VANCOUVER, Oct. 26, 2017 /CNW/ - Nevsun Resources Ltd.
(TSX:NSU) (NYSE MKT: NSU) (Nevsun or the Company) today announced
the results of the updated Preliminary Economic Assessment ("PEA")
for the high grade Timok Upper Zone project in Serbia ("Timok
Project" or "Project"), one of the world's best undeveloped copper
projects. All economic values are in 2017 US dollars unless indicated otherwise.
Timok Upper Zone Project PEA Highlights
- 15 year mine life producing over 2.1 billion pounds or 0.96
million tonnes of payable copper
- Sub-level cave mining with 3.3 million tonnes per annum
conventional plant producing copper concentrate
- After tax NAV of $1.5 billion at
flat $3.00 per pound copper and 8%
discount rate
- $630 million in pre-production
capital with 50% IRR and under 1.5 year payback
- Located in an established mining jurisdiction supportive of new
mining investment
- Strong project economics support a wide range of financing
alternatives
- Upside potential from on-license exploration and gold in pyrite
concentrate
- Next steps: PFS and exploration decline start in Q1 2018
followed by FS in H1 2019
Nevsun CEO Peter Kukielski
commented, "The PEA demonstrates the extremely compelling economics
of the Timok Upper Zone project. Nevsun is in a unique position in
the industry with a 100% ownership of a high grade, high return
copper project in a well-established mining
jurisdiction."
Mr. Kukielski continued, "For now, we remain focused on further
defining the project capital cost and execution plan through robust
front-end engineering. Additional detailed design and
metallurgical test work is ongoing ahead of the pre-feasibility
study and we now plan to break ground on the exploration decline in
Q1 2018. We are working with the Serbian government on
permitting with the objective to start production in 2021."
CFO, Ryan MacWilliam continued,
"Nevsun's strong balance sheet with $151
million in cash, no debt, Bisha cash flow and strong
front-end cash flow from Timok, puts the Company in a strong
position to finance the project build."
The PEA includes an additional 36,639 meters of infill drilling,
an updated mineral resource estimate, a mining method based upon
numerous tradeoff studies, additional metallurgical test work,
process plant and infrastructure engineering and a new marketing
study. Further work during the pre-feasibility study ("PFS")
due in Q1 2018 and the feasibility study ("FS") expected in H1 2019
will further define the project and optimize costs for the
construction and operation phases of the project.
Permitting of the exploration decline ("Exploration Decline") is
in the final stages and we expect to break ground in Q1
2018.
This PEA was compiled and project managed by SRK (Vancouver) with input from SRK (Cardiff), Knight Piesold (Vancouver), Bluequest (Zug) and Ausenco
(Toronto).
An NI43-101 Technical Report that summarizes the results of the
PEA and incorporates a revised mineral resource statement will be
filed within 45 days on SEDAR and on the Company's website.
The PEA is considered preliminary in nature and includes
inferred mineral resources that are considered too speculative
geologically to have economic considerations applied to them that
would enable them to be categorized as mineral reserves.
There is no certainty that the PEA will be realized. In the
modelled mine material about 18% of the contained copper is
inferred mineral resources, for which quantity and grade or quality
are estimated on the basis of limited geological evidence and
sampling which is sufficient to imply but not verify geological and
grade and/or quality continuity. Mineral resources that are not
mineral reserves do not by definition have demonstrated economic
viability.
