Bisha

ASMARA, Nov 19 (Reuters) – Canada’s Nevsun Resources pumped $21.7 million during the third quarter into its Eritrean Bisha project, the project’s general manager said on Thursday.

Set to become the nation’s first producing mine, Bisha’s 27 million tonnes of ore is believed to contain 1 million ounces of gold, 700-800 million pounds of copper and 1 billion pounds of zinc.

Apart from small-scale artisanal mining and some minor extraction by Italians during the colonial era, Eritrea’s mining potential is largely unexploited.

“We are by far the most advanced project in the country. November 2010 is the big drive for gold production,” Stanley Rogers, Bisha general manager, told Reuters.

In the last quarter we increased spending to a new high and doubled the number of people we have on site to 400. This is inevitable as we near production,” he said.

Actual expenditure on the Bisha project so far is $93 million, with a current budget of $250 million. It is on track and roughly half way through development,” Rogers said.

The Bisha mine, which lies to the west of the capital Asmara toward the border with Sudan, was the first mine to operate in Eritrea for 70 years, Rogers said.

“We were the first to build a relationship with the government, which paved the way for other companies to follow us,” he added.

The Eritrean government has a 40 percent stake in the project.

There are more than a dozen foreign companies exploring in Eritrea, with licenses held by groups from Australia, Canada, China, Libya and the United Kingdom.

Market Call Tonight

During the BNN program Market Call Tonight, the editor of Exploration Insight Brent Cook gave a comprehensive overview on “Junior Mining Stocks and Commodities” by answering questions of current and potential investors in mining shares.

According to Brent Cook big mining investments should be avoided in countries such as Russia, Mongolia, Venezuela and Ecuador due to the high risk of instability and corruption. He mentioned, for example that exploration projects with Russian ownership could be a very risky investment due to the involvement of the Russian Mafia.

However, he believes that places such as Canada, Mexico, Latin America, Angola and Eritrea are countries that are good to invest in due to the reliable actions taken by the governments in recent years. In respect to Eritrea he says, “I would definitely put money in Eritrea, I have been there a couple of times and talked to the government and they are under control“.

One viewer and investor asked Brent Cook on his thoughts about Nevsun Resources and their mining business in Eritrea. His reply was that the Bisha Mine is a fantastic deposit with a high grade gold cap they will mine and make a lot of money. He underlines that Nevsun Resoureces is a good company with a good deposit in a good country, which has its financing completed.

Brent Cook’s view can be supported by other analysts who say that 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 10 year mine life. Further resource potential exists at depth and from nearby discoveries within the Company’s licensed areas.

For the next 12 months experts believe that the share price of Nevsun could go up to $2.56 or even $3.50, although Brent Cook thinks that the share price will be in the range of $2.50 in the next 12 months.

Watch the program with Brent Cook here:  BNN Market Call Tonight.

Brent Cook is an independent exploration analyst and advisor. He currently serves on the Advisory Board of several junior exploration companies and acts as a consultant to several institutional investors. Brent Cook produces the weekly investment newsletter Exploration Insights. For more information on Brent’s letter please visit www.exporationinsights.com