Nevsun Press Release:
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FOR: NEVSUN RESOURCES LTD.
TSE SYMBOL: NSU
OCTOBER 7, 1999
Nevsun Resources Tabakoto Project Update
VANCOUVER, BRITISH COLUMBIA--Nevsun Resources Ltd., (NSU.T),
reviews the options available for the advancement of the Tabakoto
Project to production. These options are based on Nevsun's
management reviews of the pre-feasibility study conducted and
completed by Bharti Engineering (BLM) of Toronto. The
pre-feasibility study outlined a proposal for a 750,000 tonnes per
year underground mine producing approximately 140,000 ounces per
year at a pre-royalty cash cost of US$183 per ounce gold with a
pre-production capital cost of US$74 million.
As part of the pre-feasibility study BLM provided the Company with
several competitive operating scenarios. The Company's internal
review of the data available from the BLM studies indicates that
the Tabakoto Project could be advanced to production to generate
an internal rate of return greater than 20% at a gold price of
US$260 per ounce. This can be achieved by raising the resource
cut-off grade for the start-up of the Tabakoto Mine and reducing
the annual tonnage production accordingly.
The Company's internal review indicates that the Tabakoto Mine
could start up as an underground mine at a minimum capacity of
175,000 tonnes per year with a delivered to mill grade of
approximately 14.3 grams per tonne gold (0.42 ounces per ton
gold). Annual production for this high-grade case is estimated at
74,000 ounces of gold per year for a pre-royalty cash cost of
approximately US$120 per ounce and pre-production capital of the
order of US$30 million. The project would have a seven year mine
life based on the indicated resource and a ten year mine life
based on the indicated and inferred resource. The total cost of
production, including royalty and life of mine capital, has been
estimated at US$190 to US$200 per ounce.
It is proposed that a staged growth from this high-grade scenario
to the level of the pre-feasibility study could maximize the
opportunity for the project to proceed through feasibility into
production. The low volume, high-grade scenario develops a
project net present value of US$44 million with an internal rate
of return (IRR) of 21% at US$260 gold, a net present value of
US$72 million (IRR 32%) at US$300 gold, and a net present value of
US$90 million (IRR 38%) at US$325 gold.
The Company intends to engage an international engineering company
to develop the operating plans for an exploration decline to
access the Tabakoto ore structures. It is envisaged that trial
mining will be conducted as part of the progress to a bankable
feasibility study.
Following the issue of a mining license for the Tabakoto Project
in September, Nevsun is currently in the process of forming a
Malian operating company. The exploitation company will be
registered as the Tamboura Mining Company ("TAMICO"). The
strategic plan for TAMICO will involve the development of a
feasibility study to take the Tabakoto project into production.
NEVSUN RESOURCES LTD.
Dr. John A. Clarke, President & Chief Executive Officer
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