PEA Summary and Economic Analysis
Table 1: Economic
and Operational Summary
M = million
Metal Price
Assumptions
|
Life of Mine
("LOM")
|
Copper Price US$ per
pound
|
$3.00
|
Gold Price US$ per
ounce
|
$1,300
|
Capital
Requirements
|
|
Initial Capital
Requirement
|
$630 M
|
Life of Mine
Sustaining Capital
|
$342 M
|
Closure
Costs
|
$58 M
|
Operating
Costs
|
|
Mining
|
$18.57 per
tonne
|
Processing, Waste
& Water Management
|
$10.06 per
tonne
|
G&A
|
$2.37 per
tonne
|
Total Site
Costs
|
$31.00 per
tonne
|
C1 Cash
Cost
|
$1.02 per
pound
|
C3 Cash
Cost
|
$1.59 per
pound
|
Production Summary
|
|
Total Mill
Feed
|
42.1 M
tonne
|
Diluted Copper Feed
Grade
|
2.6 %
|
Diluted Gold
Grade
|
1.7 gram per
tonne
|
Diluted Arsenic
Grade
|
0.13 %
|
Annual Mine
Production
|
3.3 M tonne per
annum
|
Life of Mine
("LOM")
|
15 years
|
LOM Copper
Recovery
|
92 %
|
LOM Gold
Recovery
|
31 %
|
LOM Copper Bulk
Concentrate Grade
|
22.5%
|
LOM Gold Bulk
Concentrate Grade
|
4.8 gram per
tonne
|
LOM Arsenic Bulk
Concentrate Grade
|
1.1%
|
Payable
Copper
|
2,105 M
pounds
|
Payable
Gold
|
569,000
ounces
|
Project Economics – After
Tax
|
|
NPV (8% Discount
Rate)
|
$1,473 M
|
Internal Rate of
Return
|
50%
|
Payback (from start
of processing)
|
1.4 Years
|
Cumulative Cash
Flow
|
$2,810 M
|
Table 2: Total LOM Revenue, Costs and Cash Flows
Project
Parameter
|
LOM Total
(M)
|
Total Gross
Revenue
|
$7,055
|
Transportation,
Refining & Penalties
|
-$1,578
|
Net Smelter Return
("NSR")
|
$5,477
|
Royalties
|
-$274
|
Site Operating
Costs
|
-$1,306
|
Capital Costs
(pre-production, sustaining & closure)
|
-$1,030
|
Project
Cash Flow (Pre-Tax)
|
$2,867
|
Note: totals may not
match sum of individual items due to rounding
|
The corporate income tax rate is 15%. The project is
expected to benefit from a 10-year tax holiday provided in the
current Corporate Income Tax Law in Serbia and applicable to major
investments in the country. Serbia has a 5% net smelter return
("NSR") royalty and various payroll and other taxes to generate
revenue. The Project capital excludes two staged payments due to
Freeport McMoRan ("Freeport"): $45M
payable upon earliest of (i) build decision on the Upper Zone, (ii)
access to any orebody for direct ship material; and $50M payable to Freeport upon achievement of commercial
production and up to $12.5 million to
be paid to Freeport out of Project
cash flow.
Project economics are most sensitive to metal prices as
demonstrated in the sensitivity analysis below.
Table 3: After-Tax NPV and IRR Sensitivity to Copper Price
|
-15%
$2.55 per
pound
|
Base
Case $3.00 per pound
|
+15%
$3.45 per pound
|
After-Tax NPV
(M)
|
$1,001
|
$1,473
|
$1,945
|
IRR
(%)
|
41%
|
50%
|
58%
|
Payback
(Years)
|
1.6
|
1.4
|
1.2
|
Initial and Sustaining Capital Estimate
Initial pre-production capital expenditures are estimated at
$630M. The Project initial
pre-production capital consists of underground and surface
infrastructure and facilities required prior to start of
operations. Approximately 37% of the total initial capital is
associated with underground development and underground
infrastructure, which includes the Exploration Decline, ventilation
raises, over 22 kilometers of initial underground development, the
first primary crusher, material conveyor system and purchase of
underground mining equipment. Another 33% of the total
initial capital is associated with the surface facilities and
infrastructure, which include the construction of the processing
plant, water management system, initial phase of the Tailings
Storage Facility ("TSF") and other supporting and ancillary surface
infrastructure typically required at a mine site. The
remaining 30% of the total initial capital is associated with owner
costs, which includes land acquisition and total project
contingency.
The sustaining capital is estimated at $400M and includes $58M in closure costs. This total includes
$158M for mine development and
underground infrastructure spending that includes installation of a
second lower underground crusher and conveyor as the mine
deepens. $124M is required to
sustain the process plant, power supply facilities, waste
management facility expansions and other site infrastructure
sustaining costs.
Table 4a: Initial Pre-Production Capital and Sustaining Capital
Breakdown
Capital Cost
Summary
|
Initial
Capital (M)
|
Sustaining
Capital (M)
|
Total
Capital (M)
|
Underground ("UG")
Mine Development
|
$165
|
$120
|
$285
|
Underground Mine
Infrastructure
|
$70
|
$38
|
$108
|
General Surface
Infrastructure
|
$24
|
$15
|
$39
|
Process
Plant
|
$112
|
$51
|
$163
|
Waste
Management/TSF
|
$68
|
$57
|
$125
|
Site Water
Management
|
$3
|
$1
|
$4
|
Owner
Costs
|
$70
|
-
|
$70
|
Contingency
|
$102
|
$60
|
$162
|
Capitalized Operating
Cost
UG development prior to processing Startup
|
$15
|
-
|
$15
|
Closure
|
-
|
$58
|
$58
|
Total
Capex
|
$630
|
$400
|
$1,030
|
Note: totals may not
match sum of individual items due to rounding
|
Table 4b: Pre-Production Capital and Sustaining Capital
Schedule
Year
|
Initial
Capital
(M)
|
Sustaining
Capital (M)
|
2018
|
$62
|
-
|
2019
|
$178
|
-
|
2020
|
$262
|
-
|
2021
|
$127
|
$17
|
2022
|
-
|
$34
|
2023
|
-
|
$31
|
2024
|
-
|
$54
|
2025
|
-
|
$20
|
2026
|
-
|
$37
|
2027
|
-
|
$31
|
2028
|
-
|
$22
|
2029
|
-
|
$18
|
2030
|
-
|
$12
|
2031
|
-
|
$20
|
2032
|
-
|
$23
|
2033
|
-
|
$9
|
2034
|
-
|
$8
|
2035
|
-
|
$2
|
2036 -
2039
|
-
|
$60
|
LOM
Total
|
$630
|
$400
|
Operating Cost Estimate
Onsite operating costs are expected to average $31.00 per tonne milled with offsite operating
costs estimated to average $37.46 per
tonne milled excluding the Serbia government royalty for the
LOM.
