Eritrea Mining

(The Northern Miner – Gwen Preston) Asmara, Eritrea — Despite brimming with geologic promise because of its location within the prolific Arabian-Nubian Shield, Eritrea has remained underexplored for years.

Continued violence and turmoil in the young nation left the international exploration community highly wary until recently. And the country’s location did not help: Eritrea is part of the Horn of Africa, sharing borders with Sudan, Ethiopia and Djibouti, and not too far from Somalia.

But its location could soon become a benefit. Eritrea boasts a long Red Sea coastline and recently revived its major port, known as Massawa, both of which make it a point of interest for the Middle East and Asia.

Across the Red Sea, Saudi Arabia is busy building a $2-billion smelter complex that is in need of ore, Asian markets are but a short ship voyage away, and Indian smelters would also enjoy access to concentrates from a nearby nation.

Mineral exploration companies from the Middle East, Asia and India are all in Eritrea, searching for the next high-grade volcanogenic massive sulphide (VMS) deposit. But it is a Canadian company, Nevsun Resources (nsu-v), that is leading the charge: Nevsun found the country’s first major VMS deposit and is now halfway through building a mine at Bisha.

At every step in its eight years in Eritrea, Nevsun has shouldered the challenge of being a first mover. In working from a mining code that had never before been tested by the building of an actual mine, Nevsun and the Eritrean government formulated a mine development agreement that defined the realities of mining in Eritrea and will be used as a template for all mine agreements in the country to come.

The United Nations’ late-2009 decision to impose limited sanctions on Eritrea, because of the country’s unwillingness to abide by regulations on its dealings with Djibouti and alleged arms dealings with Somalian rebels, looked set to derail Nevsun’s efforts earlier this year. Bank insurers balked at the sanctions and the company’s recently-negotiated debt facility fell through.

Nevsun’s determined management team went to the equity markets instead, and raised the funds it needs to complete Bisha mine construction. And, of course, with equity funding the mine’s cash flow will no longer be impeded by financing costs and debt repayment.

So Bisha is on track, on budget, and set to become Eritrea’s first operating mine before the end of the year.

Bisha mineralization

The Bisha mine is in Eritrea’s arid west, 250 km by road from its capital city Asmara. Flying from Asmara to Bisha reveals a varied landscape, from dry rolling plains to high, steep hills.

The clean modern buildings of the Bisha mine camp seem out of place in the seemingly empty desert. But close by lies the Bisha deposit, a significant VMS discovery and the basis of Eritrea’s first mine.

Discovered in 2003, Bisha is a layered VMS deposit. Lenses of mineralization are stacked one atop another in a steeply plunging orebody that is more than a kilometer long on surface but narrows as it descends. Nevsun has tracked the deposit to 450 metres depth; below that it remains open.

The top layer comprises gossan that is stripped of base metals but enriched in precious ones, especially gold. The 35-metre-thick oxide layer starts at surface and carries an average grade of 7.99 grams gold per tonne and 32.85 grams silver per tonne throughout its 4 million tonnes of proven and probable reserves.

Those 4 million tonnes will carry the Bisha mine through its first 2.5 years of operation. Working with what nature provided, the Nevsun team devised a mine plan that moves through three stages as the open pit reaches the three key mineralized layers. After churning through oxidized, gold-bearing gossan for just over two years to produce 900,000 oz. gold and 1.5 million oz. silver, the Bisha open pit will hit the supergene layer and the mill will shift gears to focus on copper.

Supergene layers occur at the base of oxide layers, which end at the water table. When the VMS deposit at Bisha originally formed, it would have been made entirely of sulphide minerals. As the deposit moved towards the surface, however, the upper layer encountered the water table. Percolating groundwater oxidized the primary sulphide minerals and then carried the minerals downwards. At the base of the water table, the oxidized minerals reacted again, converting back to sulphide minerals but this time forming secondary sulphides, which have higher metal contents than primary sulphide minerals.

The result is a layer of secondary sulphide mineralization enriched in base metals. At Bisha, the top of the VMS deposit originally held gold, silver and copper. Precious metals do not readily mineralize as sulphides or oxides, so the leaching process does not affect them much. But copper is almost always leached from oxide zones and at Bisha it has been perfectly re-deposited in a copper-rich supergene layer. The layer reaches from 35 to 65 metres depth, totalling 6.35 million proven and probable tonnes, and carries an average grade of 4.4% copper as well as 0.83 gram gold and 35.98 grams silver.

