Nevsun sees Bisha Reserves Doubling, Gold Production Sweetener

Development News
 More gold resources could generate extra cash flow for Nevsun in the short term while more base metals could add years to Bisha’s mine life.

More Gold Reserve, Record High Gold Prices, Sweet Revenues

With heavy infill drilling underway or already completed, Nevsun Resources (TSX: NSU) expects its reserves at the Bisha mine to grow substantially in 2011 and a satellite deposit to kick in extra gold ounces to production, said Scott Trebilcock, Nevsun’s vice president of business development. 

Our objective is to double reserves,” he told Mineweb in a telephone interview. These, which Nevsun recently updated, stand at 28 million tonnes @ 1.78 g/t gold, 38.9 g/t silver, 1.6 percent copper and 3.15 percent zinc.  

Trebilcock said most of the extra reserves will come from inferred resources sitting below the existing open-pit design in the primary zone of the deposit. All told, inferred resources at Bisha weigh in at 10.6 million tonnes @ 0.67 g/t Au, 47.78 g/t Ag, 0.91 percent Cu and 5.67 percent Zn.

Meanwhile Nevsun has been defining two, smaller satellite deposits, Harena and Northwest, that are respectively about nine and two kilometers away from Bisha, and the Hangingwall Copper zone, which is adjacent to Bisha. None are the subject of a resource calculation yet, but that will soon change. Nevsun expects to have resource estimates in hand for all this year.

We’re talking pretty substantial,” pronounced Trebilcock as regards the overall impact the added reserves and new resources could have on Bisha production. Added reserves below the current pit design could add several years to the end of Bisha’s 14-year mine life, he said.

The effect of Northwest, Hangingwall and Harena on Bisha is less certain and depends on the outcome of resource calculations and production decisions, but Trebilcock suggested the Northwest and Hangingwall deposits might also add feed near the end of Bisha’s mine life.

The near-term prospects for Harena are more clear, however. Nevsun is applying for it to be added to its Bisha mining license and, pending approval, forecasts mining its gold-rich upper oxide cap as an added stream to Bisha’s mills starting in 2012.

“It’s not going to drive up analysts NAV models,” Trebilcock said, as the amount of gold it could contain in comparison to the main deposit at Bisha would be small. But with high gold prices it could add tens of millions” in cash flow, leading Trebilcock to characterize it as “a nice little sweetener.”

Nevsun, which began commercial production at Bisha in February with 40-percent joint venture partner ENAMCO, Eritrea’s state miner, is in the enviable position of mining a deposit that is rich in gold near surface at time when gold prices are at record highs. In the first two years of mining Nevsun forecasts producing 919,000 ounces gold. In subsequent years, the deposit is a copper-zinc story.

Beyond the main and satellite deposits at Bisha, Trevilcock said Nevsun is scratching the ground for other volcanogenic massive sulphide deposits on its Bisha concessions. “The only things we have gone after to date are those that have shown up on surface,” he said.

But at some point Trebilcock sees an acquisition of some kind. “We can’t see how we’re going to spend all the money we’re going to generate on Bisha.”