TORONTO (miningweekly.com) – TSX-V-listed Sunridge Gold on Thursday announced that it had recently formalised a shareholder agreement with State miner Eritrean National Mining Corp (ENAMCO) and created the Asmara Mining Share Company (AMSC), the operating entity that would own and operate the Asmara copper/zinc/gold mining project, in Eritrea.

Sunridge pointed out that it had transferred the Asmara project, equipment and all Eritrean employees to the AMSC.

"We are very happy to have completed the formation of the AMSC and formalised our partnership with ENAMCO on the Asmara project. This means that we can now rapidly push the project towards the start of Phase 1 production next year.

“Also, the money that we have recently received from ENAMCO puts Sunridge in a strong cash situation, particularly because of our current low expenditure rate on the project,” Sunridge president and CEO Michael Hopley said.

The AMSC is 60% owned by Sunridge and 40% by ENAMCO, which had a 30% participating and 10% free carried interest, and was governed by a shareholders' agreement.

The AMSC currently had five board directors – three from Sunridge and two from ENAMCO, while Hopley was appointed chairperson.

All future project development or exploration costs would be shared between Sunridge (two-thirds) and ENAMCO (one-third), as well as all project costs backdated to July 2012, when the Eritrean company notified Sunridge of its intent to exercise its full option.

ENAMCO agreed to pay Sunridge $18.33-million in instalments before production started in return for its rights to the property, $2-million had been paid in July and another $1-million plus interest had just been received, with a further $2-million scheduled to be received before the end of November.

The balance of $13.33-million would be paid in instalments after the close of a finance agreement that secured a significant portion of the funds required to develop the project.

Having established the AMSC, Sunridge and ENAMCO were now working jointly to acquire the mining licence for the Asmara project, expected early next year.