Table 5: LOM Operating Costs
Operating Cost
("Opex")
|
Total (M)
|
$ per
tonne
Milled
|
Mining
|
$782
|
$18.57
|
Processing, Water
& TSF
|
$424
|
$10.06
|
G&A
|
$100
|
$2.37
|
Subtotal
Onsite Opex
|
$1,306
|
$31.00
|
TC, RC, Penalties
& Transport
&
Transport
|
$1,578
|
$37.46
|
Royalties
|
$274
|
$6.50
|
Subtotal
Offsite Opex
|
$1,852
|
$43.96
|
All-in
Opex
|
$3,158
|
$74.96
|
Note: totals may not
match sum of individual items due to rounding
|
Mining Design Details
This PEA is based on a Sub Level Caving ("SLC") mining method.
SLC is applicable through a wide range of geotechnical conditions
and is typically used in massive, steeply-dipping orebodies with
considerable strike length as at the Timok Project. An
added benefit is the variable high grades near the top of the
deposit are blended through the caving process.
Table 6: Material Milling Plan By Year
Year
|
Material
Mined
=
Milled
(000
tonne)
|
Cu
(%)
|
Au
(gram
per
tonne)
|
As
(%)
|
Contained
Metal
|
Cu (000
tonnes)
|
Au (000
ounces)
|
2021
|
488
|
6.2
|
4.29
|
0.18
|
30.2
|
67
|
2022
|
2,711
|
5.5
|
3.80
|
0.16
|
149.2
|
331
|
2023
|
3,193
|
4.6
|
2.99
|
0.17
|
147.4
|
307
|
2024
|
3,250
|
4.3
|
2.93
|
0.16
|
138.5
|
306
|
2025
|
3,229
|
3.7
|
2.33
|
0.16
|
118.2
|
242
|
2026
|
3,216
|
3.0
|
1.77
|
0.17
|
96.3
|
183
|
2027
|
3,148
|
2.4
|
1.54
|
0.15
|
75.2
|
156
|
2028
|
3,197
|
2.1
|
1.47
|
0.13
|
67.5
|
152
|
2029
|
3,142
|
1.8
|
1.15
|
0.12
|
55.2
|
116
|
2030
|
3,165
|
1.5
|
0.94
|
0.10
|
48.7
|
95
|
2031
|
3,181
|
1.4
|
0.80
|
0.10
|
44.5
|
82
|
2032
|
3,048
|
1.3
|
0.69
|
0.10
|
39.3
|
68
|
2033
|
2,867
|
1.2
|
0.61
|
0.11
|
35.3
|
56
|
2034
|
2,072
|
1.1
|
0.57
|
0.10
|
23.6
|
38
|
2035
|
1,844
|
1.1
|
0.48
|
0.11
|
20.1
|
29
|
2036
|
375
|
1.0
|
0.10
|
0.03
|
3.7
|
1
|
LOM
Total
|
42,124
|
2.6
|
1.65
|
0.13
|
1,093
|
2,229
|
Note: totals may not
match sum of individual items due to rounding
|
Selective mining and semi-selective mining methods were reviewed
and not carried forward in this PEA for the following reasons:
- Selective mining, such as drift and fill, was not suitable
because the current Mineral Resource drill spacing (25 meters by 25
meters) does not provide sufficient certainty of grade consistency
or distribution within the higher grade cutoffs of the ultra-high
grade material ("UHG"). However, the current Mineral Resource
drill spacing does allow higher confidence at lower grade cutoff
grades for bulk mining methods such as SLC.
