VANCOUVER, June 23, 2016 /PRNewswire/ - Nevsun Resources
Ltd. (TSX:NSU) (NYSE MKT: NSU) ("Nevsun" or the "Company") today
announced that it has closed the acquisition of Reservoir Minerals
Inc. ("Reservoir"), creating a leading diversified mid-tier base
metals company.
The acquisition provides Nevsun with the following:
- High quality asset: The Timok Project Upper Zone is
a high grade copper-gold development project in a historic mining
jurisdiction with excellent local and regional infrastructure.
- Geographic diversification: Project location in Serbia
expands Nevsun's reach to Europe
from Africa.
- Resource growth: Contained copper in indicated resources
grows 51% from 857 to 1,299 million pounds and inferred resources
grow 517% from 426 million pounds to 2,631 million pounds (see
table below).
- Attractive capital deployment: Nevsun's strong,
debt-free balance sheet and operating cash flow will be used to
develop Timok, a strategic, high return project.
- Exploration potential: Significant exploration exposure
in the prolific Timok Magmatic Complex.
- Major Strategic Partners: Freeport McMoRan on the Lower
Zone project at Timok and Rio Tinto on similar exploration projects
in the Timok Magmatic Complex.
"The combination of the Upper Zone at Timok and our Bisha mine
provides Nevsun with significant growth potential," said Mr.
Cliff Davis, Nevsun's President and
Chief Executive Officer. "Given our experience as a mine developer,
the strength of our balance sheet and the ongoing cash flow
generation from Bisha, we have the financial capacity to move the
Timok project to production in a timely manner and create value for
shareholders and all stakeholders."
Nevsun has acquired all of the outstanding common shares and
restricted share units of Reservoir. On closing, Nevsun has
299,710,299 shares issued and outstanding, of which approximately
33% are owned by former Reservoir shareholders. Nevsun retains a
strong balance sheet with more than $200
million in cash and no outstanding debt.
About Timok Copper Gold Project
The Timok Copper Gold Project ("Project") is located in eastern
Serbia near the Bor Mining and Smelting complex. The Project is
focussed on the Cukaru Peki ("Timok") deposit which includes the
high grade Upper Zone (characterized by massive and semi-massive
sulphide mineralization) and the Lower Zone (characterized by
porphyry-style mineralization). The Upper Zone has an
extremely high copper and gold content consisting of 1.7 million
tonnes of indicated resource grading 13.5% copper and 10.4 g/t gold
and 35.0 million tonnes of inferred resource grading 2.9% copper
and 1.7 g/t gold (see detailed table below for details).
Reservoir's Preliminary Economic Assessment ("PEA") on the Upper
Zone alone, using a 1.0% copper cut-off grade, has an after-tax
NPV8 of US$1.63 billion and after-tax
IRR of 106%, using US$3.00 per pound
copper and US$1,200 per ounce gold
(refer to Reservoir's April 19, 2016
news release for PEA details).
The Project is a joint venture between Nevsun and Freeport
McMoRan. Nevsun owns a 100% interest in the Upper Zone
and currently a 60% interest in the Lower Zone and is the operator
of the Project. Nevsun's ownership interest in the Lower Zone
will decline to 46% once a feasibility study has been prepared for
either the Timok Upper or Lower Zone.
Detailed Resource Statements
|
Indicated
Resources
|
Inferred
Resources
|
Deposits
|
Tonnage (million
tonnes)
|
Contained Copper
(million pounds)
|
Contained Gold
(million ounces)
|
Tonnage (million
tonnes)
|
Contained Copper
(million pounds)
|
Contained Gold
(million ounces)
|
Bisha
District
|
38.3
|
857.5
|
0.8
|
15.0
|
426.4
|
0.5
|
Timok Upper
Zone
|
1.7
|
440.9
|
0.6
|
35.0
|
2,204.6
|
1.9
|
Total
|
40.0
|
1,298.5
|
1.4
|
50.0
|
2,631.1
|
2.4
|
Increase
|
1.7
|
51%
|
75%
|
35.0
|
517%
|
358%
|
For resource details and
references see Appendix "A"
Qualified Persons
Mr. Peter Manojlovic, Nevsun's VP
Exploration, is a Qualified Person as defined by NI 43-101.
Mr. Manojlovic has reviewed the technical content of this press
release and approved its dissemination.
Nevsun Board Appointments
As part of the transaction, Nevsun has appointed two former
Reservoir directors Geoff Chater and
Steve Scott to Nevsun's Board.
Mr. Chater holds a B.Sc in Geology and has over 22 years of
experience in the mining industry including roles at First Quantum
Minerals, Eldorado Gold and Ivanhoe Capital Corporation amongst
others. Mr. Scott is currently President and CEO of Entrée Gold
Inc. with almost 30 years of industry experience in a number of
international management and commercial executive roles with mining
companies including Rio Tinto from 2000 to 2014.
About Nevsun Resources Ltd.
In addition to all of the assets acquired from Reservoir, Nevsun
Resources Ltd. is the 60% owner of the high grade Bisha Mine in
Eritrea. Bisha has nine years of reserve life, generating
revenue from both copper and zinc concentrates containing gold and
silver by-products. Nevsun has a strong balance sheet with no
debt and pays a peer leading quarterly dividend. Nevsun is well
positioned to grow shareholder value through exploration at Bisha
and acquisition of additional mining assets.
