Burdened by years of drought and civil wars, the Eastern African country of Eritrea is one of poorest nations in the world. But there is hope that a mining resurgence could help turn things around.
Eritrea is an emerging mining country situated in the Horn of Africa on the shores of the Red Sea, and bordered by Sudan to the west, Ethiopia to the south, and Djibouti to the southeast.
The nation has around 6M inhabitants spread across nine recognized ethnic groups. It became independent from Ethiopia after a referendum in 1993.
According to www.countryeconomy.com, Eritrea holds the 171st position by nominal GDP. Its national debt in 2020 was US$3,794M with a 179.66% debt-to-GDP ratio and its public debt per capita is US$749 per inhabitant.
However, the African Development Bank (ADB) says mineral exports can play a key role in supporting growth within the Eritrean economy.
It recently reported that fiscal consolidation and enhanced public revenues from metals exports is projected to lower the country’s fiscal deficit to 1.0% of GDP in 2022 and generate a surplus of 0.1% in 2023, with the current account surplus stabilizing at 13.5% and 13.3% of GDP.
The ADB says Eritrea’s natural mineral resources are copper, potash, zinc, oil, natural gas, cement, gypsum, granite, marble, ceramics, limestone, and iron ore, and mining contributes significantly to the GDP of the country, after trading. This is driven primarily by natural gas, oil, gold, zinc, and potash.
Importantly, Eritrea’s government is investing in infrastructure (with construction playing a big role) and human-resources development, with infrastructure investments focused mainly on gold mines, but include a power station and a port.
Eritrea recently opened its borders to Ethiopia for the first time in 20 years, allowing landlocked Ethiopia to use Eritrea’s Massawa port for direct access to the Red Sea. The ADB says this act may strengthen investor confidence as well as economic growth.
Global mining consulting and engineering firm AMC Consultants has been operating in the country for several years and says its mining potential is largely untouched.
Mining history
Artisanal mining in Eritrea is dates back to the early times to the Pharos. Following that, modern mining began with the Italians during the colonial period (1891-1941) on gold-bearing quartz veins using the limited technology of that time. After Italy gave up her colonies, Eritrea was federated with Ethiopia and was later annexed by the country.
AMC says in the early 1970s Nippon Mining of Japan had started mining activities in Embaderho, Adi Rassi, Debarwa, Adi Nefas, Weki and other areas. Later it was forced to stop by the liberation struggle. In 1991 Eritrea was liberated and became an independent nation following a referendum in 1993.
Not long after the independence the government of the state of Eritrea encouraged exploration and mining activities by providing vast opportunities to foreign investors with suitable and flexible mining laws since 1996.
Exploration licenses were issued to the various foreign companies for prospecting and exploration to the virgin and enormous land of resources. Now there are several different types of deposits discovered and developed minable ores by the companies.
According to an Eritrea mining overview produced by mining consultancy AMC, Eritrea joined the ranks of mining producers in 2010 with the commissioning of the Bisha Project. This project is owned by the Canadian company Nevsun Resources Ltd and started as a gold producer but shifted to copper production in 2013 with the commissioning of an expanded 2.4Mtpa flotation plant. Bisha is in the process of expanding the process facilities in preparation for mining of primary zinc ore.
New breed
Now, a new breed of explores are testing the potential of what has been described by some as one of the “last frontiers” for miners.
One of those is Alpha Exploration (TSXV: ALEX) which recently reported drilling success at its Aburna gold prospect where its programme consisted of 25 drill holes totalling 3,196m.
Aburna is located in the southwest part of Alpha’s large (771km2, 100% owned, Kerkasha Project in Eritrea.
“We are again, very encouraged about these latest drilling results from Aburna,” says Michael Hopley, Alpha’s president and CEO.
“Given that the Aburna prospect is a huge area – over 6km long and 2km wide as defined by Alpha surface sampling and mapping, and the fact that we have only drilled 43 holes to date – just over 5,000m in an area measuring about 2.5km by 1.5km and many holes have found strong gold mineralization over significant widths including two holes (ABR-037 and ABD-001) which intersected extraordinary results of 16m averaging 14.07g/t and 20m averaging 7.70g/t gold.
“The results to date suggest to me a major gold discovery by Alpha at Aburna; obviously more drilling is justified.”
Mr Hopley says Eritrea is a country with significant exploration upside.
“The basic geology and structural setting lend itself to the discovery of a variety of deposit types,” he says.
The Arabian-Nubian shield is known for its volcanogenic-massive sulphide (VMS) occurrences, such as Nevsun Resource’s Bisha deposit and the historical Sunridge Gold’s Emba Derho deposit on the Asmara Project.
It also hosts the Sukari orogenic gold deposit (Centamin (LSE: CEY)) and the Jebel Ohier porphyry copper-gold deposit (Qatar Mining).
“We believe this is one of the few remaining underexplored areas in the world,” says Mr Hopley. “It’s one of the last frontiers in the mineral exploration business.”
The Kerkasha license area has had some previous periods of exploration. Exploration for gold was undertaken in the 1920s and ‘30s when Italy controlled Eritrea, and then later (2010-2013) by AngloGold-Ashanti (JSE: ANG) as part of a joint venture agreement with Thani Investments.
“These previous exploration periods have acted as a guide for Alpha Exploration,” Mr Hopley says. “The best way to explore for gold is to go where gold was found before.
“The Italian miners did that, and the artisanal miners are currently doing that,” he adds.
Although artisanal mining is currently discouraged by the Eritrean government, Mr Hopley says Alpha Exploration has still been able to find more gold where these miners were previously working.
There had never been any drilling on the Kerkasha property prior to Alpha acquiring the license in early 2018, and the exploration team has been busy mapping and testing the property since March 2018.
With the government targeting new mining investment it is hoped that new discoveries could change Eritrea’s fortunes.
