Zara Project

Dragon Mining Limited announces that Chalice Gold Mines Limited (“Chalice”) has exercised its option to purchase the Company’s 20% interest in the Zara Gold Project, Eritrea. Settlement, which will occur in two days, will result in Dragon Mining receiving $8.0 million in cash and 2 million Chalice shares (current market value of $0.9m) which will be escrowed for 12 months.

In addition, Chalice has the obligation to pay Dragon Mining a further $4.0 million on the delineation of 1 million ounces of gold Reserves at the Zara Gold Project. On 4 June 2010, Chalice announced a maiden gold Reserve at the Zara Gold Project of 760,000 ounces from an Indicated gold Resource of 840,000 ounces.

As at 31 May 2010, Dragon Mining had $21.4 million of cash and gold concentrate receivables compared to $11.8m at 31 March 2010 as reported in the quarterly report. With the receipt of the $8.0 million, the Company will have total cash and receivables of $29.4 million.

The limited obligations of Dragon Mining comprise a working capital facility of 2 million euros ($2.8m) which is repayable in two equal tranches on 30 June 2010 and 31 December 2010. In addition, as a result of on-market purchases by the Company, the outstanding number of convertible notes amount to 9.2 million.

Executive Chairman Peter Cordin stated, “It is pleasing that with the final delivery in August 2009 into the original hedge to finance the Svartliden development, the Company has substantially improved its balance sheet and cash position.

We are well positioned to meet forecasted production of 70,000 ounces of gold for 2010 and continue to generate strong operating margins with the appreciation of the gold price and the weakening of the euro and Swedish krona. The strong cash position will allow the Company to grow and enhance shareholder value.”

The Company is focussed on increasing the Reserves and mine life of its existing gold mines in Sweden and Finland. Feasibility studies for the underground operation at the Svartliden Gold Mine in Sweden and Jokisivu Gold Mine in Finland are nearing completion with commitment to development expected in the third quarter of 2010.

In addition the Company will be able to commit further funding to enhance the value of its exploration properties, particularly at Kuusamo in northern Finland.

Egypt

QNA reports that Egyptian Assistant Foreign Minister for African Affairs Ambassador Mona Omar has welcomed the mediation of the State of Qatar to settle the dispute between Eritrea and Djibouti, adding that Egypt welcomes any mediation that will realize peace between the two coutries.

She announced that her country was ready to make any effort to help achieve peace in this vital and important region, stressing that the return of normalcy between Eritrea and Djibouti is of interest to Egypt.

On the other hand, the Egyptian Assistant Foreign Minister revealed in a press statement released today that Chadian President Idriss Deby will begin a two-day visit to Cairo tomorrow (Tuesday) where he will hold talks with Egyptian President Hosni Mubarak and a number of officials on bilateral relations in addition to the latest developments in Sudan, especially in the Darfur region among others.

She also that Somali President Sheikh Sharif Sheikh Ahmed is expected to pay a visit to Egypt during the coming period, during which he is expected to hold talks with Egyptian officials on the situation in Somalia and the Horn of Africa.

Eritrean Artistis

The Delegation of the European Union in Eritrea is organising for the second time on a row the Art Competition “I Dream Therefore I Am”.

The competition calls on the youth and adults to express artistically their personal dreams, dreams for their family and dreams for their country or to interpret the theme “A world where no one is left behind”.

Participants are invited to create a work of art expressing their dreams in their preferred form of the artistic expression.

The competition is open for three different categories – Youth 11-18 years of age, Adult Non-Professional Artists and Adult Professional Artists. Participants from categories 1 and 2 must be resident in Eritrea, whereas category 3 is open to any participant from other countries in the region. The deadline of the competition is the 01 September 2010.

The European Union marks 2010 as the “European Year for Combating Poverty and Social Exclusion”. Therefore, the theme of this year’s competition is “A world where no one is left behind” The title of the competition goes back to the 19^th century Swedish Author Johan August Strindberg and expresses the feeling that every great idea starts with a dream.

During last year’s competition ten Eritrean artists received a prize for the best art works by the Head of the Delegation of the European Commission to Eritrea, Ms Paola Amadei, at the official awards ceremony.

