TWST: We like to begin with a brief historical sketch of Nevsun Resources and a picture of the things that you are doing right now.
Mr. Clarke: Nevsun Resources is a gold mining company with a strong gold and base metal portfolio. Our operations are in Africa. We have a small mine, the Tabakoto Gold Mine, that we brought into operation last year in Mali. Tabakoto is a 70,000 or 80,000 ounce a year producer. But the biggest asset in the portfolio and the biggest driver for taking this company forward is the Bisha discovery in Eritrea. Bisha will start as a gold mine for the first two years, producing about 450,000 ounces a year and then it becomes a long-term copper and zinc producer. The Bisha project has a very quick payback at today's metal prices - it is our job to make sure it makes this company.
TWST: What is your plan for Eritrea?
Mr. Clarke: Our plan for Eritrea is to take the Bisha project into production. The mine will produce 450,000 ounces a year at US$150 per ounce for its first two years of production, and then it will be producing copper and zinc. At current metal prices, we expect approximately $200 million in free cash per year after tax and royalties for the project.
TWST: What about the political situation in Eritrea?
Mr. Clarke: That's a very interesting question, because we get strong support from the government there. They are trying hard to sort out our mining license. We have a drag on our company share price at the moment. With such a strong asset, why should we have a drag? It is because we are waiting for the issuing of a mining license. We were expecting to get it a couple of months ago, but the government is sorting out its own issues of capacity and very necessary bureaucracy. I am saying bureaucracy in a very positive sense there. Everybody takes a part in the decision. It is a very important decision and has to be done properly. As far as politics is concerned, Eritrea is quite a nice country to do business in. It is underexplored because of its colonial past. The government is concentrating on building the nation as well as putting in infrastructure and housing. I have never seen a third world country as intent on using its funds for road building, power and water to the villages around the major cities and building houses for people. It is what the government should be involved in, but we rarely see that. So it is actually a comfortable place to do business, but it is not the image that you would hear in every newspaper report of Eritrea. It is a small country on the Horn of Africa. It is a very peaceful, comfortable place to do work.
TWST: Would you sketch out your timetable as you look out over the next two to three years?
Mr. Clarke: In Mali, I am pretty optimistic about where gold prices are going to go. I think gold prices will help us a lot in Mali. The really good news is Eritrea. As soon as we get our mining license, we will be able to organize financing for the building of the Bisha project in Eritrea. It is a $200 million project with a payback at the current gold price of the order of 1.3 or 1.4. It will take us about two years to build the Bisha Mine. We are already well ahead with the planning for starting the engineering design. We've also had all the necessary discussions with our long lead item suppliers -the mills, the mill motors and the crushers. With financing in place we could push those ahead faster, which would take us into production mid-2009.
TWST: What would be the two or three best reasons for the long-term investor to look very closely at Nevsun Resources?
Mr. Clarke: We are undervalued because we are in a bit of a waiting game. The wait isn't going to take much longer. So we have a short-term gain from getting the mining license, re-asserting our current share price and going out for Bisha mine construction financing. A successful financing will provide a second lift to our share price. Our shareholders after that will benefit from any positive movements in metal prices in general. We are well positioned with a very strong project. Gold production at Bisha will pay for the initial capital for the project and the copper and zinc will provide cash flow and growth going forward.
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