Resource World Magazine

Resource World - Oct-Nov 2016 - Vol 14 Iss 6

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Page 33 of 67

34 o c t o b e r / n o v e m b e r 2 0 1 6 miNiNg NEvSuN RESOuRCES' earnings top projections by Leonard Mellman While investors frequently learn of development and production difficulties encountered by companies involved in remote foreign exploration, they should keep in mind that involvement in foreign mining can also offer considerable oppor- tunities for growth and prosperity. One company which recently issued positive news on both counts is Vancouver-based Nevsun Resources Ltd. [NSU-TSX, NYSE MKT]. Nevsun's Bisha Mine operations are located in the country of Eritrea in the Horn of east Africa with the Red Sea to its east, Ethiopia to the south and Sudan to the north and west. The present State of Eritrea came into existence via a referendum fol- lowing their War of Independence which ended in 1993. Current population esti- mates are near 6,000,000. The company is also involved in the Timok development project in Serbia with relatively close international port facilities available on both the Adriatic and Aegean seas, each an arm of the Mediterranean Sea. According to company geologists, "Bisha is a large, high-grade volcanogenic massive sulphide (VMS) deposit located 150 km west of Asmara, Eritrea. The Bisha Mine ben- efits from high-grade, base metals reserves, strong support of the Government of Eritrea and an advantageous location with good local road and port infrastructure." The mine was constructed from 2008-10 and operated as a producer of gold/silver doré bars until 2013 when the operation switched to recovery of copper concen- trates. In addition, their Zinc Expansion Project which began in mid-2016 is designed to produce zinc concentrates in addition to the copper concentrates. Nevsun noted that, " date (late summer 2016) the project is expected to be com- pleted on schedule and under budget. The main Bisha deposit has three dis- tinct layered zones; a 35-metre thick surface goldsilver oxide zone which was mined out in 2013 and a copper-enriched super- gene zone which itself overlies a primary sulphide zone containing both zinc and copper which remains open to depth. Bisha's mining operations consist of conventional drill and blast open pit min- ing with ore delivered to the run-of-mine (ROM) stockpile. Ore is fed to the conven- tional single stage crushing/SAG/ball mill comminution circuit. Concentrates are then thickened, dewatered and stockpiled prior to land transport to the Red Sea port of Massawa for shipment to world markets. The company website describes the Timok Project as "…a world class, large, highgrade, copper-gold deposit located in the historic Bor mining district within close proximity to existing mining infrastruc- ture." They also advise that, "…it consists of the Cukaru Peki Upper Zone and Lower Zone." Nevsun owns 100% of the Upper Zone and the Lower Zone is a joint venture with Freeport McMoran [FCX-NYSE]. A Preliminary Economic Assessment (PEA) for the Upper Zone at Cukaru showed inferred copper resources amounting to 35 million tonnes grading 2.9% and con- taining 1.0 million tonnes of copper and inferred gold resources grading 1.7 g/t and containing 1.9 million oz of gold. In addi- tion, the PEA reported indicated resources of 1.7 million tonnes grading 13.5 copper and 10.4 g/t gold containing 0.2 million tonnes copper and 0.6 million oz of gold. Nevsun issued two press releases in late July 2016. The first noted that the company had increased their 60%-owned subsidiary Bisha Mining Share Company's Exploration License area at Bisha almost 20 fold from 41 to 814 km 2 . In Nevsun's July 26 release the company noted,"…This additional land package will ensure BMSC has sufficient time to fully test the exploration potential using the successful exploration technique of airborne geophysical surveys followed by systematic ground and borehole geo- physics…BMSC management have already identified one specific high-priority target where drilling will begin in H2 2016." The release of July 28 dealt with updated company information as well as production and revenue data for the three and six-month periods to date in 2016. Highlights of the release included the fact that Nevsun had completed the Bisha Zinc Expansion Project on time and under bud- get. Regarding production, during Q2 2016 the company produced 21.6 million pounds of copper bringing H1 production to 55.8 million pounds while gold production came in at 4,500 ounces for the first quarter 2016 and 10,500 ounces for Hl 2016. Net income figures for the three and six- month periods came in ahead of previous projections at $18.0 million and $33.6 mil- lion, respectively while cash on hand at the end of the period stood at $240.3 million. Through its reported results, Nevsun appears to have demonstrated that a Canadian junior miner can generate operat- ing profits and exploration potential while operating in remote foreign areas. n the ore processing facilities for the Bisha open pit copper-zinc mine in west eritrea, northeast africa. Photo courtesy nevsun resources Ltd.

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