Forward Looking Statements
The above contains forward-looking statements or
forward-looking information within the meaning of the United States
Private Securities Litigation Reform Act of 1995, and applicable
Canadian securities laws. Forward-looking statements are
frequently, but not always, identified by words such as "expects,"
"anticipates," "believes," "intends," "estimated," "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
concerning the Company's current beliefs, plans and expectations
about the future including but not limited to statements and
information made concerning: the Company's acquisition of
Reservoir, statements relating to the business, prospects and
future activities of, and developments related to the Company,
anticipated developments in operations, commercial production,
estimated future production, future costs of production and capital
expenditures, mine life of mineral projects, the timing and amount
of estimated capital expenditures, costs and timing of exploration
and development and capital expenditures related thereto, operating
expenditures, and related cash flows, success of exploration
activities, estimated exploration budgets, currency fluctuations,
requirements for additional capital, government regulation of
mining operations, environmental risks, unanticipated reclamation
expenses, title disputes or claims, limitations on insurance
coverage, the timing and possible outcome of pending litigation,
the timing and possible outcome of regulatory and permitting
matters, goals, strategies, future growth, planned future
acquisitions and explorations activities, the adequacy of financial
resources and other events or conditions that may occur in the
future, and are inherently uncertain. The 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, the risks that: (i) any of the
assumptions in the historical resource estimates turn out to be
incorrect, incomplete, or flawed in any respect; (ii) the
methodologies and models used to prepare the resource and reserve
estimates either underestimate or overestimate the resources or
reserves due to hidden or unknown conditions, (iii) exploration
activities or the mine operations are disrupted or suspended due to
acts of god, internal conflicts in the country of Eritrea or Serbia, unforeseen government
actions or other events; (iv) the Company experiences the loss of
key personnel; (v) the Company's operations or exploration
activities are adversely affected by other political or military,
or terrorist activities; (vi) the Company becomes involved in any
material disputes with any of its key business partners, suppliers
or customers; (vii) the Company is subjected to any hostile
takeover or other unsolicited attempts to acquire control of the
Company; (viii) the Company is subject to any adverse ruling in any
of the pending litigation to which it is a party; (ix) Reservoir's
PEA is preliminary in nature and it includes inferred mineral
resources that are considered too speculative geologically to have
the economic considerations applied to them that would enable them
to be categorized as mineral reserves; and other risks are more
fully described in the Company's and Reservoir's Management
Information Circulars dated May 18,
2016 with respect to the proposed arrangement between
Reservoir and Nevsun and the Company's Annual Information Form for
the fiscal year ended December 31,
2015, which are incorporated herein by reference. 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, except as required by
law. For the reasons set forth above, investors should not
place undue reliance on the Company's forward-looking
statements.
Further information concerning risks and uncertainties
associated with these forward-looking statements and our business
can be found in our Annual Information Form for the year ended
December 31, 2015, which is available
on the Company's website (www.nevsun.com), filed
under our profile on SEDAR (www.sedar.com) and on
EDGAR (www.sec.gov) under cover of Form 40-F.
NEVSUN RESOURCES LTD.
"Cliff Davis"
Cliff T. Davis
President & Chief Executive Officer
Appendix "A"
Bisha Mining Share Company Resources
For Bisha District resource details see Nevsun News
Release February 17, 2016.
Timok Upper Zone Resources
The Mineral Resource Statement as at March 31, 2016 for the Timok Upper Zone is as
follows (see Reservoir Minerals press release April 19, 2016) :
|
Category
|
Grade
|
|
Grade
|
Metal
|
Category
|
|
|
|
|
|
|
%Cu
|
Tonnes Mt
|
% Cu
|
g/t Au
|
% As
|
Cu Mt
|
Au Moz
|
Indicated
|
>10.0
|
1.2
|
15.5
|
12.4
|
0.21
|
0.2
|
0.5
|
|
0.75 -
10.0
|
0.5
|
8.2
|
5.1
|
0.27
|
0.04
|
0.08
|
Inferred
|
>10.0
|
1.2
|
13.2
|
10.5
|
0.20
|
0.2
|
0.4
|
|
0.75 -
10.0
|
33.8
|
2.5
|
1.4
|
0.17
|
0.8
|
1.5
|
Total
Indicated
|
|
1.7
|
13.5
|
10.4
|
0.23
|
0.2
|
0.6
|
Total
Inferred
|
|
35.0
|
2.9
|
1.7
|
0.17
|
1.0
|
1.9
|
1. The cut-off grade used for the estimate is 0.75%
Cu.
2. All figures are rounded to reflect the relative accuracy of
the estimate.
3. Mineral Resources are not Mineral Reserves and do not have
demonstrated economic viability.
The Mineral Resources and the associated PEA were reviewed and
approved by Martin Pittuck of SRK
Consulting (UK) Limited, a Qualified Person under National
Instrument 43-101, details of which can be found on SEDAR and the
Nevsun website. The PEA is preliminary in nature and it
includes inferred mineral resources that are considered too
speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral
reserves. Mineral resources that are not mineral reserves do not
have demonstrated economic viability. There is no certainty that
the PEA will be realized.
SOURCE Nevsun Resources Ltd.