China Construction Bank provides $870 million loan for Zijin Mining to acquire 55% ownership stake in Bisha Mine (Linked to Project ID#56386, #73371, and #89502)

On October 26, 2007, the state-owned Eritrean National Mining Corporation (ENAMCO) announced that an ownership agreement for the Bisha Gold Mine had been reached with Nevsun Resources Ltd. (“Nevsun”). Under the terms of the agreement, ENAMCO agreed to purchase a 30% ownership stake in the Bisha Mining Share Company (BMSC) from Nevsun Resources Ltd., which with the Government of Eritrea’s 10% free carried interest brought ENAMCO’s total ownership stake in BMSC to 40%. Then, in November 2007, China Eximbank issued an $80 million commercial loan to the Government of Eritrea for Phase 1 of Bisha Gold Mine Project. The proceeds of this loan were use to partially fund ENAMCO’s acquisition of a 30% ownership interest in the Bisha Gold Mine. Then, on July 12, 2010, China Eximbank issued a $60 million follow-on loan to the Government of Eritrea for Phase 2 of the Bisha Gold Mine Project. The loan agreement for Phase 2 was signed by China Eximbank President Li Ruogu and the Eritrean Minister of Finance Berhane Abrehe It is unknown how the proceeds of this loan were used. The China Eximbank loan for Phase 1 is captured in Project ID#56386 and the China Eximbank loan for Phase 2 is captured in Project ID#73371. Construction of the mine began in September 2008 and was completed by 2010. The mine began the commercial production of gold in February 22, 2011, which allowed for an early payback of gold phase capital and allowed for complete funding of both the copper and zinc phase expansions. Then, the mine transitioned from gold production to copper production in late H2 2013 and commenced commercial production of copper in December 2013 and commercial production of zinc in October 2016 following the completion of the zinc expansion project. Then, on August 31, 2018, China Construction Bank Corporation (“CCBC”) issued a binding commitment letter in which it agreed to fully underwrite a $870,000,000 (approximately C$1.1 billion) loan to Gold Mountains (H.K.) International Mining Company Limited — a wholly-owned subsidiary of Zijin Mining — to facilitate the acquisition of a 55% ownership stake in Nevsun Resources Ltd. (captured via Project ID#89500). This loan carried a 5-year maturity and an interest rate of LIBOR plus an unknown margin. Bank of China Limited also committed to provide a credit facility worth up to $660,000,000 (approximately C$834 million) to Zijin Mining to facilitate the acquisition of a 55% ownership stake in Nevsun Resources Ltd (captured via Project ID#89502). Zijin Mining intended to repay all borrowings under the Bank of China loan facility and CCBC loan facility using cash flows from its operations and existing cash on hand. The two principal properties of Nevsun Resources Ltd. were the Timok Project in Serbia, which hosts the copper-gold Cukaru Peki deposit on the Brestovac-Metovnica exploration permit, and the Bisha Project in Eritrea, which hosts the copper-zinc-gold Bisha deposit and includes potential satellite VMS deposits at Harena, Northwest, Hambok and Asheli. Zijin Mining successfully completed its acquisition of a 55% ownership stake in BMSC in September 2018.

Additional details

1. Nevsun Resources Ltd. was incorporated under the laws of the Province of British Columbia under the Companies Act (British Columbia) on July 19, 1965 under the name “Hogan Mines Ltd.” Since then, it has undergone four name changes, the last of which occurred on December 19, 1991 when it adopted its current name (Nevsun Resources Ltd.). Nevsun Resources Ltd.’s head office is located at 1750 - 1066 West Hastings Street, Vancouver, British Columbia, V6E 3X1 and its registered and records office is located at 2600 - 595 Burrard Street, Vancouver, British Columbia, V7X 1L3. 2. On August 8, 2018 (Beijing Time), Zijin Mining issued a takeover offer proposal to Nevsun. After friendly negotiations between the two parties, Nevsun’s board of directors (“Nevsun’s Board”) consented to support the takeover offer. On September 5, 2018 (Beijing Time), Zijin Mining entered into the Pre-Acquisition Agreement with Nevsun and a Lock-up Agreement with Nevsun’s directors and executive officers. Zijin Mining proposed to make an all cash takeover to acquire all of the Nevsun’s issued common shares which was approximately 302,592,672 common shares (of which, 3,197,191 Nevsun’s common shares were held by Zijin Global Fund, which were managed by a subsidiary of Zijin Mining) and any other common shares that were issued after the date of the offer (including any but prior to the expiry time). The offer price represented a premium of 21% over the closing price of the Nevsun’s common shares on the previous trading day. The total amount of the consideration was approximately CAD $1,839,016,284 (based on the current number of issued common shares and options of Nevsun, assuming all of the options are exercised; excluding the common shares held by Zijin Global Fund), approximately equivalent to RMB 9,530,150,187 or $1.39 billion. 3. On April 30, 2019, Nevsun Resources (Eritrea) Ltd. (“Nevsun Eritrea”), a subsidiary of Nevsun Resources Ltd., entered into an equity transfer agreement with Eritrean National Mining Corporation and Bisha Mining Share Company (BMSC). Nevsun Eritrea transferred its 5% equity interest in Bisha to Eritrean National Mining Corporation at a consideration of $10 million. The registration change of this equity transfer was completed on May 30, 2019. Nevsun Resources Ltd. subsequently owned a 55% equity interest in BMSC through Nevsun Eritrea, while Eritrean National Mining Corporation owned a 45% equity interest in BMSC.

Number of official sources

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