Blood Money

U.S. should deter foreign mining in Eritrea-report

* Accuses Eritrea of religious freedom abuses

* Calls for hardening of U.S. policy

* Eritrea denies abuses, foreign miners reject call

Some 16 foreign mining companies are operating in the Red Sea state. Canada's Nevsun Resources Ltd <NSU.TO> is expected to be the first to start producing gold later this year, followed some 12 months later by Australia's Chalice Gold Mines <CHN.AX>.

No U.S.-based mining company is operating in the country but analysts say an aggressive stance in Washington would heap pressure on Australia and Canada among others to follow suit.

"The U.S. government should ... prohibit any foreign company's raising capital or listing its securities in the United States while engaged in developing Eritrea's mineral resources," USCIRF said in its report released this month.

The government-funded commission was set up under the 1998 International Religious Freedom Act to give independent advice to the White House and Congress and make policy suggestions.

Poor Eritreans increasingly joining gold rush

More than a dozen foreign mining firms are now working in Eritrea, but poor villagers in the Red Sea state's remote lowlands are also increasingly using their bare hands to claim some of the riches.

National service is mandatory for young Eritreans, and when someone will be granted "demobilization" is often unknown. Some Eritreans spend most of their adult lives in national service, whether in the military, building roads or working in cafes.

Mining company officials say the groups of impoverished Eritreans who search for gold on their licences use primitive and often unconventional methods.

UN sanctions no deterrence for Eritrean mining-Bisha

ETHICAL DILEMMA?

Asmara is accused by the United Nations and others of fuelling the chaos in Somalia -- where 18,000 people have died in violence since the start of 2007 -- by sending funds and arms to rebel groups battling the UN-backed transitional government.

Sanctions include an arms embargo, travel bans and asset freezes. They do not target the interests of mining companies operating in Eritrea, where licenses are held by groups from Australia, Canada, China, Libya and the United Kingdom.

Nevsun Resources Ltd.: Bisha Debt Facilities Reconfirmed

Nevsun Resources Ltd. (NSU-TSX/AMEX) is pleased to advise that the Industrial Development Corporation Limited of South Africa (“IDC”) has re-confirmed its commitment to provide $89 million in project debt facilities to the Bisha project in Eritrea.  In July 2009 the Company signed extensive loan documentation with IDC and a group European lenders for the funding of the Bisha project via debt facilities.  The Company is waiting for European lenders to also reconfirm their commitment on the balance of the facilities agreed to at that time.

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