According to the company, the agreed price of $253.5m will be settled from the after tax cash flows generated by the mine.

Enamco’s ownership interest will effectively pay for itself without a separate use of government funds.

A substantial portion of the cash generated by the Bisha mine that would otherwise be paid to Enamco will go to Nevsun until the purchase price is paid in full.

The balance is expected to be settled over a period of about two years, depending mainly upon future metals prices and output from the mine, Nevsun said.

The Bisha Project is a large precious and base metal-rich volcanogenic massive sulphide deposit located about 150km west of Asmara, Eritrea.