The supergene layer will feed the Bisha mine for three years, producing 538 million lbs. copper plus 80,000 oz. gold and 3 million oz. silver. Finally, the mine will start to tap into the primary sulphide portion of the deposit, which means the mill will shift focus again, this time to zinc.

According to Nevsun’s current plan, the Bisha open pit will reach 200 metres depth. To that depth, the pit’s primary sulphide layer contains 9.7 million proven and probable tonnes grading 7.21% zinc, 1.14% copper, 0.76 gram gold and 54 grams silver.

However, Nevsun knows the deposit continues to more than twice that depth at the south end. At the north, mineralization ends at just over 100 metres depth but halfway along the deposit’s 1.2-km strike, the zone suddenly opens up at depth. The deepest intercept to date returned 128 metres grading 0.66 gram gold, 49.1 grams silver, 0.96% copper, and 7.36% zinc, starting 289 metres downhole and including 84 metres of 0.71 gram gold, 63 grams silver, 0.92% copper, and 11.1% zinc.

The pit was planned using conservative metal prices, specifically US$400 per oz. gold, US$1.05 per lb. copper, and US50¢ per lb. zinc. With current prices significantly higher — 2.5 times higher for gold, more than three times higher for copper, and double for zinc — Nevsun is remodelling the pit to extend the mine life by going deeper.

Deepening the pit to chase the steeply-plunging deposit farther would increase the strip ratio, but Nevsun does not expect the increase to be dramatic. While details of the remodelled pit have not yet been released, the company has said deepening the pit to 400 metres from 200 metres would increase the strip to 5 to 1 from 4 to 1.

In addition, Nevsun has partially defined a zone adjacent to the Main Bisha deposit that could reduce the strip ratio back down. Known as the Hangingwall Copper zone, the additional mineralization is being considered waste rock in a pit remodel because it does not carry a defined resource.

Previous drilling returned several promising intercepts from the Hangingwall zone, such as 56.5 metres grading 0.81% copper, 19.3 metres of 2.11% copper, and 12 metres of 2.64% copper. The area has not been drilled since 2006. If Nevsun decides to deepen the pit, the company would better define the Hangingwall zone and the new resource would reduce the wasterock increase.

Plans for the pit may still be changing but plans for the mill, which is more than 50% complete, are solid.  The operation will churn through 5,500 tonnes of ore each day or 2 million tonnes a year. Nevsun actually oversized the plant, making it capable of processing 3 million tonnes annually, to give the company room to ramp up production if it wants.

During phase one, when the feed is oxide, ore will be crushed and leached in cyanide tanks, with gold then recovered via conventional carbon-in-leach technology and poured into doré bars. Before phase one is complete, Nevsun will install the flotation system needed for phases two and three. Copper and zinc will be recovered via flotation.

After producing 900,000 oz. gold and 1.54 million oz. silver in phase one, Bisha will shift to producing 180 million lbs. copper and 1 million oz. silver a year for three years. In the 4.5 years of phase three, the mine will kick out roughly 240 million lbs. zinc, 44 million lbs. copper, and 1 million oz. silver annually. Metal concentrates will be trucked from Bisha to the port at Massawa, roughly 400 km away by road.

The operation’s cash costs are fairly low. Including by-product credits, in phase one it will cost US$210 to produce an ounce of gold, in phase two it will cost US67¢ to produce a pound of copper, and in phase three it will cost US54¢ to produce a pound of copper and US50¢ for a pound of zinc. Nevsun’s original feasibility study for Bisha, completed in 2006, pegged capital costs at $250 million. With the mine almost

complete, Nevsun recently revised that number, but only slightly, to $260 million.

The company has already spent more than $130 million at Bisha. And with the recent close of a $117-million private placement, plus funding from the Eritrean government’s 30% participating stake in the mine, Nevsun has all the cash it needs to finish building the mine.

Eritrean partner

Yes, the Eritrean government has a stake in Bisha. The country’s mining code gives the government an automatic, carried 10% stake in every mineral project. The code also gives the government a right to buy another 30% participating stake in any project and, in late 2007, the Eritrean government decided to step up its ownership of Bisha.

