Friday, October 31, 2008

Nevsun secures $89m for Eritrea project from SA's IDC

By: Liezel Hill - Published on 30th October 2008 - TORONTO (miningweekly.com)

South African development finance institution, the Industrial Development Corporation (IDC) will put up $89-million in debt funding for the development of Nevsun's Bisha gold project, in Eritrea, the Vancouver-based firm announced on Thursday.

The IDC, which has been appointed lead banker for the $250-million project, has approved an $89-million limited recourse line of senior and subordinated debt for Bisha.

A number of other potential lenders have also submitted indicated terms for the remaining funding needed for the project, and the proposals are currently being evaluated.

The Bisha project will produce an average of 431 000 oz/y of gold and 702 000 oz/y of silver in the first two years of production, and copper and zinc output will begin in years three and six respectively.

If all goes to plan, targeted commissioning will get under way in the first quarter of 2010, with first production scheduled for the second quarter of the same year, Nevsun said.

The company was receiving “strong support” from the government of Eritrea, which also continued to fund its share of expenditures.

Nevsun was ordered by the Eritrean government to halt exploration at Bisha in 2004 and then allowed to resume operations in the country in early 2005, after agreeing to allow the government to buy a 30% interest in the project, on top of the free 10% interest it receives according to the country's law.