Chalice Gold Mines (ASX:CHN)(TSX:CXN) has moved closer to development of its Koka Gold Mine at the Zara Project after executing an agreement with the Government of the State of Eritrea.
Chalice's 60 per cent-owned Eritrean joint venture company, Zara Mining Share Company (ZSMC), struck the deal with Eritrea which governs the future development and operation of the Zara Project.
ZMSC has also applied for a Mining License for a period of 18 years, which the Government has advised will be issued shortly.
Tenders for the construction of the plant and mine are being received and assessed, with final selection of the contractor expected to occur before the end of the year.
This should enable Chalice to move ahead with financing and development of the high-grade Koka Gold Mine at the Zara Project.
With the granting of all necessary permits and licences and other such matters, this could enable Chalice to begin production at Koka in late 2013.
Koka has a Probable Mineral Reserve of 760,000 ozs at a grade of 5.1 g/t gold and an Indicated Mineral Resource of 840,000 ozs at a grade of 5.3 g/t gold.
The project feasibility study is based on annual average production of approximately 104,000 ounces of gold per year at a cash cost of US$338 per ounce of gold.