From: Biniam Haile \(SWE\) (eritrea.lave@comhem.se)
Date: Wed Oct 29 2008 - 08:14:35 EST
Nevsun Resources Ltd.: Bisha Project-Finance and Economic and Project
Update
Thursday, October 30, 2008
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 30, 2008) - Nevsun
Resources Ltd., (TSX:NSU)(NYSE-A:NSU) ("Nevsun") is pleased to announce
that the Industrial Development Corporation of South Africa ("IDC") has
approved a US$89 million commitment to the development of the Company's
Bisha Project. Nevsun and the Eritrean National Mining Corporation
("ENAMCO") (collectively the "Sponsors") own the Project, located in the
Gash Barka District of Eritrea. IDC will be appointed as Lead Banker to
the Project.
IDC is a national development finance institution established to promote
economic growth and industrial development in South Africa. Its mandate
includes the rest of the Africa continent and it operates in a broad
spectrum of industries, with a primary objective to contribute to
balanced, sustainable economic growth in Africa.
PROJECT FINANCE
Endeavour Financial is the financial advisor for the Bisha Project.
Endeavour has been in active discussions with multiple potential lenders
in recent months. A condensed summary of recent finance related
activities is as follows:
June 2008 - revised capex and lenders financial model updated
July 2008 - lenders technical due diligence completed
- information memorandum for financing purposes distributed
to potential debt providers
August 2008 - site visit and country review by shortlist of potential
debt providers
September 2008 - follow-up meetings with potential debt providers
regarding terms of finance
October 2008 - initial lead banker selected and approval for US$89
million commitment - other potential debt providers in the
midst of their approval processes
The Sponsors are delighted to appoint IDC as lead banker for the
Project. IDC's Board of Directors has approved a US$89 million limited
recourse line of senior and subordinated debt for Bisha. Documentation
and fulfillment of normal conditions is expected to take place over the
coming few months.
A number of other potential lenders have submitted indicative terms for
the remaining funds required and the Sponsors are in the process of
evaluating these proposals. These additional lenders are at various
stages of internal approvals and the Sponsors will publicly release
details of the finance group once the entire group of lenders has been
established and commitments are in place.
In the mean time, the Project is advancing on plan using the cash
strength of the Sponsors. Based on the current finance plan, the
Sponsors have sufficient cash and lines of credit to fully finance the
Project. Nevsun does not expect to issue any additional equity.
PROJECT ECONOMICS
High returns and quick capital payback highlight the economic strength
of the Project. Low site operating costs throughout the projected mine
life result in Bisha being particularly robust, even at low metal prices
(1). The strengthening of the US dollar will improve the economics
further regarding both capital and operating costs.
Key Project Statistics (1)
IRR - 42% Payback
- 1.6 yearsLife of mine, net after tax cash flow - $440 million.
(1) Assumptions Low metals price case - Au $600, Cu $1.50, Zn
$0.50, Ag $8
Preproduction capex - Approx. $250 million (June
2008, including contingency)
GOVERNMENT SUPPORT
The Company continues to get strong support from the Government of
Eritrea, who continues to fund its pro-rata share of expenditures. The
Government clearly understands the benefits that a responsible mining
industry can bring to the country.
PROJECT UPDATE
Construction
Spring/summer 2008 - construction camp and facilities upgraded
August 2008 - SENET, the EPCM contractor, mobilized to site
- site clearance and heavy earth moving for plant
construction started
September/October 2008 - town site construction for 400 people well
advanced (25% complete)
Pictures of activity can be found on the Nevsun web site:
http://www.nevsun.com/bishaprojectdevelopment.html
Note that critical long lead items (such as ball and SAG mills) were
ordered in early 2008 for installation during late 2009 and equipment
pricing has been fixed.
Targeted commissioning is Q1 2010 and production in Q2 2010, all subject
to no delays in supply of materials or finance.
Nevsun looks forward to moving the Project to the next stage.
Forward Looking Statements: The above contains forward-looking
statements concerning the approved financing of the mine; current
finance plan, anticipated commitments, project economics, government
support, targeted commissioning and production schedule. Forward-looking
statements are frequently, but not always, identified by words such as
"expects", "anticipates", "believes", "intends", "estimates",
"potential", "possible" and similar expressions, or statements that
events, conditions or results "will", "may", "could" or "should" occur
or be achieved. Forward-looking statements are statements about the
future and are inherently uncertain, and actual achievements of the
Company or other future events or conditions may differ materially from
those reflected in the forward-looking statements due to a variety of
risks, uncertainties and other factors, including, without limitation,
those described in the Management Discussion and Analysis of the
Company. The Company's forward-looking statements are based on the
beliefs, expectations and opinions of management on the date the
statements are made and the Company assumes no obligation to update such
forward-looking statements in the future. For the reasons set forth
above, investors should not place undue reliance on forward-looking
statements.
NEVSUN RESOURCES LTD.
Cliff T. Davis, President & Chief Executive Officer
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