An early Eritrean Christmas for Nevsun

Nevsun Resources‘ (NSU-T, NSU-X) latest deal with Eritrean government has it firmly on the road towards building the Bisha mine in the northeastern African country.

While the company still needs a mining license which it says the government has told it is imminent Nevsun has reached a mining agreement with the government.

The news helped to push Nevsun shares were up 10% or 20 to $2.18 on roughly 780,000 shares traded midday in Toronto on Dec. 12.

Nevsun says the agreement has all of the “normal provisions governing the future development and operations” for the project which includes assurances required by international financial institutions.

Back in late October the government signaled its support by buying into a 30% stake in the project. That stake came on top of the 10% free interest it already held by virtue of the country’s mining legislation.

The deal left Nevsun with a 60% interest and the government with a 40% stake in the Bisha Mining Share Company which will be responsible for developing the mine.

The government reiterated that support both by concluding the mining agreement and by giving the project a positive verbal endorsement.

“The success of the Bisha Mining Project has a special significance both for its economic benefits and trendsetting effects on the path of the industry we are very eager to develop in Eritrea,” said minister Tesfai Ghebreselassie on behalf of the government in a prepared statement. “I would like to reiterate our government’s commitment to do all within its means to assist Bisha Mining Share Company be a success story.”

The Bisha deposit is made up of three distinct layered zones and four major minerals. The 35 metre oxide zone is rich in gold and silver, while the 30 metres supergene zone beneath it is rich in copper, while beneath that the primary sulphide zone has both zinc and copper. Byproduct gold and silver are recoverable from both the supergene and primary ores.

In the oxide zone the deposit has 4 million tonnes grading 7.99 grams gold and 32.85 grams silver in the proven and probable categories.

The supergene zone has 6.3 million tonnes grading 4.4% copper, 0.83 grams gold and 35.98 grams silver in the proven and probable. And the primary sulphide zone has 9.7 million tonnes, grading 7.21% zinc, 1.14% copper, 0.76 grams gold and 54 grams silver in the proven and probable categories.

Processing will start with gold in the surface oxide zone being extracted by conventional cyanide leaching and then carbon-in-pulp processing with a copper flotation plant being built for ore in the supergene zone towards the end of the oxide zones mine life. As the supergene zone nears completion extra flotation equipment needed for zinc recovery from the primary ore will be commissioned.

That means gold and silver will be produced for the first two years, with copper concentrate production easing in during the second year and ramping up through years three to five, with zinc production coming on line in years six to ten.