Nevsun Gets US$235M Credit Approvals For Bisha

VANCOUVER — Nevsun Resources (NSU-T, NSU-X) appears to have cleared a major hurdle on the way to financing the Bisha poly-metallic project in Eritrea. Nevsun says lenders have given it all necessary credit approvals for the project’s US$235 million debt facilities.

The US$235 million includes US$32 million in contingency funds and a US$30-million cost-overrun facility.

Nevsun also reports that the project is a third complete and forecast to remain on budget.

Nevsun president and CEO Cliff Davis said in an email he preferred to wait to comment on the financing until after the company announces further news about the debt package in the coming weeks.

Nevsun says there are seven institutions from Europe and South Africa taking part in the debt package.

News of the approvals boosted Nevsun’s share price by 31% to $1.70 and also buoyed other explorers in Eritrea. Sunridge Gold (SGC-V, SGCNF-O), for example, which owns Emba Derho, the next most advanced exploration project in Eritrea after Bisha, received a 22% lift to 41¢.

Bisha, a 60-40 joint venture between Nevsun and the government of Eritrea’s state mining company Enamco, is expected to cost about US$250 million.

Nevsun expects Bisha to ramp up into production during the third quarter of 2010.

A feasibility study estimated that a open-pit mine at Bisha would have a 10-year mine life, an internal rate of return of 26% and a net present value of US$135 million. The scenario used conservative metal prices of US$435 per oz. gold and US$1.44 per lb. copper for the first five years, then US$1.28 per lb. copper, US57¢ per lb. zinc and US$6.50 per oz. silver.

The plan is to mine about 2 million tonnes of ore per year over 10 years to produce 1.06 million oz. gold, 749 million lbs. copper, 1.1 billion lbs. zinc and 9.4 million oz. silver.

The stratified deposit will see Nevsun mine a silver-gold oxidized zone first, then a copper-gold supergene zone and then a zinc-copper primary zone. The first two years of mining are expected to yield nearly half, or 431,000 oz., of the gold production.

Respectively, proven and probable reserves in the gold, copper and zinc zones stand at 4 million tonnes grading 7.99 grams gold and 32.85 grams silver per tonne; 6.4 million tonnes grading 4.4% copper, 0.83 gram gold and 35.98 grams silver; and 9.7 million tonnes grading 7.21% zinc, 1.14% copper, 0.76 gram gold and 54 grams silver.