- Semi-selective mining methods such as Sublevel Open Stoping
("SLOS") were rejected due to the high variability of the
geotechnical conditions within the orebody. The presence of
the UHG near the top of the orebody means that stope stability
requirements would require stopes that were too small to set up and
mine practically.
- It should also be noted that both selective and semi-selective
methods require more waste material for backfilling than would be
generated by the milling operation. Backfill material
would then need to be acquired from secondary sources increasing
cost.
The total LOM dilution is higher for SLC than selective and
semi-selective mining methods, however the SLC method does allow
conversion of higher tonnages of minable material from the Mineral
Resource due to lower unit mining costs and hence lower cut-off
grade. The dilution profile over the vertical height of the orebody
ranges from 7% at the top to over 30% near the bottom with a LOM
average of 27%. During the PFS and FS process, a further review of
the SLC draw strategy to decrease dilution will be undertaken, as
there are successful benchmarked SLC operations that experience as
little as 10% to 15% dilution.
The underground mine will be developed in three phases:
- The Exploration Decline consists of twin 5 meter x 5 meter
ramps which will be driven straight for approximately 2,800 meters
to 400 meters below the surface. This Exploration Decline
will serve as the main access, egress and material haulage ramp for
the mine. Exploration Decline construction is expected to
take up to two years to complete. Once at depth, the upper
portion of the orebody will be drilled perpendicular to the current
drilling. This drilling will increase geotechnical knowledge
and tighten up the existing mineral resources drill density.
- Mine infrastructure and development including the first
underground primary jaw crusher about half way down the orebody
which will support production for the first 7.5 years. This Phase
will begin upon receipt of the Exploitation License from the bottom
of the Exploration Decline.
- Sustaining mine infrastructure development which provides
access to lower production levels and a second jaw crusher at the
bottom of the orebody which will be utilized for the final 7.5
years of the mine life.
LOM material will be transported to surface by a staged
underground conveyor system connecting to an overland conveyor to
the process plant.
Primary ventilation consists of a push/pull system with a fresh
air raise and a return air raise (RAR). Both raises will be
installed using raise bore techniques from access off the
Exploration Decline.
Mine dewatering will be conducted by a series of
pumps. The water balance predicts moderate inflow to
the underground from groundwater which will average between 25 to
30 liters per second over the life of mine. The dewatering
design capacity is 60 liters per second to accommodate groundwater
inflows and service water from mine operations.
The mining cost estimates were generated using first principles
development costs and associated support for the forecast ground
conditions. Labour and development costs were benchmarked on
operating mines within Eastern
Europe.
Metallurgical Testing Details
The metallurgical test work performed during this PEA study
further expanded upon prior work done in 2015 and 2016 where basic
parameters were established for a conventional copper flotation
process and flowsheet. For this PEA, the focus of the metallurgical
work was optimization of the established flowsheet and variability
testing.
Optimization test work, performed at SGS-Lakefield (SGS),
targeted the flotation conditions to separate the different copper
species and maximize recovery of metals while also maintaining the
quality of concentrates. This program generated additional
concentrate samples to be used to investigate other metallurgical
opportunities for the project at a scoping level, such as
pyrite-gold recovery options and arsenic reduction options for
copper concentrates.
The variability program, also at SGS, tested the response of
varying flotation conditions when fed with differing samples. A
parallel program was initiated in Serbia with the Mining and
Metallurgy Institute in Bor, to confirm results being generated at
SGS.
Processing Design Details
The copper mineralogy consists primarily of covellite and
enargite. The mineralization also contains significant amounts of
pyrite, accounting for approximately 45% of total tonnage.
The process plant design is based on key inputs from the
metallurgical test work programs, the mine production plan, and
industry best practices, including benchmarking of similar
copper-gold concentrators.
The process plant has been designed to treat an average of 8,900
tonnes per day, equivalent to 3.25M tonnes per annum. The
plant will produce a single bulk concentrate and a gold bearing
pyrite rougher concentrate ("Rougher Pyrite") which will be stored
in a dedicated pyritic tailings storage facility, a separate
compartmentalized subset of the larger Tailings Storage Facility
("TSF"). This tailings design preserves the potential to
profitably monetize gold contained in the Rougher Pyrite by further
processing it to either a saleable pyrite-gold concentrate or to
extract the contained gold at site. Approximately two thirds of
gold contained in the mined material over the life of mine reports
to the Rougher Pyrite.
