TORONTO (miningweekly.com) – Nevsun Resources, which owns the Bisha gold mine in Eritrea, on Tuesday said the East African country’s government had agreed to pay $253.5-million for its 30% stake in the operation.

The State will settle the amount, which two independent international institutions helped determine, with after-tax cash flows from the mine.

TSX- and NYSE-listed Nevsun said that the price was not indicative of the fair market value of Bisha, but rather the outcome of the price determination process first defined in a 2007 shareholder agreement, based on the Bisha deposit at that time.

Nevsun had previously said the price would be decided by June 30.

Enamco, the Eritrean State-owned miner, would likely have settled the amount within two years, depending on metals prices.

“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, the Ministry of Finance and various other Ministries,” Nevsun CEO Cliff Davis said in a statement.

“By collaborating with international companies, Eritrea is developing a mining industry that provides direct economic benefits, skill enhancement and supply chain expansion.”

In addition to the 30%, Enamco has a 10% free carry stake in Bisha, giving it a total 40% ownership.

Bisha produced 93 000 oz of gold in the second quarter this year, generating an after-tax net profit of $60.6-million for Nevsun.

The company closed 5% lower on the TSX at C$6.49 a share, in line with a broader correction in gold equities after the precious metal retreated from its record highs of the day before to around $1 830/oz.
 

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