Nevsun Resources Ltd. (TSX:NSU / NYSE Amex:NSU) is pleased to announce that it has finalized its arrangements with the State of Eritrea regarding the purchase of 30% of the Bisha mine by the Eritrean National Mining Corporation (Enamco). The agreed price is US$253.5 million, which will be settled from the after tax cash flows generated by the Bisha mine.
The purchase price determination was subject to a process involving two independent international institutions that were mutually appointed by Nevsun and ENAMCO in January 2011. It should be noted that the purchase price is not indicative of the fair market value of Bisha but rather the outcome of a price determination process, defined in a 2007 shareholder agreement, based on parameters of the Bisha deposit as it was understood in 2007.
Enamco’s ownership interest will effectively pay for itself without a separate use of government funds.
A formula has been agreed whereby a substantial portion of the cash generated by the Bisha mine that would otherwise be paid to Enamco will go to Nevsun until the purchase price is paid in full. The balance is expected to be settled over a period of approximately 2 years, depending mainly upon future metals prices and output from the Bisha mine.
While the current mine life is approximately 13 years, management looks to increase the mine life as it continues to drill out additional mineralization in and around the Bisha mine.
Nevsun’s President Cliff Davis states,
Enamco has been an excellent partner in Bisha. The Government of Eritrea has significantly contributed to the project, both financially and through the board of directors of Bisha Mining Share Company, as well as through the support of the Ministry of Energy & Mines, Ministry of Finance and various other Ministries. By collaborating with international companies, Eritrea is developing a mining industry that provides direct economic benefits, skill enhancement and supply chain expansion. Through these cooperative efforts, sustainable development from the industry can positively impact the Eritrean economy for decades to come.”