It took several months for Nevsun and the government to finalize the terms of the deal. But by the end of 2007, the partners had become just that, with the signing of a mining agreement for Bisha. The agreement required the Eritrean government to start contributing its 30% share of costs right away but the government did not immediately have to hand over a chunk of cash to pay for its ownership position.

Instead, that payment is due when Bisha ships its first gold. When that shipment happens, an independent agency will essentially complete a new feasibility study on Bisha using actual capital costs. That study will determine the project’s value and the Eritrean government will have to pay for its 30% interest based on that valuation.

The Eritrean national mining company, ENAMCO, has already contributed $80 million towards Bisha. ENAMCO has handed over $25 million towards its ownership position, contributed $35 million towards construction costs, and loaned $20 million to Nevsun. The construction contribution is not applicable against the purchase price, so when the first gold is poured and the valuation completed, ENAMCO’s payment will be calculated as 30% of the project’s net present value (NPV), minus $45 million.

The valuation will use consensus life-of-mine metal prices, determined as the average of 10 predicting houses. Using current metal prices, the project generates a NPV of roughly US$1 billion.

“Of course the negotiations were difficult — there is a lot at stake,” says Cliffs Davis, Nevsun’s president and CEO. “But afterwards, one of the government’s key negotiators came over and said to me, ‘We hope that payment is a big one,’ because of course that would mean the project is set to provide the government with considerable cash through taxes, royalties, and its own portion of revenue. So the better the project, the better for both us and them.”

The reality of operating in Eritrea also impacted Nevsun’s financing efforts. In mid-2009 the company lined up a $235-million credit facility to develop Bisha. The loans were to come from a consortium of South African and European lenders. Everything was ready to go when the UN imposed sanctions on Eritrea in December.

According to the UN Security Council resolution, the sanctions stem from concerns that Eritrean nationals are providing “support to armed groups undermining peace and reconciliation in Somalia” and worries that the Eritrean government has “not withdrawn its forces following clashes with Djibouti in June 2008.” The sanctions are very specific; the U.N. imposed an arms embargo on the country, and placed travel restrictions and asset freezes on its political and military leaders. The news immediately pushed Nevsun’s share price down to the $2.55 area, from closer to $3.20. But Nevsun is actually not too concerned.

“Except for the impact of the market’s misconceptions, we don’t think the UN sanctions will have any significant implications on the abilities of mining companies to conduct business here,” says Davis. “The sanctions are very specific and the United Nations does not want these to become more general.”

The sanction did create one significant problem for Nevsun: the European lenders involved in the credit facility required support from the German government, which can give a partial guarantee to lenders. Nevsun waited several months for the Europeans to try to insure the loan but, by early February, the company realized time was running out. Nevsun was funding Bisha development with cash until the loans became available and the company’s cash position was dwindling.

So Davis found a way around the problem. A few days into February Nevsun announced a $117-million private placement; within two weeks the company had closed the deal, selling 52 million shares at $2.25 apiece. The funds will be sufficient to carry Nevsun and Bisha through commissioning into cash flow positive operations.

Expansion potential

The current Bisha mine plan only calls for mining the Main deposit but, in addition to the potential Hangingwall zone resource expansion, chances are good that Nevsun will define more resources in the area to extend the mine life. The company has already identified two new VMS discoveries within its Bisha mine licence.

Nevsun discovered the Northwest zone, which is 1.5 km north and slightly west of the Main Bisha deposit, in 2003 when a few initial drill holes returned low-grade massive sulphides. In 2005 the company returned to the area and pulled two significant, well-mineralized massive sulphide intercepts from the ground, including 22.1 metres grading 1.42% copper and 4.67% zinc in hole NW8.

In 2006 Nevsun punched four more holes into the Northwest zone that returned sphalerite-rich intercepts from the zone’s southwest. The results, such as 22 metres of 7.08% zinc and 12 grams silver, led Nevsun to believe the Northwest zone actually comprises a main, lower-grade massive sulphide body with a second, zincrich lens sitting just to the southwest. With all its energy focused on permitting and building the mine, Nevsun has not been able to return to the Northwest zone since 2006 but plans to ramp up expansion exploration once the mine is operational.

The second area that offers expansion potential is the Harena zone, which lies 9.5 km southwest of the Bisha Main deposit. Harena is developing into a third nearsurface massive sulphide zone with the potential to provide additional feed to the Bisha mill.

