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From: Biniam Tekle (biniamt@dehai.org)
Date: Mon Mar 28 2011 - 09:51:00 EST
http://www.nevsun.com/news/2011/march28/
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PRESS RELEASES 3/28/2011 5:06:32 AM
Nevsun Increases Mineable Reserves at Bisha by 40% Using Updated Metal
Prices
March 28, 2011 - 09:06:32 AM
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VANCOUVER, BRITISH COLUMBIA-- Nevsun Resources Ltd. (TSX:NSU)(NYSE Amex:NSU)
is pleased to announce the revised reserve estimate for its Bisha mine in
Eritrea. The revised estimate has increased the total proven and probable
reserves to 28.3 million tonnes from the previously reported 20.1 million
tonnes (2006 feasibility study). The net impact of higher throughputs and
lower cut-off grade has resulted in an extended mine life of 13 years, while
increasing previously reported robust cash flow.
Highlights
-- 40% increase in reserves, using $1,015/oz gold, $15.85/oz silver,
$2.40/lb copper, $0.92/lb zinc
-- 20% increase in ore throughput starting in 2013
-- Bisha 13 year undiscounted cash flow now totals $2,162,000,000 (1)
-- Upgrade does not include pit expansion at depth, hanging wall copper
zone or the Harena satellite deposit
(1) Bisha Project undiscounted cash flow was estimated using what Nevsun has
classified below as a medium metals price scenario, at $1,200/oz gold,
$24/oz silver, $3.30/lb copper and $1.00/lb zinc, all on an after-tax, after
expansion capex basis.
Mineral Resources, Effective Date: 01 January, 2011
Mineral resources for the project which are based on the same resource model
as the model used in the 2006 feasibility study, were re-estimated within an
optimized pit shell using a base-case gold price of $1,170/oz, silver price
of $18.20/oz, copper price of $2.76/lb, and zinc price of $1.05/lb, and
variable NSR cut-offs, based on oxidation state, and include:
Measured: 2,124 kt grading 2.72 g/t Au, 40.01 g/t Ag, 2.26% Cu, 2.07% Zn
Indicated: 27,726 kt grading 1.62 g/t Au, 38.79 g/t Ag, 1.53% Cu, 3.22% Zn
Inferred: 10,570 kt grading 0.67 g/t Au, 47.78 g/t Ag, 0.91% Cu, 5.67% Zn
Mineral resources that are not mineral reserves do not have demonstrated
economic viability.
Mineral Reserves, Effective Date: 01 January, 2011
---------------------------------------------------------------------------
Ore Au Ag Cu Zn
Ore Type (kt) (g/t) (g/t) (%) (%)
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Oxide
---------------------------------------------------------------------------
Proven 933 5.75 21.90
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Probable 3,719 7.39 31.48
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Combined (cut-off approx. 1.0 g/t(2)) 4,651 7.06 29.56
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Supergene
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Proven 844 0.80 43.47 4.92
---------------------------------------------------------------------------
Probable 6,537 0.77 31.29 3.77
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Combined (cut-off approx. 0.50 % Cu(2)) 7,382 0.78 32.68 3.90
---------------------------------------------------------------------------
Primary
---------------------------------------------------------------------------
Proven 521 0.78 52.51 0.91 8.09
---------------------------------------------------------------------------
Probable 15,759 0.72 44.12 0.97 5.31
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Combined (cut-off approx. 0.75 % Zn(2)) 16,279 0.72 44.40 0.97 5.40
===========================================================================
Total Proven 2,298 2.80 36.77 2.07 1.98
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Total Probable 26,015 1.69 39.09 1.55 3.26
===========================================================================
Total Combined 28,313 1.78 38.90 1.60 3.15
===========================================================================
(2) Cut-off is based on NSR, Oxide = $29.03/t, Supergene = $26.57/t,
Primary = $26.68/t, cut-off grade values shown above are approximate and
may be affected by other metal values in the deposit.
The above reserves do not include the recent results of the nearby Harena
deposit (refer to news release dated March 2, 2011). Nevsun expects
continued growth of the Bisha resources as a result of ongoing drill
programs designed to define the low-grade hanging wall copper zone, as well
as infill drilling below the current pit limits in order to raise the
confidence of the inferred resources and bring them into the indicated
category, all anticipated for use in a second reserve re-statement due in Q4
2011.
