From: Biniam Haile \(SWE\) (eritrea.lave@comhem.se)
Date: Mon Aug 11 2008 - 19:41:32 EDT
http://www.marketwire.com/press-release/Nevsun-Resources-Ltd-TSX-NSU-888
217.html
Aug 11, 2008 16:39 ET
Nevsun Resources Ltd.: Second Quarter 2008 Financial Results
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 11, 2008) - Nevsun
Resources Ltd., (TSX:NSU)(AMEX;NSU) ("Nevsun") wishes to announce its
results for the second quarter of 2008. Complete details of the June 30,
2008 interim financial statements and Management's Discussion and
Analysis can be found on the Nevsun website at
www.nevsun.com/financial.html as well as on Sedar at www.sedar.com and
EDGAR at http://www.sec.gov/edgar/searchedgar/webusers.htm.
The Company's cash position at June 30, 2008 was approximately US$58
million. The income for the quarter was US$2.6 million as compared to a
loss of US$4.7 million for Q2 2007. The main reason for the improvement
in operating results was the disposal of Nevsun's Mali assets, resulting
in a gain on sale of US$3.8 million.
In January 2008 the Company received US$25 million related to the
provisional payment on acquisition by ENAMCO (Eritrean National Mining
Corporation) of its contributing 30% interest in Bisha. In addition,
ENAMCO continues to fund its one third share of the Bisha project costs.
The Company effectively has a 90% interest in the net present value of
the project, 30% of which will be received shortly after the start of
production (less the US$25m prepayment received in January 2008).
In May 2008 the Company received US$20 million, plus a 1% smelter return
royalty interest, in connection with the sale of its Malian assets and
in July 2008 the Company received US$3 million in connection with the
final settlement for the 2007 sale of its Ghanaian assets.
Nevsun's key asset is the high-grade gold/copper/zinc Bisha project in
Eritrea, East Africa. Following the issue of the Bisha Mining License,
announced January 8, 2008, the following decisions and updates have been
made concerning the Bisha project:
- Decisions by both the Nevsun board and the board of the project
subsidiary, Bisha Mining Share Company (BMSC), to progress the project
to production.
- Endeavour Financial, the project finance advisor for Bisha, completed
a financing Information Memorandum for circulation to traditional
sources of project debt. Numerous responses were received indicating
strong interest to provide finance for the project. A site visit for
interested bankers and debt providers is scheduled for late August 2008.
- The capital and operating costs for the project have been updated
following recent engineering design by SENET, the selected EPCM
contractor for the project. The current estimate for the pre-production
capital cost is approximately US$250m, representing a 25% increase over
the 2006 Feasibility Study estimate.
- With the above cash position, and considering the revised capital cost
of the Bisha project, Nevsun should not be required to raise any further
capital by way of equity issues. It is anticipated that the project
capital will be supplied by its shareholders, and traditional sources of
project debt finance or off-take arrangements. Due to the robust nature
of its cash flow, the project has the capacity to be strongly levered.
- Orders placed in February 2008 for the semi-autogenous (SAG) and ball
mills. These are the longest lead items for the project and are expected
to be manufactured, delivered and installed by December 2009. Project
capital purchases have continued on a routine basis in step with project
schedule and as at June 30 2008 US$27 million had been expended or
committed which at that time represented approximately 11% of the
projected pre-production capital spend of the project. In addition,
rates for steel requirements have now been fixed.
- Financial scenarios and sensitivity review (all after tax):
Recent metals prices scenario:------------------------------
Metal prices - Au $850/oz, Cu $3.40/lb, Zn $0.75/lb, Ag
$15/ozRate of Return - 60%Cumulative cash flow - $1,527
millionNPV (10%discount) - $738 millionPayback -
1.2 years (pre-production capital payback)Life of mine operating cost
- $33.35 /tonne of ore milled, excluding royalties
August 2008 base case scenario (more conservative metal
prices):----------------------------------------------------------------
Metal prices - Au $700/oz, Cu $1.80/lb, Zn $0.60/lb, Ag
$10/ozRate of Return - 36%Cumulative cash flow - $607
millionNPV (10% discount) - $267 millionPayback -
1.6 years (pre-production capital payback)
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 funds to be received for the Company's Bisha
property in Eritrea, future financing and anticipated financial health,
capital and operating costs, order delivery times and financial
scenarios for future mine production. 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.
Dr. John A. Clarke, President & Chief Executive Officer
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