Discovered through geophysics and initially drilled in 2005, Nevsun returned to Harena in late 2009 to conduct infill drilling and recently released the results. The northeast-striking, 400-metre-long zone seems to carry gold, silver, copper and zinc.

Collared at the northeast end of the zone, hole 29 returned 7 metres grading 2.71 grams gold, 51.86 grams silver, 1.01% copper and 0.14% zinc from 62 metres depth. From 100 metres to the southwest hole 32 cut 37.4 metres grading 0.13 gram gold, 9.72 grams silver, 0.37% copper, and 3.51% zinc, starting 63 metres downhole and including 5.2 metres averaging 2.62 grams gold, 134.42 grams silver, 1.95% copper and 1.35% zinc. Then a line of holes across the centre of the zone, another 100 metres to the southwest, produced three promising intercepts: Hole 35 hit 31 metres of 2.41 grams gold and 12.71 grams silver; hole 36 returned 37.7 metres averaging 0.32 gram gold, 27.18 grams silver, 0.74% copper and 3% zinc; and hole 37 cut 23.5 metres of 0.61 gram gold, 30.52 grams silver, 1.09% copper and 4.5% zinc.

The Country Question

Eritrea is a difficult country to understand. Its history tells part of the story but the country’s trajectory since its very recent independence and its generally closed door policy makes its recent past appear dark and veiled to outsiders.

Eritrea was under Italian control, first as a colony and then as a province, from the late 1800s until 1941 when British armed forces expelled the Italians. The British controlled the country only until 1951 when, pursuant to a UN mandate, Eritrea was federated with Ethiopia. Eritreans initially welcomed the federation but, before long, Ethiopia started to exert more control over its northern neighbours than they wanted. Then, in 1962, Ethiopia annexed Eritrea as its 14th province.

The Ethiopians’ lack of regard for the Eritrean population soon prompted an independence movement that led to war. The bloody, 30-year war did not end until 1991. In 1993, following a UN-supervised referendum, Eritrea declared its independence and gained international recognition.

At first, the international community welcomed Eritrea as a prime candidate for a much needed African success story. The long liberation war had hard moulded Eritreans into a determined population led by a political party, the Eritrean People’s Liberation Front (EPLF), that enjoyed popular support and endorsed liberal democracy, human rights and free markets.

Sadly, the dreams of 1993 and the reality of modern Eritrea are much different. Eritrea’s conflict with Ethiopia reignited in 1998 and led to another horrible war, this one lasting three years. In the aftermath of that war, a group within the government started to question the president’s authority and decisions. A dissident movement started to gain momentum, with independent newspapers and social groups challenging the EPLF’s monopoly on power.

But the dissident movement met a rapid end in September 2001 when the President ordered a nation- wide clamp down. Government forces arrested hundreds of critics, closed down all private media outlets, and placed limits on the general public’s activities.

The constitution, ratified by the government in 1997, has still not come into effect. The government has used the threat of war with Ethiopia as an excuse to repeatedly postpone elections, which were originally scheduled for 1998 but still have not occurred. The country today runs as a singleparty state.

Organized political opposition is forbidden, and military service is compulsory — at age 16 teenagers leave for two years of training and many Eritreans, especially men, stay in the service for the rest of their lives.

Eritrea’s troubles as an independent country are reflected in various international rankings of democracy and human rights. The country places 164th out of 179 countries on the United Nations’ Human Development Index. On the Worldwide Press Freedom Index 2008, Eritrea took the last rank in the world for the second year. Transparency International ranked Eritrea 126th out of 180 countries on its Corruption Perceptions Index. And in the Freedom of the World survey for 2008, in which Freedom House evaluates the state of global freedom as experienced by individuals, Eritrea is classified as being “Not Free,” and grouped with the world’s most repressive societies.

Within the country, however, the feeling is not one of repression. Perhaps the realities are well shielded, but, to a Western reporter, the country and its people appear functional and reasonably happy.

For the country with the biggest per capita defence budget in Africa, the military presence is surprisingly minimal. There are checkpoints at the entrances and exits to major cities, but their lack of guns and use of a thin rope as the main barrier make them feel more like a formality than a threat.

