Nevsun Resources, the rapidly growing mineral producer currently focused on aggressively expanding its resource base in and around its massive Bisha Mine Project in Eritrea, East Africa, reported finalization of arrangements with the State over purchase of 30% of the mine by Enamco (the Eritrean National Mining Corporation).
President of NSU, Cliff Davis, commented on how excellent a partner Enamco has been in Bisha thus far, contributing significant financial and logistical support, ultimately culminating in this latest deal which has an agreed-upon price tag of $253M. The payment is slated to be settled via after tax cash flow from the Bisha mine, which is projected to produce some 1.14M oz Au, 11.9M oz Ag, 821M pounds of copper and in excess of a billion pounds of zinc.
A particularly good deal for Eritrea, as Enamco’s ownership interest will cover the cost without additional government funds, with the balance expected to be settled within the first two years of operation when the mine’s profile will be yielding large outputs of gold at a low cost. Given the profile of the mine, it will emerge after around two years of robust precious metals production, to become more focused on solid high-grade copper and zinc.
The purchase price was arrived at by mutually appointed and independent international institutions, having been based upon the 2007 shareholder agreement valuations and resolved as a determination process between NSU and Enamco’s proxies.
A formula has been agreed upon; whereby a large chunk of the cash generated by Bisha, which would otherwise be paid to Enamco, will be go to NSU until the purchase price is paid in full.
Davis went on to extol the Eritrean government’s initiative to embrace mineral development and hailed this as a prime example. Citing the vast logistical support from the government’s various Ministries in the run up to this point at Bisha, Davis argued that Eretria is quickly shaping up to be a global hotspot for mineral development, where “direct economic benefits, skill enhancement and supply chain expansion” are contributing to a perfect storm of enticements for international investment capital.
NSU is in a prime position to deliver high value to shareholders as precious metals, and minerals in general continue to trounce expectations. With gold and silver generating incredible momentum amid long-term sovereign debt concerns, NSU is another one of those small, dynamic mineral developers poised for huge success.
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