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From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Tue Mar 29 2011 - 14:43:10 EST
Nevsun Increases Mineable Reserves at Bisha by 40% Using Updated Metal
Prices
March 29, 2011
<http://www.nevsun.com/> Nevsun Resources Ltd. (TSX:NSU / NYSE Amex:NSU) is
pleased to announce the revised reserve estimate for its
<http://www.nevsun.com/projects/bisha-main/> 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 <http://www.nevsun.com/projects/harena/> 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
<http://www.nevsun.com/bisha-main/resources/> 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 grading1.62 g/t Au, 38.79 g/t Ag, 1.53% Cu, 3.22 %Zn
Inferred:
10,570 kt grading 0.67 g/t Au, 47.78g/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 Type
Ore
(kt)
Au
(g/t)
Ag
(g/t)
Cu
(%)
Zn
(%)
Oxide
Proven
933
5.75
21.90
Probable
3,719
7.39
31.48
Combined (cut-off ~ 1.0 g/t(2))
4,651
7.06
29.56
Supergene
Proven
844
0.80
43.47
4.92
Probable
6,537
0.77
31.29
3.77
Combined (cut-off ~ 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
Combined (cut-off ~ 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
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 <http://www.nevsun.com/news/2011/march02/> 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
<http://www.nevsun.com/bisha-main/expansion/> 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
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Oxides
Supergene
Primary
Oxide Processing
Gold
919,000 oz
90,000 oz
127,000 oz
Silver
1,590,000 oz
3,775,000 oz
6,914,000 oz
Sulphide Processing
Copper
538,000,000 lbs
283,000,000 lbs
Zinc
1,373,000,000 lbs
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.
Bisha After-Tax Life of Mine Cash Flow
(4) In addition, the Company expects to expand resources during 2011 from
the drill programs mentioned in exploration
Qualified Persons Statement
The information in this report that relates to Mineral Resources was
prepared David Thomas, P.Geo, (APEGBC #149114) 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
concerning development progress, planned mine output and project economics.
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
Tel: 604 684 6730
Toll free 1 866 684 6730
Email: <mailto:ir@kincommunications.com> ir@kincommunications.com
Website: <http://www.nevsun.com/> www.nevsun.com
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