🕐03.05.11 - 23:27 Uhr

NEVSUN RESOURCES RAMPS UP PRODUCTION WHILE EXPANDING RESOURCES






Nevsun Resources Ramps up Production while Expanding Resources

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Nevsun Resources (TSX:NSU or NYSE Amex:NSU) has hit every milestone in the last year.

Nevsun successfully arranged more than $250 million in financing deals, including a deal with Eritrean government for it to become a partner in its flagship Bisha Mine, put the Bisha Mine into production, and ramped it up to full production in a few short months.

Now Nevsuns mine is producing more than 1,000 ounces of gold per day.

Nevsun has been rewarded for its accomplishments by the markets too. Shares of the Nevsun have more than tripled in the past year.

But Nevsun is now starting to advance some other key projects that it put on the back burner while building its mining operations. That is quickly changing and, given the early results of these satellite projects, there could be a lot more life to Nevsun than the market sees right now.

Despite all the success Nevsun has had so far, there could be even more to come as it ramps up exploration in high-potential targets surrounding the Bisha Mine, increases its reserve base and further extend its mine life.

$1 Million a Day Free Cash Flow

Nevsun is a rapidly expanding mining company in many different ways.

Its core asset is the Bisha Mine. Nearly a decade after discovery, the Bisha Mine was commissioned at the end of 2010. In March 2011 the mine reached full production of 35,000 ounces per month.

Since Nevsun is an unhedged gold producer with no debt, it enjoys every uptick in the price of gold. With gold at nearing $1500 per ounce and Nevsuns cash costs of less than $300 per ounce, Nevsun is cash flowing more than $1,000 per ounce of gold. And with production of 34,000 ounces in March, its clearing well more than $1 million per day and accumulating cash rapidly.

The Bisha Mine, however, will not be a high-grade gold mine forever.

As the chart below shows, its frontloaded with high-grade gold and silver, then adds high-grade copper, and then high-grade zinc.

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*) 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*) 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*) 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

*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. When Bisha initially went into production, it had the economics to justify building the mine. It had a mineable reserve estimate of 20 million tonnes of zinc, copper, silver, and gold ore.

Nevsun has been able to expand its mineable reserves to more than 28 million tonnes, from an estimated 40 million tonnes resource. Thats an increase of 40% that extended the mine life from nine years to 13 years and is expected to grow even longer after the completion of two ongoing drilling programs in the Bisha Main deposit.

The first drilling program is the infill drilling of 10 million tonnes of inferred high-grade copper-zinc material. The programs objective is to bring the material up to Measured & Indicated resource categories and then add to reserves. This program is expected to be completed later in 2011 and extend the mine life and add reserves.

Nevsuns second drilling program consists of infill drilling aimed at a potential incremental copper resource adjacent to the current pit shell. This program is expected to further increase mine life and reserves.

Nevsun is in a very unique position that its already in production and still adding reserves. Its growing every way possible. Theres a lot more to the Nevsun story thats starting to unfold.

In Production and Still Growing

Nevsuns resource size, successful mine completion, and production expansion are impressive on a standalone basis, but now its starting to focus on the rest of the Bisha project. The Bisha Mine only makes up a small fraction of the property and the resource potential on it. The rest of the Bisha project includes two other deposits, the Northwest (NW) Zone and Harena:

The Harena VMS discovery is satellite deposit which early exploration results show considerable similarities to the main Bisha deposit. It is located approximately 10 km away from the main Bisha deposit. Diamond drilling in 2005 confirmed the existence of both oxide and sulphide mineralization, much like the main Bisha deposit, across a strike length of 400 meters.

NThe first round of drilling in late 2010 confirmed near-surface, high grade gold at the Harena discovery. Highlights of the drilling included (view full table of results here):

Hole #H-078 - 18m at 11.78g/t Au, from 51.0 meters to 69.0 meters
Hole #H-062 - 31.9m at 4.09g/t Au, from 5.6 meters to 37.5 meters
Hole #H-063 - 51m at 3.34g/t Au, from 19.5 meters to 70.5 meters
Hole #H-059 - 60m at 2.73g/t Au, from 13.5 meters to 70.3 meters

The second round of drilling results confirm very high grade copper and zinc contained in the Harena discovery, again, much like the main Bisha deposit. The results include:

Hole #H-077 - 12m at 5.62% Cu, from 67.5 meters to 79.5 meters
Hole #H-076 - 6m at 3.90% Cu, from 67.5 meters to 73.5 meters
Hole #H-054 - 27m at 7.37% Zn, from 70.5 meters to 97.5 meters
Hole #H-061 - 7.5m at 7.26% Zn, from 84.9 meters to 92.4 meters

The drilling results confirm the significant economic potential of the Harena and, given the 400 meter strike length and open in two directions, it still has the potential to be very big too.

Although Harena has a lot of potential at this point, it is just part of resource potential of the satellite deposits on Bisha. The NW Zone is the second near-surface volcanogenic massive sulphide (VMS) discovery on the Bisha property and it is just 1.2 kilometers from the main Bisha deposit. Drilling of the project was initially conducted between 2004 and 2006. The initial exploration results confirmed a strike length at least 600 meters long and open to the northeast and southwest.

It plans reverse circulation drilling to explore for oxide gold and infill diamond drilling in Q3 2011. Those drilling results are expected to add additional resources and potentially yet again increase mine life for the Bisha mill.

The Harena and NW Zone both have the potential to significantly extend the mine life. Since the mill is already in production, minimal capital costs are expected to develop and produce from the Harena and NW Zone.

Nevsun is a growth story that, after going into production, has proven it can continue to grow.

Share Structure:
Common Shares Outstanding: 196.5 million
Warrants Outstanding: 0
Options Outstanding: 10.3 million
Fully Diluted Shares Outstanding: 206.8 million
Market Value (@ $6.50 per share): $1.34 billion

The Bottom Line

Nevsun (TSX:NSU or NYSE Amex:NSU) has been a rapidly developing story over the last few months.

It completed its mine construction and within a few months is already at full capacity. The mine is generating more than $1 million a day in operating free cash flow. As the mining operations go deeper into the deposit, Nevsun will be dipping into very high-grade copper and zinc ore.

Although Nevsun has delivered on its development and production timeline, the growth isnt over yet. Two more known discoveries rest within its 110 square kilometer Bisha project add significant exploration potential.

Further development of Harena, the Northwest Zone and in the Bisha Main pit should grow resources and reserves, adding additional value to an already very successful mining company.

You can follow Nevsun Resources (TSX:NSU or NYSE Amex:NSU) development at

Click here to contact Nevsun Resources

Sources:
Nevsun Web Site
Nevsun Presentation

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