From: Biniam Haile \(SWE\) (eritrea.lave@comhem.se)
Date: Tue Mar 31 2009 - 09:10:19 EST
Nevsun Resources Ltd.: Bisha Update and Annual Financial Results
By: Marketwire .
Mar. 30, 2009 05:02 PM
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/30/09 -- Nevsun
Resources Ltd. (TSX: NSU)(NYSE Alternext US: NSU)(NYSE Amex: NSU.A)
wishes to announce its recent financial position and its annual results
for 2008 as well as provide an update on the Bisha project. All amounts
are expressed in United States dollars.
The Company's current cash position at the end of March will be
approximately $30 million.
For the year ended December 31, 2008 the Company has reported a loss of
$5.7 million, net of income of $2.0 million from discontinued operations
in early 2008. The results compare to 2007 when the Company reported a
loss of $12 million, including $7.8 million from discontinued
operations.
Complete details of the 2008 financial statements and management's
discussion and analysis can be found on the Nevsun website at
www.nevsun.com as well as on Sedar at www.sedar.com and EDGAR at
http://www.sec.gov/edgar/searchedgar/webusers.htm.
BISHA UPDATE
The Bisha Project is a World Class gold/copper/zinc deposit in Eritrea.
It benefits from the continued support of the local Eritrea Government
and, despite the "credit crunch", Nevsun is in the process of arranging,
with a reputable lending group, the necessary additional finance for the
Bisha development. The project continues to be on budget. Production is
scheduled for mid 2010.
Bisha Mining Share Company (BMSC), the project company, had, as of
December 31, spent, ordered or arranged approximately $80 million of the
$250 million project cost. Funding to date has been provided by Nevsun
and ENAMCO; the Eritrean National Mining Corporation. ENAMCO is a 40%
owner, contributing 1/3 of the equity requirements. Finance costs will
be in addition to the $250 million project costs.
1. Completion of debt finance. The lending group for the project debt
has been actively dealing with the documentation and normal legal, due
diligence and documentation arrangements. While not absolutely assured
until all approvals and documentation is completed, the planned debt
package will be a mix of senior and subordinated debt coming from a
number of development agencies and commercial banks from Europe and
South Africa. The completion of debt facilities will take place during
Q2 and is expected to total $240 million, including a cost over-run
facility of $30 million. The robust nature of the Bisha Project will
likely result in a fairly quick payback, depending upon the price of
gold. For example, assuming a gold price of $900 per ounce, debt payback
is expected to be less than 2 years. Operating costs for the gold phase
is projected at approximately $200/oz. Endeavour Financial is the
project finance advisor.
2. Construction. Photographs of the progress at site can be found on the
Company website - http://www.nevsun.com/properties/photo_gallery/.
Preparatory work, equipment orders and delivery are continuing. The
project detailed design work is virtually complete and orders have been
placed with terms secured for a substantial portion of the project. The
early order strategy was followed so as to ensure capex costs were
controlled. As a result of exchange rates favorable to the project, as
well as the early order strategy, the Company remains confident that the
Project can be completed within the previously issued capex estimate of
approximately $250 million, excluding cost of finance. The Company
continues to build its team of personnel in Eritrea from available
skills in country and from abroad.
Bisha Milestones Achieved
January 2008 Mining license granted
February 2008 Orders placed for critical equipment (long lead
items,
ball and SAG mills)
August 2008 Contractor mobilized to site; site clearing and heavy
earth moving started
Sept 2008 Construction camp for 400 people advanced
October 2008 $89 million debt finance commitment received from
Industrial Development Corporation of South Africa,
as
part of the project finance consortium, subject to
completion of all debt facilities referred to above
March 2009 Over 500,000 accident free hours on Bisha site since
start of construction
Bisha Project Economics
High returns and quick capital payback highlight the economic strength
of the Project. Low site operating costs throughout the projected mine
life result in Bisha being particularly robust and the strengthening of
the US dollar will also improve the economics further regarding both
capital and operating costs. Due to the volatility in metals prices over
recent months, management presents below two projections using different
metals prices. Both cases are prior to the cost of the project debt
finance that is currently being arranged.
------------------------------------------------------------------------
---
Lower metals prices(1) Higher metals
prices(1)
------------------------------------------------------------------------
---
Rate of return (IRR) 35%
47%
------------------------------------------------------------------------
---
Net cash flow (after tax) $560 million $856
million
------------------------------------------------------------------------
---
Payback 2.4 years 2.0
years
------------------------------------------------------------------------
---
(1) Assumptions Lower metals prices - Au $750/oz, Cu $1.70/lb,
Zn $0.60/lb, Ag $10/oz
Higher metals prices - Au $900/oz, Cu $2.00/lb,
Zn $0.70/lb, Ag $12/oz
Preproduction capex - $250 million (June 2008,
including
$32 million contingency)
The Company looks forward to progressing Bisha through to production
with the continued full support of the Eritrean Government.
Forward Looking Statements: The above contains forward-looking
statements concerning Eritrean government support, production schedule,
details of the planned debt package, completion date of debt facilities
and payback time, operating costs and costs to project completion,
metals price projections and assumptions. Forward-looking statements are
frequently, but not always, identified by words such as "expects",
"anticipates", "believes", "intends", "estimates", "potential",
"possible" and similar expressions, or statements that events,
conditions or results "will", "may", "could" or "should" occur or be
achieved. Forward-looking statements are statements about the future and
are inherently uncertain, and actual achievements of the Company or
other future events or conditions may differ materially from those
reflected in the forward-looking statements due to a variety of risks,
uncertainties and other factors, including, without limitation, those
described in the Management Discussion and Analysis of the Company. The
Company's forward-looking statements are based on the beliefs,
expectations and opinions of management on the date the statements are
made and the Company assumes no obligation to update such
forward-looking statements in the future. For the reasons set forth
above, investors should not place undue reliance on forward-looking
statements.
NEVSUN RESOURCES LTD.
Cliff T. Davis, President & Chief Executive Officer
Contacts:
Nevsun Resources Ltd.
John Clarke
(604) 623-4700 or 1-888-600-2200
Email: nevsuninfo@nevsun.com
Website: www.nevsun.com
http://br.sys-con.com/node/898902
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