QKR Corporation, a mining fund backed by Qatar’s sovereign wealth fund and Poland’s richest man Jan Kulczyk, has held discussions on a possible $1bn bid for Canada’s Nevsun Resources, which owns 60% of the Bisha gold, copper and zinc mine in Eritrea in East Africa.

Such an agreement would represent the second acquisition in recent months by QKR after it conducted a $110m purchase of AngloGold Ashanti’s Navachab mine in Namibia in July, as the fund seeks assets closely linked to production or companies struggling with their finance.

QKR is headed by Lloyd Pengilly, the former JPMorgan Chase & Co. metals and mining chair, Andre Liebenberg, formerly the CFO for BHP Billiton’s Energy Coal Division and Diamonds, and David Munro, a former director of Kazakhmys and CEO of the RMC Group.

Nevsun has remained tight-lipped about proceedings, but has failed to dissuade a fervent bout of market speculation that initially saw the company’s stock leap by 25% prior to its statement, closing at $4.71 on 21 November — representing a company valuation of roughly $940m.

However, even this figure sits 28% lower than the share price of $6.52 in February 2012, when the company cuts its gold production forecast by half to 5,500-6,000kg.

The Bisha mine, which works a deposit of gold oxide above layers of copper and zinc stopped producing gold altogether last year, but Nevsun now plans to expand into copper and zinc.

It predicts a production of 80,000-90,000 tonnes of copper this year and the start its first production of zinc at the Bisha site, located 150km west of Asmara, from the beginning of 2016.

Nevsun reported sales of $416.3m and a profit of $71.5m for the first nine months of 2014, producing 65,100 tonnes of copper in concentrate with a working capital of $519m, including $380m of cash and $113m in current receivables.

The company is looking to generate a free cash flow of $120m this year after tax and capital expenditure, CEO Cliff Davis revealed in October.

At QKR’s end, the Navachab mine is located in central Namibia, near the town of Karibib 170km northwest of the capital Windhoek. The open-pit operation began in 1989 and produced 1,786kg of doré gold in 2013, with 53,864kg of ore reserves and 110,563kg of mineral reserves as of December.