Foreigners require visas to enter the country and travel documents to move around within it. Eritreans are free to move around within the country but require permission to leave. The country is just about crime-free — a foreigner can walk the streets of the capital city in the middle of the night and usually be perfectly safe.

The main occupation in Eritrea is agriculture, most of which is sustenance farming. Half the population is Christian and half is Muslim; the two groups live in peace. There is as much

Western garb as traditional clothing and there is more female representation in the Eritrean National Assembly than there is in Canada’s parliament.

One of the most interesting aspects of this African nation is its determination to be self-sufficient.

From the time of independence, Eritrea has shunned foreign aid, choosing instead to try to develop the abilities to care for its own people. In terms of food it generally succeeds, even exporting some livestock and grain, though a drought last year necessitated some food aid.

And there are essentially no nongovernmental organizations (NGOs) in the country. The lack of NGOs is in part because of Eritrea’s focus on independence, though the primary reason is that the EPLF has thrown most of them out.

Perception and reality clash constantly, in the eyes of an outsider visiting Eritrea. Is the government not actually as repressive as the rest of the world thinks it is? Or is the repression very real but hidden from view?

In a short stay those questions remained unanswered. In terms of its developing mining sector, however, those Eritreans involved in it appear thoughtful and reliable. The government knew very little about mining just eight years ago and now is poised to hold a 40% stake in a brand new, promising mine. Nevsun’s experiences dealing with the government have been positive, if sometimes slow, and the company truly believes it has found a solid partner in ENAMCO.

By the end of the year, Bisha’s mills should see their first ore and Nevsun will have done its all to define mining in Eritrea.

NGEx

(NGQ-TSX) NGEx Resources Inc. (“NGEx” ‘ or the “Company”) is pleased to report that the initial diamond drill program at the Aradaib prospect has resulted in an exciting new copper/zinc discovery.

Aradaib is a new volcanic hosted massive sulphide prospect in northwestern Eritrea on trend with the Company’s growing Hambok copper/zinc deposit and Nevsun’s Bisha deposit now under development.

The first hole, ARD-10-001, tested a gossan outcrop highly anomalous in gold, copper, zinc, silver and lead returning a 17 meter interval of massive and semi-massive sulphides. Significant assay intervals are shown in the following table:

Weighted averages from ARD-10-00

NOTE: The above intervals are drill hole lengths.  There is currently insufficient information to determine the true widths of the intervals

The sulphide interval is overlain by gossanous oxidized sulphides and altered hanging wall rocks, with locally intense kaolinite, alunite and hematite alteration from which metals have been leached.

A second hole, ARD-10-002, drilled 230 meters to the northeast, intersected altered host volcanic rocks with pervasive disseminated and stringer sulphides, returning a 3 meter interval of 1.30% Zn from 60.0 meters depth. The remainder of the hole was strongly anomalous in copper and zinc. Recent geological mapping together with the results of ARD-20-002 indicates that the sulphide body intersected in ARD-10-001 plunges moderately to the south.

Commenting on the Aradaib discovery, Wojtek Wodzicki, President and CEO stated, “The Aradaib discovery drill hole is the best the Company has drilled in Eritrea. The intercept is notable for its thickness, gold content, high zinc and copper grade, and could represent a very significant new gold-rich massive sulphide discovery in a new and unexplored area. The mineralization is open on strike and down dip and recent prospecting has found additional significant mineralized outcrops along a four kilometer trend. We are very excited about this discovery and plan to follow it up with an aggressive drill program over the coming months.”

The Aradaib prospect is located on NGEx’s Kerkebet River exploration license and is 75 kilometers north of Nevsun Resources’ Bisha deposit (presently under development) and NGEx’s Hambok massive sulphide deposit. Nevsun’s Bisha deposit contains primary sulphide reserves of 9.71 Mt of 7.21% Zn, 1.14% Cu as well as an oxide cap of 4.02 Mt of 7.99 g/t Au and 33 g/t Ag and a supergene enriched zone of 6.35 Mt of 4.4% Cu (Nevsun Resources website). NGEx’s Hambok deposit has an NI 43-101-compliant indicated resource (at a 0.75% zinc cutoff) of 10.7 million tonnes grading 0.98% copper, 2.25% zinc, 6.84 g/t silver, 0.20 g/t gold and an additional inferred resource (at a 0.75% zinc cutoff) of 17.0 million tonnes of 0.85% copper, 1.74% zinc, 5.89 g/t silver, 0.19 g/t gold (Hambok NI 43-101 Technical Report, January 23, 2009 available on www.sedar.com).

