Identifier
Created
Classification
Origin
08ASMARA252
2008-05-09 08:34:00
CONFIDENTIAL
Embassy Asmara
Cable title:  

SANU RESOURCES' MINING PROSPECTS

Tags:  EMIN ECON PGOV PINR PREL ER 
pdf how-to read a cable
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C O N F I D E N T I A L ASMARA 000252 

SIPDIS

LONDON AND PARIS FOR AFRICA WATCHERS

E.O. 12958: DECL: 05/08/2018
TAGS: EMIN ECON PGOV PINR PREL ER
SUBJECT: SANU RESOURCES' MINING PROSPECTS

REF: A. ASMARA 248


B. 07 ASMARA 907

Classified By: Ambassador Ronald K. McMullen for Reason 1.4 (d)

C O N F I D E N T I A L ASMARA 000252

SIPDIS

LONDON AND PARIS FOR AFRICA WATCHERS

E.O. 12958: DECL: 05/08/2018
TAGS: EMIN ECON PGOV PINR PREL ER
SUBJECT: SANU RESOURCES' MINING PROSPECTS

REF: A. ASMARA 248


B. 07 ASMARA 907

Classified By: Ambassador Ronald K. McMullen for Reason 1.4 (d)


1. (SBU) Summary: Canada's Sanu Resources exploration
company reported successful drilling results indicating large
deposits of copper and zinc near Nevsun's Bisha Mining
Project (reftel A). Only a small amount of gold was also
discovered at this site, but Sanu anticipates "finding more
gold nearby." Adding mining revenues from Sanu's find to the
anticipated extraction revenues from Nevsun and Sub-Sahara
Resources (reftel B) brightens the financial light at the end
of a two-year tunnel for a chronically cash-strapped
government. End Summary.

-------------- --------------

2. (SBU) Gold? Maybe. Copper and Zinc? Absolutely.
-------------- --------------

Country manager Estifanos Ogbazghi (protect) for Sanu
Resources, a Vancouver-based mining exploration company
traded on the Toronto Stock Exchange, told Emboff on April 28
of "extremely promising" prospects for copper and zinc
extraction. Sanu is exploring the Hambok Trend, a promising
geological formation roughly 10km south/southwest of
Nevsun,s Bisha Mining Project. Despite finding only a small
amount of gold, the large copper and zinc deposits can be
extracted beginning in 2010 and mined for 10 to 20 years.
Sanu is contractually obligated to sell its rights to major
shareholder Lundin Mining Corporation, a Swedish-owned
company based in Vancouver, to mine the minerals.

Sanu's initial assessments of the site indicated gold
deposits similar to Bisha, but Estifanos said their recent
drilling likely missed the vein. Further drilling will be
conducted to find the gold, but the value of the base
minerals alone will make mining profitable.

--------------

3. (SBU) Koka ) Bigger than Bisha?
--------------

Estifanos also described their promising Koka site, near
Sub-Sahara,s recent gold strike 100 miles northwest of
Asmara, as potentially "the biggest in Eritrea," noting Sanu
is 80% certain of large deposits of copper, zinc, and gold.
Sanu is conducting intensive drilling operations in the area,
and has procured licenses to explore approximately 1,000
square miles of Eritrea's mineral fields. Sanu's assessment
is Eritrean mineral deposits may extend from the Bisha area
in a 30 mile wide and 180 mile long northward path to the
conjunction of Sudan, Eritrea, and the Red Sea.


5. (C) Comment: Although Nevsun leads in preparing for full
operations, Sanu anticipates Nevsun's prior education of
Eritrean Ministry of Energy and Mines bureaucrats makes
negotiations easier and quicker. Like Nevsun and Sub-Sahara,
Sanu expects extraction to begin in 2010, but the Eritrean
government must make sizeable investments in order to cash in
on these projects. Not only will it likely purchase a 30%
stake in a joint venture with each extraction company, as it
did with Nevsun, but substantial road improvement and
maintenance will be necessary to handle the massive truck
traffic moving over Eritrea's often narrow and winding
escarpment roads.

Comment con't: Seeing these potential revenues so near but
yet so far away must be maddening to officials of the
remittance-dependent Eritrean government that is barely
avoiding fiscal bankruptcy. Their feeling must be that if
they can only hang on a little longer, Eritrea's pitiful
finances, and their ability to rule, will be rescued. End
Comment.
MCMULLEN