February 23, 2010
Nevsun Reports Increased Cash Flow Projections for 2011
VANCOUVER, BC
- Nevsun Resources Ltd. (TSX:NSU / AMEX:NSU) is pleased to provide a brief update on the gold/copper/zinc Bisha Project in Eritrea. As a result of the recent financing, there have been
considerable improvements to the project's economics.
Highlights
- Increased Cash Flow projections in 2011
- Mine construction now 50% complete
- Resource expansion at current metal prices
The Bisha mine is now fifty percent (50%) complete with plant
commissioning targeted as early as November 2010. The Company expects
Bisha to be cash flow positive in Q1 2011, with a 4% increase in the
capital budget to $260M (originally estimated at $250 million).
Nevsun continues to post pictures of construction progress in
the Company's photo gallery available at
http://www.nevsun.com/project/gallery/.
Revised Economics
As a result of financing the project entirely by equity rather
than debt, Bisha's projected cash flow model has increased through the elimination of financing costs and
debt repayment. The chart below demonstrates the net cash flow at
varying metals prices, after tax and capital expenditure, for 100% of
the project:
Project Summary
Internal Rate of Return (IRR)
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The IRR for the Project using the above high metals case is
63%, mid metals case is 45% and low metals case is 20%.
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Deposit
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Gold, Copper Zinc Volcanic Massive Sulphide (VMS)
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Reserves
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20 million
tonnes
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Mine life
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Open pit 10 years, plus significant expansion likely (see
below)
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Process methods
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Gold in oxide by carbon in leach for 2 years and then copper
and zinc by separate floatation circuits
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Expansion Capability
The economics noted above were conservatively based on a shallow pit model (depth to 200 meters) using low metals price assumptions
($400/oz Gold, $1.05/lb Copper, $0.50/lb Zinc). When one increases the
metal price assumptions, the pit design will go much deeper, with
limited additional strip ratio. For example, the strip ratio for the
current 10 year mine life is approximately 4:1, as compared to a strip
ratio of approximately 5:1 if the pit is re-designed to 400 meter
depths, using $2.00/lb Copper and $0.75/lb Zinc. (For reference only,
current commodity prices are now roughly $1,100/oz Gold, $3.30/lb
Copper and $1.00/lb Zinc).
In addition to resources open at depth, the Company has
identified two additional deposits within its licensed areas.
State Support
Nevsun has been operating in Eritrea for over ten years and has developed a very good relationship
with the Eritrean government. The State has been a strong supporter of
a responsible mining industry within the country, is a partner in the
development of the Bisha mine and has honored all of its commitments in
our business arrangement. Nevsun is very pleased to have the State as
its partner.
NEVSUN RESOURCES LTD.
Cliff T. Davis,
President & Chief Executive Officer
Forward Looking Statements: The above contains forward-looking
statements concerning progress of the project, expected costs, project
economic characteristics, mine expansion and support of the Eritrean
government. 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.
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