The Aradaib prospect consists of a series of gossan and massive barite outcrops over a strike length of over 300 meters and was discovered by NGEx crews during a reconnaissance exploration program. Grab and trench samples collected from barite and gossan outcrops prior to drilling returned assays including 4.2 g/t and 8.9 g/t gold (barite outcrops) and 0.37 g/t gold from a 12 meter trench across the gossan. Base metal values from gossan grab samples were highly anomalous with values up to 1589 ppm copper, 523 ppm zinc and 1735 ppm lead. The highest gold values are associated with barite rich horizons that have not yet been drill tested.

Recent regional mapping and prospecting along strike from Aradaib has discovered altered felsic volcanic rocks with lenses of massive barite anomalous in copper and zinc as far as 2.5 kilometre south of the discovery drill hole as well as altered host rock and magnetic exhalites with coincident zinc-anomalous soil 1.5km northeast (see attached map). The base metal results are from field XRF. Gold results for these new samples are pending. The four kilometer strike extent of prospective geology is being covered with a detailed gravity and ground magnetic survey to trace mineralization under cover. Gravity has been an effective exploration tool for detecting massive sulphide bodies at both Bisha and Hambok. The prospect has easy access and follow-up drilling is planned once the current geophysical survey is complete.

Sample Preparation and Analysis.

The drill core was sawn on site and quarter cores were sampled in their entirety in one meter intervals or intervals corresponding to geological breaks. The quartered core was bagged and air-freighted directly to Genalysis Laboratories in Perth, Western Australia. Genalysis Laboratories crushed and ground the samples. All splits and rejects produced during sample preparation have been retained at Genalysis Laboratories. A minimum of 5% duplicate core samples were sent to ALS laboratories in Vancouver for check analyses.

Trench channel and grab rock chip samples from Aradaib were submitted to African Horn Laboratories in Asmara for crushing and coarse grinding. A split was air freighted to Genalysis Laboratories in Perth Western Australia where the final grinding and analysis were performed. The remainder of the sample was retained in NGEX’s store in Asmara.

High and low grade, base metal and gold standards were randomly inserted into the sample stream before shipment of the samples to Genalysis. Duplicate samples and standards accounted for approximately 5% of all samples submitted for analysis.

Qualified Person/Quality Analysis/Quality Control

Dr. Demetrius Pohl, a Qualified Person as defined by National Instrument 43-101 and Vice President of Exploration for NGEX’s wholly owned subsidiary Sanu Resources, has reviewed and verified the technical exploration information contained in this news release.

On behalf of the Board,

Dr. Wojtek Wodzicki

President and CEO

Eritrea

East African-focused company Chalice Gold Mines Limited (ASX:CHN), developing the high grade 1 million ounce Zara Project in Eritrea, advises that new results from infill drilling at the Koka Gold Deposit continue to confirm the high grade nature of the ore body.

The results, which will form part of the final resource estimate for the Koka feasibility study, include:

• 6 metres grading 12.37 grams of gold per tonne in ZARD 135;
• 5 metres grading 21.90 grams of gold per tonne in ZARD 135;
• 10 metres grading 9.97 grams of gold per tonne in ZARD 136;
• 4 metres grading 32.76 grams of gold per tonne in ZARD 137;
• 2 metres grading 10.58 grams of gold per tonne in ZARD 139, and;
• 9 metres grading 4.68 grams gold per tonne in ZARD 141.

The new results come from diamond drill holes ZARD 135 through to 144 (results from ZARD 143 pending) which achieved significant intersections of quartz stockwork mineralisation within the Koka Main Zone.

A complete tabulation of results is provided in Table 1.

Assays have now been received from 15 holes of the 31-hole, ~5,000 metre infill diamond drilling program (Figure 2). Results received to date are consistent with previous drilling that indicated a decline in quartz stockwork development and gold grades at around 150 metres depth (Figure 3).

All 31 holes have now been completed with the last five holes currently being logged prior to processing through the sample preparation facility in Asmara and transport to Genalysis Laboratories in Perth, Western Australia for analysis. Further assay results will be released to the market as they become available.

