UPDATE 1-Eritrean turmoil weighs on Nevsun shares

* Nevsun stock tumbles more than 14 percent

TORONTO, Dec 24 (Reuters) - Nevsun Resources <NSU.TO> insisted on Thursday its Bisha gold project in Eritrea would proceed as planned despite United Nations sanctions against the African country.

Nevsun shares tumbled more than 14 percent following the sanctions, despite its assurances the U.N. actions -- including travel restrictions and asset freezes -- should not have any direct impact on the company or the project.

However, the Canadian miner could not say whether they would "indirectly" affect its Bisha debt facilities.

The company also said it is already in talks with the project's various stakeholders and is working on alternative financing sources. It said the project remains on track to start operations in late 2010.

Shares of Nevsun, which have risen some 300 percent in the past year, were off 7.5 percent at C$2.85 on the Toronto Stock Exchange on Thursday morning, after falling as much as 14.3 percent to C$2.64 earlier in the session.

The U.N. Security Council imposed the sanctions on Wednesday, saying Eritrea was aiding Islamist rebels trying to topple a fragile U.N.-backed transitional government in nearby Somalia. The sanctions also include an arms embargo. [nN23147693]

Eritrea has repeatedly denied the allegations.

The Bisha mine, in which the Eritrean government has a 40 percent stake, lies to the west of the capital Asmara, towards the border with Sudan.

Bisha's 27 million tonnes of ore is believed to contain 1 million ounces of gold, 700 million to 800 million pounds of copper and 1 billion pounds of zinc.

($1=$1.05 Canadian) (Reporting by Scott Anderson; editing by Rob Wilson)