TORONTO (miningweekly.com) – Vancouver-based Sunridge Gold has received a vote of confidence from Antofagasta Minerals, which will fund $10-million of exploration work over a five-year period, to earn a 60% interest in part of the company's Asmara project, in Eritrea.

The areas that Antofagasta will earn into exclude the four defined deposits that Sunridge has outlined to date, but cover about 585 ha of exploration property that is considered to have the potential for large new discoveries, the firm said.

Sunridge will be the operator of the exploration programme until a total of $7-million has been funded by Antofagasta, at which point Antofagasta can opt to become the operator.

After the $10-million has been spent, Antofagasta can acquire a 60% share in the exploration areas, and will also have a right to complete a feasibility study on any project in the exploration areas to earn another 15%.

Antofagasta will also buy Sunridge shares in a $5-million private placement, which will make it Sunridge's biggest shareholder, with about 18% of the company.

"We are very happy to be forming this strategic alliance with one of the leading copper producers in the world,” Sunridge CEO Michael Hopley commented.

“Having concluded site visits, it is obvious that Antofagasta shares our belief that the Asmara project has the potential for the discovery of other large base metal deposits”

Meanwhile, Sunridge will use the proceeds of the placement to continue exploration and development of the four existing deposits towards final feasibility and eventual production.

Another Canadian firm, Nevsun Resources, recently arranged $235-million in debt to fund its own more advanced Eritrean project, the Bisha mine.

Nevsun CEO Cliff Davis on Friday welcomed the news of Antofagasta's deal with Sunridge.

“This confirms once again the attractiveness of Eritrea as a country to do business,” he said.

“All of this points to further international acceptance of Eritrea for investment.”

Sunridge shares leapt 29% on Friday, to C$0,71 apiece by 15:58 in Toronto.

Nevsun gained 0,9%, to C$2,20 a share.