Table 7: PEA Bulk Concentrate Grades and Recoveries
Material
Type
|
Cu
Grade
|
Years
|
Recoveries
|
Cu Concentrate
Grade (% Cu)
|
Cu
|
Au
|
As
|
High Grade
|
> 6%
|
1
|
94%
|
34%
|
84%
|
29%
|
Medium High
Grade
|
4 - 6%
|
2 to 4
|
94%
|
35%
|
94%
|
25%
|
Medium Low
Grade
|
2 - 4%
|
5 to 8
|
92%
|
27%
|
93%
|
20%
|
Low Grade
|
< 2%
|
9 to 15
|
87%
|
27%
|
82%
|
20%
|
The processing flowsheet is considered conventional and consists
of primary underground crushing; underground conveyors; overland
conveying to the processing plant; coarse material storage bins;
SAG and ball mill comminution circuit; copper flotation comprising
of rougher flotation, regrind, and three stages of cleaning; copper
concentrate thickening and filtration; and pyrite rougher
flotation. Other supporting systems to the process plant and
site are included and generally consist of reagents storage
and distribution; effluent treatment; water services which include
fresh, fire, service, and process water systems; compressed air
services; concentrate storage and handling; grinding media storage
and addition; and plant control rooms.
The capital cost estimate for the processing facilities was
prepared by Ausenco Canada. Pricing for major process equipment
such as the primary crusher, SAG mill, ball mill, regrind mill,
flotation cells, thickeners, and concentrate filters were obtained
through budgetary quotations sent to multiple suppliers per each
quotation package. The remainder of process equipment and
facilities have been sized/selected for this project's specific
requirements and priced based on benchmarks. Similarly, major
discipline quantities such as earthworks, concrete, and steel have
been priced based on drawings and unit rates benchmarked to project
location and jurisdiction. A similar approach was used for
the labour rates and productivities assumed in the buildup of the
cost estimate. In general, this estimating approach meets and
exceeds expectations for a typical PEA level study.
Though the basis of this PEA is production of a single bulk
concentrate, the robust flowsheet is flexible and allows the option
to produce two copper concentrate products, instead of a single
concentrate, with relatively minor additions of flotation
equipment. In the two concentrates scenario, a clean
concentrate less than 0.5% arsenic and a complex concentrate
greater than 0.5% arsenic would be produced. Which
concentrate is produced will be subject to the market conditions
for complex concentrate at that time, but the flexibility is key to
manage off-site realization costs.
Tailings Storage Facility Details
Knight Piesold Ltd. Vancouver
("KP") developed a long-term tailings storage strategy, including
initial starter dams construction, future expansion stages and
tailings deposition plan, to manage all deposition streams and
water management structures based on the proposed mine development
plan.
The proposed waste and tailings management system consists of
two separate Tailings Storage Facilities ("TSF"): Bulk TSF,
where final tailings of copper concentrator are deposited; and
Pyritic TSF, where the Rougher Pyrite is deposited for potential
future processing. The Pyritic TSF has both the basin and
embankment fully lined with High Density Polyethylene ("HDPE"),
while the Bulk TSF has a clay liner in the basin and the upstream
face of embankment lined with HDPE.
PEA level cost estimates were developed for construction and
closure of the TSF and water management structures using generated
material quantities by the study design and benchmarked unit cost
rates and productivity data from similar facilities in comparable
jurisdictions.
Environmental, Permitting and Reclamation Details
The Project has contracted Dvoper Ltd, the Belgrade based subsidiary of a Croatian
environmental permitting consulting firm, to support permitting and
ERM, a global environmental consulting company, to perform
environmental impact assessment work. ERM has subcontracted part of
that work to Envico, a Belgrade
based environmental and permitting consultant ("ERM/Envico").
ERM/Envico are also supporting environmental permitting.
The Project permitting process is on two separate and parallel
tracks. The first permitting track involves obtaining
approval to start development of the Exploration Decline and the
associated surface based supporting infrastructure at the portal
site. This permit is expected imminently with
Exploration Decline construction starting in Q1 2018. The
other permitting effort focuses on those permits required to
develop and operate the balance of the Project facilities,
including the remainder of the underground mine development, the
mineral processing facilities, TSF and other supporting
infrastructure.
Since acquisition in June 2016, an
International Finance Corporation ("IFC") aligned land acquisition
program has been underway in the project area under an incentivized
willing seller, willing buyer approach. To date, the Company has
acquired 28% of the total estimated lands for the project. The
Company has already acquired enough lands in the Exploration
Decline area to enable immediate construction once the permits have
been issued. Ongoing cooperation with government entities is well
underway regarding the acquisition of state-owned properties in the
Project area. Given the rural and recreational component of the
lands required for this project, less than ten physical and
economic relocations will need to be undertaken.
Closure work is being led by ERM/Envico and the closure criteria
were aligned with international best practices for closure and
rehabilitation.