Starting with the copper production phase in 2013, the Company plans to
increase throughput by 20%. The engineering for the copper phase expansion
is nearing completion of a detailed design for constructing the copper
flotation circuits taking into account this planned increase. Construction
of the copper phase is planned to start later this year.
Mine life is extended as a result of increased reserves and the waste-to-ore
strip ratio increases slightly to 4.2:1. Together with the impact of
increased throughput, the estimated life of mine is now 13 years, excluding
any potential extensions that may result from current drill programs
designed to further expand resources.
Reserves Methodology
The mineral reserves were estimated within an ultimate pit design using a
gold price of $1,015/oz, silver at $15.85/oz, copper at $2.40/lb, and zinc
at $0.92/lb. Metallurgical recoveries by ore type are 87% Au and 36% Ag for
oxide mineralization reporting to dore, 56% Au, 54% Ag and 88% Cu for
supergene mineralization reporting to Cu concentrate, 36% Au, 29% Ag and 85%
Cu for primary copper mineralization reporting to copper concentrate, and 9%
Au, 20% Ag and 83.5% Zn for primary zinc mineralization reporting to zinc
concentrate.
AMEC Americas Limited completed the revised reserve estimate. A NI43-101
report is being filed today on SEDAR.
Production Profile
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Years 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
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Oxide Supergene Primary
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Oxide Processing
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Gold 919,000 oz 90,000 oz 127,000 oz
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Silver 1,580,000 oz 3,370,000 oz 6,914,000 oz
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Sulphide Processing
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Copper 538,000,000 lbs 283,000,000 lbs
-------------------------------------------------------------------------
Zinc 1,373,000,000 lbs
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Net Financial Impact
The net impact of the above on the Bisha Project cash flow, on a go forward
basis, is demonstrated below using different metals prices. These are all on
an after-tax, after expansion CAPEX basis:
Sensitivity Scenarios Net Future Cash (3) Metals Prices Used
---------------------------------------------------------------------------
Low metals price case $1,034,000,000 $850/oz Au; $12.50/oz Ag;
$2.00/lb Cu; $0.75/lb Zn
AMEC Base Case $1,484,000,000 $1,015/oz Au; $15.85/oz
Ag; $2.40/lb Cu; $0.92/lb
Zn
Medium metals price case $2,162,000,000 $1,200/oz Au; $24/oz Ag;
$3.30/lb Cu; $1.00/lb Zn
High metals price case $3,325,000,000 $1,500/oz Au; $35/oz Ag;
$4.75/lb Cu; $1.25/lb Zn
(3) Net future cash flow is undiscounted after tax from 2011 onwards, and
after all expansion and sustaining capex for 100% of the Bisha Project.
Nevsun owns 60% of the Bisha Project and also has a receivable from the
Eritrean State mining company related to its 30% purchased interest. The
determination of the purchase price by a mutually appointed third party is
in progress and is expected within the next month. The price is based on
the feasibility study reserves and does not include any of the reserve
increase noted above. The purchase price will be paid out of future cash
flows from the Bisha Project.
To view the chart associated with this press release, please click on the
following link: http://media3.marketwire.com/docs/n327m.pdf
Qualified Persons Statement
The information in this report that relates to Mineral Resources was
prepared David Thomas, P.Geo, (APEGBC #149114 #225250) of AMEC Americas
Limited. The information in this report that relates to Mineral Reserves was
prepared by Jay Melnyk P.Eng (APEGBC #25975) of AMEC Americas Limited.
Darin Wasylik, P.Geo. is Nevsun's designated Qualified Person for the
purposes of the study and has reviewed and approved the contents of this
press release.
Sample preparation and analysis was done by ALS Chemex in Vancouver, Canada.
Forward Looking Statements: The above contains forward-looking statements
increases in reserves, strip ratio, throughput, production profile and
expected financial results using varying metals prices. 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
FOR FURTHER INFORMATION PLEASE CONTACT:
Kin Communications
604 684 6730 or Toll Free: 1 866 684 6730
ir@kincommunications.com
www.nevsun.com
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