Chalice Gold and Eritrean Government sign mining agreement

6 November 2011 (Last Updated November 6th, 2011 18:30)

Chalice Gold Mines' joint venture firm Zara Mining Share (ZSMC) has signed a mining agreement with the Government of Eritrea for the financing and development of the Koka gold mine at the Zara project in West Africa.

Chalice Gold Mines' joint venture firm Zara Mining Share (ZSMC) has signed a mining agreement with the Government of Eritrea for the financing and development of the Koka gold mine at the Zara project in West Africa.

The Koka gold mine has a probable mineral reserve of 760,000oz at a grade of 5.1g/t gold and an indicated mineral resource of 840,000oz at a grade of 5.3g/t gold.

According to the project's feasibility study, the mine is estimated to have an average production capacity of 104,000oz of gold a year at a cash cost of $338/oz of gold.

The firm is also awaiting government approval regarding its application for an 18-year mining licence.

The Government of Eritrea holds a 30% interest in the Zara project through the Eritrean National Mining Corporation.

Koka gold mine is expected to commence production in late 2013.