Product Marketing and Logistics Details
A preliminary marketing review of the Project's anticipated
copper concentrates indicates that the material has a low
deleterious element composition except for arsenic. As
such, the Company assumed for purposes of this PEA it will market
to copper smelters and traders capable of processing or blending
higher arsenic copper concentrates (referred to generally as
"complex" copper concentrates). Higher treatment and refining
charges along with arsenic penalties will be incurred to compensate
buyers for managing this more complex concentrate. However,
the Company believes all of the Project's copper concentrates will
be marketable and sales can be made at acceptable terms in line
with the market for complex concentrates. Any future
relaxation of current arsenic import limits on copper concentrates
to China may materially improve
commercial terms and represent an upside to the Project.
In terms of logistics, the Project site is favourably situated
for export logistics and early investigations with regional rail
operators, road authorities and port facilities, demonstrate
diverse, viable road and rail options to transport concentrates to
inland smelters and Black Sea port terminals for overseas
shipments.
For this PEA, the realization costs shown in the table below are
based on SRK's reliance of the Company's own views and experience
with the copper concentrate market supplemented by a detailed
marketing report prepared by Bluequest Resources AG, a specialist
in marketing elevated arsenic content concentrates.
Table 8: LOM Realization Costs
LOM Realization
Cost Assumptions
|
$
Amount
|
Treatment
Charges
|
$157 per dry metric
tonne of concentrate
|
Refining
Charges
|
$0.157 per payable Cu
pound
|
Penalties (Arsenic
related)
|
$40 per dry metric
tonne of concentrate
|
Transport and Other
Selling Costs
|
$83 per dry metric
tonne of concentrate
|
TC, RC, Penalties,
Transport & Selling Costs & Transport
|
$1,578 M
|
Future studies will further investigate the potential to improve
the Project's overall net smelter return by marketing two separate
grades of concentrates, a "clean" copper concentrate with a low
level of arsenic and a complex copper concentrate with relatively
higher level of arsenic verses a single bulk concentrate with a
blended level of arsenic as assumed in this PEA.
Mineral Resource Estimate
All drilling data available for the Project as of April 24, 2017 was made available to SRK (UK). In
comparison with the previous March
2016 mineral resource estimate, the new database includes an
additional 52 exploration and resource drill holes resulting in an
additional 36,639 meters. The total drilling as of
April 24, 2017 consists of 180 holes
for 100,338 meters.
The summary Resource Statement for the Project is shown
below.
Table 9: Summary Updated Timok Upper Zone Mineral Resource
Statement (as at April 24, 2017)
Category (all
domains)
|
Tonnes
|
Grade
|
Contained
Metal
|
M
|
%
Cu
|
g/t
Au
|
%
As
|
Cu, M
tonnes
|
Au, M
ounces
|
Measured
|
2.2
|
8.6
|
5.7
|
0.29
|
0.19
|
0.40
|
Indicated
|
26.6
|
3.3
|
2.1
|
0.20
|
0.87
|
1.8
|
Total Measured and
Indicated
|
28.7
|
3.7
|
2.4
|
0.20
|
1.05
|
2.2
|
Inferred
|
13.9
|
1.6
|
0.9
|
0.06
|
0.23
|
0.42
|
Note: totals do not
match sum of individual items due to rounding. See full table
and notes at end of this news release. Qualified person Martin
Pittuck SRK UK
|
When compared to the previous March
2016 Timok Upper Zone Mineral Resource estimate, a
significant portion of the Inferred Resource ("Inferred") was
converted to Indicated Resource ("Indicated"). The resulting
contained copper in the Indicated category increased some 350% from
0.2 to 0.9 million tonnes and contained gold some 200% from 0.6 to
1.8 million ounces. In addition, 2.2 million tonnes of
previously Indicated resource was upgraded to the Measured Resource
category, at a grade of 8.6% copper and 5.7 g/t gold.
SRK considers that the key changes result from a combination of
the following factors:
- metal converted to Measured and Indicated, primarily due to new
infill drilling confirming the overall continuity of the geology
and mineralization, typical grade distribution and average grades
within better drilled areas of the deposit;
- reduction in geological continuity outside of interpreted fault
boundaries, which impacts on the margins of the highest grade
mineralization;
- refinement from infill drilling to the distribution of medium
to high grade layering within parts of the massive sulphide
domain;
- the lower volcano-sedimentary breccia domain postulated in the
previous model has been re-interpreted, based on new drilling
information; instead, low grade copper in covellite mineralization
continues to depth, constrained by more competent, unmineralized
andesite; and
- change in the cut-off approach from using copper grade to
Resource NSR ("RscNSR") value and elevation limit which has added
low grade material at depth.
