August 23, 2010 / 10:29 PM / in 7 years

UPDATE 1-Nevsun's royalty buyout in Africa mine to help results

* Buys out royalty stake in Africa mine for C$18.5 mln

* Increased stake to add at least $C0.20 per share

* Sees mine starting in Q4, commercial production in Q1

Aug 23 (Reuters) - Nevsun Resources (NSU.TO) (NSU.A) said it bought out a third party royalty on its flagship mine in the horn of Africa for C$18.5 million, and said the increased stake would add to earnings.

The royalty buy out of the Bisha project in Eritrea, whose government has a 40 percent interest in the project, is expected to add at least 20 Canadian cents a share to earnings, Nevsun said in a statement.

The 1.5 percent net smelter royalty on the gold, copper and zinc deposit was previously held by an arm’s length private company, Nevsun said.

The project continues on time and on budget and operations are expected to start in the fourth quarter, with commercial production before the end of the first quarter of 2011.

Shares of Nevsun, which have risen about 186 percent in the past year, closed at C$4.78 on the Toronto Stock Exchange. (Reporting by Savio D‘Souza in Bangalore; Editing by Vyas Mohan)

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