From: Biniam Haile \(SWE\) (eritrea.lave@comhem.se)
Date: Thu Jul 16 2009 - 18:31:15 EDT
Bisha Project Financial Close
July 16, 2009
http://www.nevsun.com/news/index.php?
<http://www.nevsun.com/news/index.php?&content_id=77> &content_id=77
Nehttp://www.nevsun.com/news/index.php?&content_id=77vsun Resources
Ltd., (NSU-TSX/NYSE AMEX) is very pleased to announce the financial
closing of debt facilities totaling $235 million for its Bisha
gold-silver-copper-zinc Project in Eritrea (the "Project"). All amounts
are expressed in United States dollars.
A debt package totaling $235 million has been arranged for Bisha Mining
Share Company ("BMSC") to complete its funding arrangements to develop
the Project. The debt package is a mix of senior and subordinated
loans from a lending group comprised of seven institutions ("Lenders")
from Europe and South Africa. The arrangements include an available
cost over-run facility of $30 million that will be in addition to a
contingency allowance of $32 million in the Project Cost Budget
("Budget").
The Project is now more than one third completed, and the forecast cost
to complete remains on Budget.
CEO, Cliff Davis, stated "It is a tribute to the strength and quality of
the Project and the support of the country that even during difficult
financial markets we have managed to arrange a significant debt package
to fully complete Eritrea's first modern day major mining project. This
accomplishment has been a collaborative effort between Nevsun and our
partner, the Eritrean National Mining Corporation, our current and past
staff and advisors and ultimately only made possible through the support
of the governments of Eritrea, Germany and South Africa. We naturally
also thank the Lenders for their contribution to make this happen and
look forward to their continued support."
Summary of Estimated Project Costs and Funding:
Pre production costs:
Historic property related costs
$29
million
(exploration, pre-development, etc)
Pre production project costs
220
million
Contingency allowance
32
million
Cost overrun allowance
30
million
(management does not expect to incur)
Pre production finance costs
44
million
(includes interest, fees and a small hedge per below)
$355
million
Funded by:
Nevsun and State of Eritrea
$120
million
Senior debt
125
million
Subordinated debt
80
million
Senior cost overrun
30
million
(management does not expect to utilize)
$355
million
Utilization of the debt facilities is expected in the next few weeks
after certain conditions are met, including the registration of
security, final letters from governments and final insurance
arrangements.
In connection with the debt facilities the Company is required to
establish a gold price protection programme in the unlikely event that
the price of gold falls below $700/oz. The programme is a purchase of
gold puts of 200,000 ounces for the first two years of production. This
ensures the Project benefits from not only the floor price of $700/oz,
but also 100% of all gold prices higher than $700/oz.
The debt facilities are secured by BMSC and all of its assets, as well
as by a completion guarantee from each of Nevsun and the Eritrean
National Mining Corporation, to their respective contributing interests.
Endeavour Financial is the Company's project finance advisor.
At recent metal prices, the Project is expected to generate enough cash
in the first two and a half years to repay all debt facilities, as well
as fund the copper phase mine expansion. The projected operating cash
costs for gold production are estimated to be less than $230/oz,
including royalties. The after tax internal rate of return of the
Project, using recent metal prices and including the cost of finance, is
approximately 54%.
The mine is expected to start producing gold in Q3 2010. A recent update
on the Project itself can be found in the Company's Q1 MD&A and news
release dated May 13, 2009. Photographs of progress can be found on the
Nevsun web site at - http://www.nevsun.com/properties/photo_gallery/.
The Company looks forward to progressing Bisha through to production
with the continued full support of the Eritrean Government.
Forward Looking Statements: The above contains forward-looking
statements concerning Eritrean government support, production schedule,
details of the debt package and payback time, operating costs and costs
to project completion, metals price projections and assumptions.
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"
Cliff T. Davis
President & Chief Executive Officer
For further information, Contact:
John Clarke
(604) 623-4700
1-888-600-2200
e-mail: nevsuninfo@nevsun.com
Website: www.nevsun.com
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