The complete resource table with notes is included at the end of
this news release.
Technical Report
Further information about the PEA and the resource estimate
referenced in this news release, including data verification, key
assumptions, parameters, risks and other factors, will be provided
in the NI 43-101 technical report on the Timok Project that the
Company will file on SEDAR under the Company's SEDAR profile at
www.sedar.com within 45 days of this Press Release.
Cautionary Statement
The projected mining method, potential production profile and
mine plan are conceptual in nature and additional technical studies
will need to be completed in order to fully assess their viability.
There is no certainty that a potential mine will be realized or
that a production decision will be made. A mine production decision
that is made without a feasibility study carries additional
potential risks which include, but are not limited to, the
inclusion of inferred mineral resources that are considered too
speculative geologically to have the economic considerations
applied to them that would enable them to be converted to a mineral
reserve. Mine design and mining schedules, metallurgical flow
sheets and process plant designs may require additional detailed
work and economic analysis and internal studies to ensure
satisfactory operational conditions and decisions regarding future
targeted production.
About Nevsun Resources Ltd.
Nevsun Resources Ltd. is the 100% owner of the high-grade
copper-gold Timok Upper Zone and 60.4% owner of the Timok Lower
Zone in Serbia. The Timok Lower Zone is a partnership with
Freeport, which currently owns
39.6% and upon the completion of any Feasibility Study, Nevsun
Resources Ltd. will own 46% and Freeport will own 54%. Nevsun generates cash
flow from its 60% owned copper-zinc Bisha Mine in Eritrea. Nevsun is well positioned with a
strong debt-free balance sheet to grow shareholder value through
advancing Timok to production.
Qualified Persons Statement
The technical content of this press release has been reviewed by
the associated Qualified Persons ("QPs") listed below for specific
aspects of the report as defined by the National Instrument
43-101.
|
Mineral Resource –
Martin Pittuck SRK UK
|
|
|
|
Mining – Jarek
Jakubec SRK Vancouver
|
|
|
|
Economic Evaluation –
Neil Winkelmann SRK Vancouver
|
|
|
|
Mineral Processing –
Ray Walton
|
|
|
|
TSF – Mihajlo
Samoukovic, Knight Piesold Vancouver
|
Frazer Bourchier, P.Eng., is Nevsun's designated Qualified
Person and has reviewed and approved the overall contents of this
press release.
Each of the individuals listed above are independent QPs for the
purposes of NI 43-101. All scientific and technical information in
this press release in respect of the Timok Project or the PEA is
based upon information prepared by or under the supervision of
those individuals.
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. All statements, other than statements of
historical facts, are forward looking statements including
statements with respect to the Company's intentions for its Timok
Upper Zone Project in Serbia (the "Timok Project"), including
without limitation, future drilling and other work on the Timok
Project. The Company also cautions the reader that the
preliminary economic assessment ("PEA") on the Timok Project that
supports the technical feasibility or economic viability of the
Timok Project, including the marketability of the concentrate,
mining method, costs, processing, metal recoveries and any other
technical aspects related to the Timok Project, is preliminary in
nature and there is no certainty that the PEA will be
realized.
Forward-looking statements are frequently, but not always,
identified by words such as "expects", "anticipates", "believes",
"hopes", "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:
statements relating to the business, prospects and future
activities of, and development plans related to the Company,
anticipated dividends, goals, strategies, future growth,
exploration activities, the adequacy of financial resources and
other events or conditions that may occur in the future.
These forward-looking statements are based on a number of
assumptions which, while considered reasonable by the Company, are
subject to risks and uncertainties. In addition to the
assumptions contained herein, these assumptions include the
assumptions described in the Company's Annual Information Form
("AIF") and the Company's management's discussion and analysis for
the year ended December 31, 2016
("MD&A"). The Company cautions readers that forward-looking
statements involve and are subject to known and unknown risks,
uncertainties and other factors which may cause actual results,
performance or achievements to differ materially from those
expressed in or implied by such forward-looking statements and
forward-looking statements are not guarantees of future results,
performance or achievement.