This year’s prizes awards range from 800 Nakfa and an art kit in category Youth and 3000 Nakfa in category Non-Professional Artists to 10.000 Nakfa in category Professional Artists.

The United Nations Security Council late Friday extended its “fully support” to Qatar’s mediation, under the auspices of H.H. the Amir Sheikh Hamad bin Khalifa Al-Thani, between Djibouti and Eritrea, and welcomed their signing of an agreement aimed at resolving their two-year old border dispute.

“The members of the Security Council are encouraged by the willingness of the parties to resolve their border dispute peacefully, in full compliance with the provisions of relevant Security Council statements and resolutions, and in accordance with the United Nations Charter,” council President Claude Heller of Mexico told reporters on behalf of the other members.

The members also called upon both parties to engage in the mediation process “fully and in good faith, to refrain from the use or the threat of use of force and to abide by their commitments” under the agreement, and to solve their dispute and normalize their relations for the overall stability and security in the region.

The leaders of Eritrea and Djibouti signed a deal last week vowing to pursue a negotiated settlement to their dispute.

The deal ends the conflict that erupted in early 2008 when, after weeks of tensions and military build-up, the two countries’ armed forces clashed over an un-demarcated area in the Red Sea known as Doumeira, killing 35 people and leaving dozens of others wounded.

Earlier this week Secretary-General Ban Ki-moon also issued a statement welcoming the deal and expressing confidence that it will “contribute to long-term peace and stability” in the region.

Nevsun Resources Ltd. (TSX:NSU)(NYSE Amex:NSU) -

At the request of Market Surveillance of the Investment Industry Regulatory Organization of Canada (IIROC), on behalf of the Toronto Stock Exchange, the Company wishes to advise that it is not aware of any material undisclosed development that would cause the significant upward movement of the Company’s share price.

The Company’s Bisha Project continues to be on target for plant commissioning in late 2010. We refer you to other recent news releases for information about the Bisha Project.

NEVSUN RESOURCES LTD.

Cliff T. Davis

President & Chief Executive Officer

For further information, please contact:

Eritrea

In a recent Exploration+Processing Magazine editorial, Stacy Davidson describes Eritrea with its 620 miles of coastline along the Red Sea as a historic centre of attention for various foreign powers, including the Ottoman Empire, Egypt, British Empire and Italy.

Nevertheless, Eritrea received the most attention from its larger neighbour Ethiopia, causing 30 years of oppression from the early 1960s to 1991 during the Ethiopian reign over Eritrea.

Eritrea fought a long and bitter independence war against Ethiopia and soon after the struggle had to face the challenge of rebuilding most of its shattered infrastructure and economy to serve the people of a new nation. According to Davidson, it was around this time that a Canadian gold and base metal explorer by the name of Nevsun Resources Ltd. shifted its focus towards southern Africa.

Nevsun’s history dates back to its founding year in 1965 in Vancouver as a minor exploration entity working on small mining projects geographically limited to North America. Nevsun’s expansion to markets abroad began in 1993 when it successfully started to identify properties with significant potential in Africa. The Kubi project in Ghana, under an agreement with Anglogold Ashanti, and Tabakoto mine in Mali were Nevsun’s first overseas ventures in 1999 and 2004. Both properties were sold between 2007 and 2008 as Nevsun wanted to focus solely on Eritrea, according to Nevsun CEO Cliff Davis.

In 2003 Nevsun made a discovery at Eritrea’s Bisha property, and it soon become apparent the Nevusn and the government of Eritrea would have a mutual interest to develop the property. Nevsun says that Bisha will be the first mine operating since colonial times in Eritrea and acknowledges the commitment of Eritrea’s President Isaias Afewerki to develop a mining industry to pursue Eritrea’s economic rehabilitation. The government holds a 10 percent free participating interest in the Bisha Mine and a 30 percent paid participating interest through the Eritrean National Mining Corporation (ENAMCO), which is a state owned mining company.