Following completion of the infill drilling program, one of the drill rigs has moved to the Koka East Zone, which lies 80-100 metres into the hangingwall of Koka Main Zone. Planning for drilling of the Koka South Zone is in progress. In the meantime one of the rigs will be employed on tailings dam foundation testing.

Four geotechnical holes have also been completed which will provide data on ground conditions in the pit highwall that will potentially allow a redesign of the pit to a lower strip ratio.

Koka, which is the flagship deposit at Chalice’s 80 per cent-owned Zara Project, has JORC compliant Indicated and Inferred resources of 944,000 ounces.

Table 1: Significant Koka Prospect Diamond Drill Assay Intercepts:

About the Zara Gold Project

The Zara Joint Venture comprises four Exploration Licenses and two Prospecting Licenses covering an area of 615 km2 situated in northern Eritrea, approximately 160 km northwest of Asmara city (Figure1). Chalice holds an 80% interest in the project with the remaining 20% held by Dragon Mining (ASX: DRA). The Koka Gold Deposit within the project contains an estimated resource of 5 million tonnes of ore containing 944,000ozs gold, grading 5.8grams of gold per tonne. Metallurgical test work indicates +95% recovery with ~60% recovered by gravity.

DR DOUG JONES

Managing Director

22 February 2010

Competent Persons’ Statement

Gold Wave

ASMARA, Feb 19 (Reuters) – Eritrea granted a mining exploration licence to Bermuda-based Sahar Minerals on Friday as the Red Sea state continues its drive towards a highly anticipated mining boom, industry officials told Reuters.

Sahar is the 16th foreign mining company now operating in the country, joining groups from Australia, Canada, China, Libya and Britain.

Eritrea sits on a patch of the Arabian-Nubian Shield, a geological feature that stretches from Saudi Arabia and Yemen in the east to Sudan and Egypt in the west.

Foreign investors are attracted to Eritrea because of its liberal mining laws.

“In the last 12 months we have assessed opportunities all over east Africa where there is a lot of similar geology and prospective areas, but Eritrea’s offer to foreign companies is by far the most attractive,” Alasdair Smith, Sahar’s managing director, told Reuters.

Sahar Minerals was established in 2009 by mining professionals specifically to target opportunities in east Africa. Eritrea is its first licence.

“Eritrea has the most advanced mining act in the region,” said Smith, who has been working in the local industry for 10 years. “We will begin drilling by the middle of the year.”

In 2008, Eritrea set the government’s stake in any mining project at 10 percent with an option to buy a further 30 percent, a small claim compared to other countries in the area such as Egypt, which mandates a 50 percent stake, or Sudan at 60 percent, according to industry experts.

Analysts say the country’s impending mining boom will challenge neighbours to make it easier for foreign firms to prospect across the Arabian-Nubian Shield.

The mining surge may prove a lifeline to Eritrea’s agriculture-based economy that has suffered from irregular rains and the global economic downturn.

Asmara is not expected to see a return on its mining investment until 2012. But some of Eritrea’s poorest people are cashing in on the nation’s mineral potential, working in family groups to collect rocks and crush them by hand.

Apart from this small-scale artisanal mining and some minor extraction by Italians during the colonial era, Eritrea’s mining potential is largely unexploited.

Sahar’s license covers 373 square km (144 square miles) near Sudan. Gold and base metals are the main interests.

The most advanced projects are at Bisha, run by Canada’s Nevsun Resources Ltd (NSU.TO) with gold production expected by the end of 2010, and at Zara, run by Australia’s Chalice Gold Mines (CHN.AX), expected to start producing a year later. (Editing by David Clarke and William Hardy)

Executive Summary

SOUTH BOULDER MINES:

• ASX Listed October 2003 (ASX: STB), (SO3-Ber), (SO3-Fra); and
• Three outstanding projects: potash, gold and nickel.

PROJECTS:

Colluli Potash Project

• Potentially “world class” buried evaporite potash project in Eritrea; and
• Acquisition of an Exploration license granted in July 2009.

Duketon Greenstone Belt Projects, Western Australia.

• Gold discovery at surface “Terminator Prospect”; and
• Other excellent targets proximal to Moolart Well (ASX: RRL)
• Nickel JV with Independence Group (ASX: IGO):
  • IGO earning 70% of nickel upon completion of BFS; and
  • Targeting massive and matrix nickel sulphide deposit, currently drilling, sulphides intersected, announ. 8th Feb.