These risks, uncertainties and factors include general
business, economic, competitive, political, regulatory and social
uncertainties; actual results of exploration activities and
economic evaluations; fluctuations in currency exchange rates;
changes in project parameters; changes in costs, including labour,
infrastructure, operating and production costs; future prices of
copper, gold, zinc, lead, silver and other minerals; resource
estimates and variations of mineral grade or recovery rates;
metallurgical challenges; operating or technical difficulties in
connection with exploration; achievement of land acquisition
requirements for the Timok Project; mining method, production
profile and mine plan; other development or mining activities,
including the failure of plant, equipment or processes to operate
as anticipated; delays in exploration, development and construction
activities; changes in government legislation and regulation; the
ability to maintain and renew existing licenses and permits and the
ability to obtain other required licences and permits in a timely
manner or at all; the ability to obtain financing on acceptable
terms and in a timely manner or at all; contests over title to
properties; employee relations and shortages of skilled personnel
and contractors; the speculative nature of, and the risks involved
in, the exploration, development and mining business; and other
factors and risks discussed in the Company's AIF and
MD&A.
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 AIF for the year ended December 31, 2016, 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.
"Peter G.J. Kukielski"
Peter G.J. Kukielski
President & Chief Executive Officer
Mineral Resource Estimate
All drilling data available for the Timok Upper Zone Project as
of April 24, 2017 was made available
to SRK (UK). In comparison with the previous March 2016 mineral resource estimate, the new
database includes an additional 52 exploration and resource drill
holes resulting in an additional 36,639 meters. The total
drilling as of April 24, 2017
consists of 180 holes for 100,338 meters.
The Mineral Resource has been evaluated based on a Resource NSR
("RscNSR") cut off value based on copper, gold and arsenic, using a
copper price of $3.49/lb and gold
price of $1,565/oz using long term
consensus forecasts with a 20% uplift as appropriate for assessing
eventual economic potential of Mineral Resources. Assumed technical
and economic parameters selected were based on the results of the
PEA study.
SRK considers that the blocks with a RscNSR value greater than
$35 have "reasonable prospects for
eventual economic extraction" and can be reported as a Mineral
Resource. SRK has determined a level in the block model (45 meters
below the lowest mining production level), based on a 5 meter
vertical block increment review, below which the RscNSR falls short
of covering this cost. The reported Mineral Resource comprises all
material above this elevation without re-applying an RscNSR cutoff
value to individual blocks, which prevents the reporting of
isolated blocks with >35 USD/t
RscNSR situated at the base of the model.
Mineral Resource Statement for Timok Upper Zone Project -
Cukaru Peki Deposit – Serbia
Effective April 24, 2017 –
Qualified Person Martin Pittuck, SRK UK
Category
|
Resource
Domain
|
Tonnes
|
Grade
|
Contained
Metal
|
Mt
|
%
Cu
|
g/t
Au
|
%
As
|
Cu
Mt
|
Au
Moz
|
Measured
|
Ultra-High
Grade
|
0.44
|
18.7
|
11.7
|
0.29
|
0.082
|
0.17
|
Massive
Sulphide
|
1.7
|
6.0
|
4.1
|
0.29
|
0.10
|
0.23
|
Indicated
|
Ultra-High
Grade
|
0.95
|
17.1
|
11.8
|
0.24
|
0.16
|
0.36
|
Massive
Sulphide
|
6.7
|
5.2
|
3.4
|
0.25
|
0.35
|
0.73
|
Low Grade
Covellite
|
19.0
|
1.9
|
1.1
|
0.17
|
0.36
|
0.70
|
Measured &
Indicated
|
Ultra-High
Grade
|
1.4
|
17.6
|
11.8
|
0.26
|
0.24
|
0.52
|
Massive
Sulphide
|
8.4
|
5.4
|
3.6
|
0.26
|
0.45
|
0.96
|
Low Grade
Covellite
|
19.0
|
1.9
|
1.1
|
0.17
|
0.36
|
0.70
|
Inferred
|
Ultra-High
Grade
|
0.45
|
15.0
|
10.8
|
0.16
|
0.07
|
0.16
|
Massive
Sulphide
|
0.80
|
4.9
|
3.4
|
0.11
|
0.04
|
0.09
|
Low Grade
Covellite
|
12.7
|
1.0
|
0.44
|
0.05
|
0.12
|
0.18
|
Total
Measured
|
2.2
|
8.6
|
5.7
|
0.29
|
0.19
|
0.40
|
Total
Indicated
|
26.6
|
3.3
|
2.1
|
0.20
|
0.87
|
1.8
|
Total Measured and
Indicated
|
28.7
|
3.7
|
2.4
|
0.20
|
1.05
|
2.2
|
Total
Inferred
|
13.9
|
1.6
|
0.9
|
0.06
|
0.23
|
0.42
|
Notes to be read in
conjunction with the mineral resource table above:
|
(1)
|
Resource NSR
value used to report the estimate is $US 35 per tonne
|
(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
|
(4)
|
Mineral
Resource is reported on 100% basis
|
SOURCE Nevsun Resources Ltd.