Eritrea’s government’s objective is to have a clean well-developed mining industry and Nevsun has not experienced any kind of corruption or underhanded dealings, says the company. “We got into Africa in 1993 and in 1997 received an enquiry about investing in Eritrea,” Nevsun CEO Cliff Davis recalls. “By 1999, we were actively engaged in Eritrea and exited about the potential we saw there.” Today Nevsun is nearly finished with the construction of the Bisha Mine and expects it to be in operation by the end of 2010. The Bisha project is a large precious and base metal-rich volcanogenic massive sulphide deposit, and it is fully financed and permitted. Nevsun says the mine will be a low cost gold producer for the first two years of its 10-plus mine life time.

The company expects to return payable metals of: 1.06 million ounces gold, 9.4 million ounces silver, 734 million pounds copper, and 1 billion pound zinc. Nevsun highlights that drill hole intersections have encountered mineralization to a maximum tested depth of 1300 feet, but further resource potential exists beyond depth and from nearby discoveries within the company’s licensed areas. Further, it believes that the mine life of Bisha could be far more than 10 years based on evidence from potential resources deep inside the Bisha mine.

Nevsun’s CEO projects that the company will employ at least 350 local employees and 50 expats when Bisha will reach full operational capability. He ads that Nevsun is employing around 600 local people and 100 expats during the current construction phase and committed to train and develop locals due to a lack of skilled human resources in the country. Nevsun has developed three scenarios of economic estimates from the mine, based on three types of metal prices:

1. With low metal prices, the company projects a 20 percent internal rate of return, payback within 2.8 years and $426 million net cash for mine’s life.
2. With medium metal prices, the company projects a 45 percent rate of return, payback within 1.6 years and $1.1 billion net cash for mine’s life.
3. If metal prices are high, it plans with 63 percent internal rate of return, payback within 1 year and $1.75 billion net cash for mine’s life.

In addition Nevsun continues to work at the nearby Harena deposit, which is within its current mining licence, to define its potential as mill feed for the Bisha plant. There are also plans to drill at other potential targets on the property, along with continued prospecting, mapping, sampling and ground geographical surveys in order to identify new targets within its license.  However, right now the company is focused on getting its Bisha plant into production according to its CEO.

Qatar

DOHA – Qatar said on Monday that Eritrean troops have withdrawn from an area they controlled in Djibouti as a result of Doha’s mediation bid to end a territorial dispute between the two neighbours.

Qatari Prime Minister Sheikh Hamad bin Jassem al-Thani was quoted by official QNA news as saying that Eritrea has already conducted “a withdrawal from disputed border areas,” a move verified by a Qatari observer force.

The Qatari mediation provides for the formation of a committee, headed by Sheikh Hamad, which is empowered to appoint an international firm to demarcate the border, with Eritrea and Djibouti’s consent, QNA said.

The Qatari observation force is tasked with monitoring the border between the two countries “until the conclusion of a final agreement on settling the conflict,” QNA reported.

The force, made up of about twenty soldiers, arrived in Djibouti on Friday, according to Djibouti press reports.

The long-running border row between Djibouti and Eritrea over the disputed Ras Doumeira promontory on the shores of the Red Sea led to clashes in 1996, 1999 and again in 2008.

Qatar, a small Gulf country rich in natural gas and oil, has offered to mediate in various conflicts, including internal strife in Sudan, Yemen and Lebanon. (Middle East Online)

PERTH (miningweekly.com) – ASX-listed gold explorer Chalice Gold Mines has declared a maiden ore reserve of 760 000 oz for its Koka gold deposit, in Eritrea.

The Koka gold deposit forms part of the Zara gold project, in which Chalice holds an 80% stake.

The Koka deposit was now estimated to host around five-million tons of ore, grading at 5,3 g/t gold, for 840 000 contained ounces. The project further hosted a probable ore reserve of 4,6-million tons, at 5,1 g/t gold for the 760 000 contained ounces.

Chalice said in a statement that the new resource and reserve statement for the Koka deposit was a critical component of the feasibility study currently being conducted. The feasibility study was expected to be completed by next month.

While the current feasibility studies were still under way, Chalice was aiming to start gold production at the Koka deposit during 2011.

Last week, Chalice said that it would raise A$9,1-million to buy the remaining 20% stake in the Zara project, from Dragon Mining.