Eritrea awards more mining licences, sees gold output in 2010

* Foreign juniors snap up more mining exploration licences

* Bisha gold mine projected to start producing by late 2010

By Andrew Cawthorne

ASMARA, May 19 (Reuters) - Eritrea said on Tuesday eight more foreign firms had entered its mining sector with a clutch of new exploration licences in a nation seen on the cusp of a minerals boom that could motor its needy economy.

Alem Kibreab, director general of mines for the Energy and Mines Ministry, added the Horn of Africa nation's first and flagship project -- the Bisha mine -- should start producing gold by the third quarter of 2010.

"Despite its small size, Eritrea is going to be on the map of mining countries," he told Reuters, adding that reserves identified so far were only the "tip of the iceberg."

Foreign miners agree on the potential, but Eritrea insists the sector must be developed slowly and carefully to prevent the so-called "resources curse" where oil and minerals have spawned corruption and violence elsewhere in Africa.

A new round of licences awarded earlier this year had brought the total number of foreign companies exploring or about to explore in Eritrea to 14, Alem said.