From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Fri Jan 29 2010 - 06:00:45 EST
IDC remains committed to funding Eritrea gold/copper/zinc project despite UN
sanctions
Mining Weekly
By: Loni Prinsloo
29th January 2010
South Africa's State-owned Industrial Development Corporation (IDC) has
reaffirmed its commitment to providing $89-million in project debt
facilities for the Bisha gold project, in Eritrea, despite the imposition of
a number of sanctions on the Eritrea government.
Head of the IDC's mining and beneficiation strategic business unit Abel
Malinga tells Mining Weekly that the corporation does not expect the
sanctions to influence the project at all.
"As I understand it, the sanctions include an arms embargo, travel bans and
asset freezes. They do not target the interests of mining companies
operating in Eritrea or the develop- ment of mining projects in the
country."
Canada's Nevsun Resources head of the Bisha project Stanley Rogers backs
this statement, saying that there has been no slowdown whatsoever since the
announcement and that the momentum of the project has continued. "I do not
expect anything to change with respect to the Bisha project. Our production
start date remains the same.
"For investors, the international price of gold is a more decisive factor
than sanc-tions imposed on a single country," he comments.
In July 2009, Nevsun signed extensive loan documentation with South Africa's
IDC and a group of European lenders for the funding of the Bisha project.
Currently, the company is still waiting for European lenders to also
reconfirm their commitment on the balance of the facilities agreed to at
that time.
Malinga says that the IDC decided to sponsor the project owing to the fact
that more than 60% of goods and services supplied to the project will be
coming from South Africa.
"Before the IDC makes a commitment to funding a project outside South
African borders, we ensure that at least 50% of the goods and services will
be derived from South Africa."
The IDC will provide funding in a one-off payment.
Bisha is Eritrea's most advanced mining project. Its 27-million tons of ore
is believed to contain one-million ounces of gold, 700-million pounds to
800-million pounds of copper and one-billion pounds of zinc. Pro-duction is
expected by the end of the year.
Before sanctions were imposed in Dec-ember 2009, Nevsun spent a record
$21,7-million on its Bisha project in the third quarter of 2009.
Meanwhile, Nevsun Resources has reached a significant milestone in the
construction of its flagship Bisha project with the delivery of major
equipment to the site in Eritrea.
By the end of December 2009, the company had received delivery of the semi-
autogenous mill, the ball mill and the primary crusher. Installation of the
mills and crusher has started.
Nevsun president and CEO Cliff Davis says that the installation of the mills
forms the critical path activity and their timely arrival maintains the
development time-line. The project continues to be on track for operation in
late 2010.
The Bisha project is a high-grade gold/-copper/zinc volcanogenic massive
sulphide deposit discovered in 2003, brought to feasibility in late 2006 and
that began its official development stage at the start of 2009.
The project is positioned to become the first modern-day mine in this
north-eastern African country, with yearly production projected to return
payable metals of 1,06-million ounces of gold, 9,4-million ounces of silver,
734-million pounds of copper and 1 075-million pounds of zinc.
At current metal prices, the project is expected to generate enough cash in
the first two-and-a-half years to repay all debt facilities, in addition to
further mine expansion. The Bisha mine will be a low-cost gold producer for
the first two years and a low-cost, high-grade copper and zinc producer for
the remaining ten-year mine life. Further, resource potential exists at
depth and from nearby discoveries within the company's licence areas.
The project has the strong support of the government of Eritrea, which has a
40% ownership stake in the project company. "Nevsun looks forward to a very
productive year in 2010," concludes Davis.
ABEL MALINGA<br />
The sanctions do not target the interests of mining companies
ABEL MALINGA The sanctions do not target the interests of mining companies
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