Cablegate: Gse Pays Nevsun 25 Million From Chinese Loan

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DE RUEHAE #0187 0941443
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FM AMEMBASSY ASMARA
TO RUEHC/SECSTATE WASHDC 9575
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UNCLAS ASMARA 000187

SIPDIS

SIPDIS

SENSITIVE

LONDON AND PARIS FOR AFRICA WATCHERS
DEPT FOR AF/E

E.O. 12958: N/A
TAGS: EMIN ECON PGOV ER
SUBJECT: GSE PAYS NEVSUN 25 MILLION FROM CHINESE LOAN

1. (SBU) The Government of the State of Eritrea (GSE) paid Nevsun
A $25 million down payment for purchasing a 30% stake in the Bisha
mining project, according to Nevsun and Bisha Mining Share Company
General Manager Stan Rogers (please protect). Rogers said the GSE
paid with a partial distribution from a $100 million loan from the
Chinese government.

2. (SBU) The GSE is also required to make monthly payments of
approximately $3 million to Nevsun until the mine is ready for
operations in 2010. The project will then be independently
appraised and the balance owed by the GSE recalculated; if the
project is valued at $1 billion, the GSE will owe Nevsun $300
million minus the amount paid to date. Rogers said the GSE is
already $4 million in arrears, apparently due to unknown Chinese
procedural hurdles delaying GSE access to the remaining $75
million.

3. (SBU) Rogers also said Nevsun originally offered the GSE an
additional free 10% stake in Bisha, in addition to the free 10%
required by Eritrean law, if the Eritreans agreed not to purchase
30% of the operation. Rogers said Nevsun made this offer in
anticipation of GSE difficulty in securing hard currency necessary
to make ongoing payments.
MCMULLEN

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