master’s in international business management and a Bachelor of Science (Honors) in geology from University College London and an Advanced Certificate in economics from Birkbeck University. Before joining Ocean Equities, Welch spent four years with Bloomsbury Minerals Economics as a copper analyst, prior to which he worked as a geologist in Lesotho.

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DISCLOSURE: 
1) Brian Sylvester of The Gold Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Gold Report: Condor Resource Plc, Sunridge Gold Corp. Streetwise Reports does not accept stock in exchange for services.
3) Christopher Welch: I personally and/or my family own shares of the following companies mentioned in this interview: Condor Resources Plc, Rambler Metals & Mining Plc and Nyota Minerals Ltd. I personally and/or my family am paid by the following companies mentioned in this interview: None. I was not paid by Streetwise for participating in this story.

Mining Indaba

South Boulder Mines Managing Director and CEO Lorry Huges is going to present on Wednesday, 8th February at 11:30am at  the 18th Annual Investing in African Mining Indaba Convnetion in Cape Town.

The Mining conference will take place at the Cape Town International Convention Centre from the 6th-9th of February 2012. With some 6500 professionals, representing more than 1000 international companies and about 45 African and non-African government delegations from all the major mining countries of the world, Mining Indaba is the sector’s largest gathering of influential decision-makers, financiers, investors (institutional, hedge funds, sovereign funds, merchant banks, stock exchanges, and commodities exchanges), stakeholders, mining professionals and governments.

Mining Indaba’s delegations represent 100 countries across four continents. From chief executive officer of the world’s largest mining company to chief investment officers of renownded international banks, you will find an elite gathering of professionals all interested in one common deonominator – fuelling investments in the African mininv value chain.

South Boulder Mines Ltd recently announced the appointment of Mr Flavio Garofalo in the new role of Chief Financial Officer, effective from February 2012.

Mr Garofalo is an experienced finance and corporate executive who has over 20 years experience in the mining industry and was previously Chief Financial Officer and Finance Director for Kagara Ltd.

Mr Lorry Hughes CEO and MD of South Boulder said that “The appointment of Mr Garofalo reflects the growth of South Boulder as it continues the transition into a significant potash producer from the Colluli Potash Project in Eritrea. Mr Garofalo has successfully undertaken the transition of a number of listed companies from developer to producer and has strong financial links and experience from within the Asia region.”

In addition Mr Garofalo will make significant strategic contributions to South Boulder’s development of the Duketon nickel and gold projects and the planned in specie distribution of the assets to shareholders.

For more information visit: Mining Indaba

Below is an excerpt from an article published by Bloomberg:

African Boom

Five of the 20 projected fastest-growing countries last year were in Africa, including Ghana at 13.5 percent; Eritrea at 8.2 percent; Ethiopia at 7.5 percent; and Mozambique at 7.2 percent, the International Monetary Fund said.

O’Neill said non-BRICs emerging markets need to improve performance in economic policy, education and technology to sustain their strong growth.

The Goldman Sachs N-11 Equity Fund has lost 10.7 percent since inception on Feb. 28 while the Goldman Sachs BRIC Fund lost 24.3 percent. The Standard and Poor’s 500 Index (SPX) lost 5.3 percent in the same period.

Even as the BRICs slow, they may still outpace the developed world over the coming decades, enabling their share of global GDP to rise to almost 40 percent by 2050, Goldman estimates.

O’Neill’s book “The Growth Map,” published last month, says the group still has “rosy prospects.” He estimates that even with slower growth, the BRICs economies will collectively be bigger than the U.S. by 2015.

The full article can be found here: Bloomberg