Nevsun soars on African projects

Vancouver – Riding a surging gold price, junior Nevsun Resources (NSU-T) is wasting no time in advancing its two promising projects in Mali, West Africa.

The latest bout of in fill reverse circulation drilling aimed at defining the Main zone of the Segala deposit at 25 metres spacings has confirmed the continuity of broad mineralized zones hosting high-grade sections.

The best drill results came from holes 357, 359 and 364, which returned 25.62 grams gold per tonne over 3 metres, 9.81 grams gold over 6 metres and 10.44 grams gold over 30 metres, respectively.

Holes 349 and 354 tested the margins of the deposit and failed to cut any significant mineralization. Other highlights include:

• Hole 355 – 6 metres grading 1.38 grams gold from 76.5 metres downhole,
• Hole 356 – 9 metres grading 4.09 grams gold from 21 metres downhole,
• Hole 358 – 7.5 metres grading 2.06 grams gold from 12 metres downhole,
• Hole 360 – 4.5 metres grading 4.77 grams gold from 40.5 metres downhole,
• Hole 361 – 6 metres grading 8.23 grams gold from 42 metres downhole,
• Hole 362 – 36 metres grading 2.6 grams gold from 42 metres downhole.
• Hole 367 – 42 metres grading 4.66 grams gold from 36 metres downhole,

A new resource estimate is expected by the first quarter of 2003 with a final feasibility study for the Segala Deposit (Main and NW zones) slated completion in the first half of the new year. Drilling on the NW zone is complete with assay results still pending.

The program is part of a $4 million, 23,000 metre drill campaign on the Tabakoto and Segala mining licenses. So far diamond and RC drilling has been completed on the Far NW Segala, Moralia, and the Dar Salam exploration targets on the Segala property and diamond drilling is now underway on exploration targets on the Tabakoto property

Nevsun picked up a 77% stake in the Segala project from Semafo (Barbados) Ltd. The price tag came in at US$9 million, of which US$1 million and 2.86 million shares represented the initial payment of US$3 million. The remaining US$6 million is payable to Semafo over three years by a combination of cash (US$3 million) and shares (valued at US$3 million). Nevsun had already acquired 3% stake by paying US$150,000 and the issuance of 56,000 shares. The remaining 20% of the property is held by the Government of Mali.

“The final purchase of this interest in Segala positions Nevsun as the majority owner and operator of a significant undeveloped gold project in West Africa, the combined Tabakoto/Segala project,” said Nevsun’s president, John Clarke. “Tabakoto/Segala can now be developed in tandem.”

In October, Nevsun tabled a robust feasibility study over the Tabakota project. some 4-km to the south. Completed by South African-based MDM, the study envisions a 650,000 tonne per year open pit operation cranking out some 105,400 oz of gold annually over a 5-year mine life. The average grade coming out of the proposed pit tallies 5.45 grams gold with a recovery rate hitting 96%. The average production cost is expected to be US$185 per oz. Preproduction costs come in at US$24 million with the project generating an internal rate of return of 35%.

Other surface resources on the property could extend the mine life of the operation by another 2 years. There is an inferred resource lying within the waste envelope of 220,000 tonnes grading 8.56 grams gold and 978,000 tonnes grading 8.48 grams gold in the northern pit extension.

The company has also been evaluating the prospects of moving to an underground operation once the open pit is depleted. The underground mining pre-feasibility envisions mining to a depth of 600 metres at a rate of 330,000 tonnes per year over a 6-year mine life. The initial capital cost for developing the underground mine is estimated at US$7 million with production averaging 75,000 oz per year. The average grade comes in at 7.5 grams gold with recoveries hitting 96%. The junior is now trying to raise financing to turn the property into a mine by the second quarter of 2004.

The pre-feasibility study was based on a total gold resource of 1.88 million oz. of gold comprising an indicated resource of 5.6 million tonnes grading 7.5 grams gold of primary material and 535,000 tonnes grading 1.8 grams gold of oxide. The inferred resource tallied 2.1 million tonnes grading 7.64 grams gold of sulphide material.

In April, the junior picked up more ground around Tabakoto. The Dioulafoundou, Koutila and Fougala claims upped the size of the project to 60 sq km from 26 sq km.

The Dioulafoundou and Koutila project were acquired from Malian entities for 450,000 and 150,000 shares plus US$60,000, respectively.

Dioulafoundou and Koutila have been subjected to a property wide soil geochemical survey, limited termite mound sampling, magnetometer and VLF-EM geophysical surveys as well as preliminary geological mapping. Limited auger, reverse circulation and diamond drilling was carried out on the property.

“Nevsun will continue its efforts to increase its resource base through aggressive exploration of its present Tabakoto/Segala area land holdings,” adds Clarke.

The two projects cover 83 sq km in the Kenieba district of western Mali.

The company also holds the Kubi project in Ghana. Gold production began in 1991, but is currently on care and maintenance while joint-venture partner Ashanti Goldfields seeks permits to mine its reserve of some 225,868 tonnes grading 4.61 grams gold. Mining was conducted at the Kubi pit up to the boundary with a designated forest reserve area. The current pit depth is 112 metres, which is also the ultimate pit bottom.

In April 1999, Ashanti made an initial payment of US$1.8 million for the first 60,000 oz to be recovered. 20% of the initial payment is held in escrow pending receipt of either a permit to mine inside the forestry reserve or the recovery of the first 60,000 ounces from areas outside the forestry reserve. In addition, Ashanti will make royalty payments of US$15 per ounce for every additional oz recovered beyond 60,000 ozs. Should the gold price exceed US$325 per ounce, Ashanti shall pay Nevsun an additional 20% of the amount by which the gold price exceeds US$325 per oz for all the oz over 60,000.

Nevsun has been one of the best performing stocks on the Toronto Stock Exchange this year soaring nearly 900% to $1.84 from $0.21.

The company is one of only a few small-cap gold companies that have advanced-stage projects that were revived by a rising gold price.