STRATEGY:

• Conduct resource confirmation and definition drilling ahead of JORC resources and feasibility studies at Colluli. Drilling scheduled for March, first since 1968; and
• Follow up RC drilling planned for Terminator at end February and work towards defining an initial JORC gold resource at Terminator POW approved; and
• JV partner conducting nickel drilling to define JORC resource.

Eritrea

FORMATION

• The country gained its independence in 1991;
• UN supervised referendum made it official in 1993;
• Population ~ 4 million people; 80% dependent on subsistence agriculture;

CURRENTLY

• Stable Government:
  • Previous minister for mines was in place for 12 years.
• Supportive government for foreign investment in mining and exploration.

MINING REGIME

• Mining code based on Northern Territory, Australia, with royalties of:
  • 5% on precious metals; and
  • 3.5% on base metals and salts.
• Corporate tax rate ~ 38%;

GOVERNMENT INTEREST

• Government 10% free carry; and
• After BFS Government has option to purchase an additional 30% equity participation interest at an independently determined price.

Click here for PRESENTATION

Eritrea

Chalice Gold Mines Limited (ASX:CHN) advises that following its merger with Sub-Sahara Resources NL (“Sub-Sahara”), it became entitled to a payment of A$5 million upon commercial production at the Nyanzaga Project in Tanzania.

The Nyanzaga Project, which hosts the Tusker Gold Project, is currently owned 49% by Tusker Gold Limited (ASX:TKA) and 51% by Barrick Gold Corporation (“Barrick”) following Sub-Sahara’s sale of its interest in the project to Indago Resources Limited (ASX:IDG) (“Indago”) in February 2009. Barrick has announced a takeover bid for Tusker.

As advised to ASX by Indago on 8 February 2010, Indago has entered into a Pre-bid Acceptance Agreement with Barrick in respect of 17.5 million Tusker shares it owns and has notified that it intends to accept the Barrick bid for its remaining 50 million shares.

Should the Barrick takeover of Tusker be successful, Barrick will own 100% of the Nyanzaga Project. Chalice sees this as a positive transaction which may expedite the development of the Nyanzaga Project and hence receipt by Chalice of the A$5 million deferred consideration

Chalice Gold Mines has projects in Eritrea and Australia. In 2009 the merger with Sub-Sahara Resources gave Chalice a 80% stake in the Zara Gold Project in Eritrea.

At the end of 2009 Chalice subscribed for 1.6M shares in London Africa at 12.5p per share for GBP200,000 (A$358,000) which will gave Chalice an 11.8% interest in the Company. London Africa Limited signed in June 2009 a prospecting licence to cover 1562 km² around Akordat – Orota in central Eritrea.

VANCOUVER, BRITISH COLUMBIA–(Marketwire – 02/10/10) – Nevsun Resources Ltd. (TSX:NSU - News)(AMEX:NSU - News) is pleased to report the final assays from the seventeen infill diamond drill holes at the Harena deposit within its Bisha exploration license in Eritrea.

Harena lies 9.5 km southwest from the Bisha Main deposit and the exploration license is contiguous to the Company’s Bisha Mining license.

Highlights

--  Third VMS near surface deposit on Bisha

--  Mainly base metal (zinc) with some gold

--  Additional feed for the Bisha mine

The infill drilling took place in the fall, 2009 and was carried out to confirm a previously identified discovery. Harena was originally selected as a potential exploration target based on an alteration anomaly defined on Landsat imagery. A subsequent airborne EM survey defined a moderate conductor over a limited strike length on what was interpreted to be the same stratigraphic horizon as the Bisha Main deposit. Diamond drilling in 2005 intersected various widths of oxide and sulphide mineralization over a strike length of 400 meters confirming the presence of a satellite VMS (volcanogenic massive sulphide) deposit. As a result of the Company’s efforts to advance the Bisha Main Zone through feasibility and development, the Harena area was left until the fall of 2009 for further exploration. The results are summarized as follows:

---------------------------------------------------------------------------

Hole #       From (m)  To (m)  Length (m)  Au (g/t) Ag (g/t)  Cu (%)  Zn (%)

---------------------------------------------------------------------------

H-029          61.50   68.50        7.00      2.71    51.86    1.01    0.14

---------------------------------------------------------------------------

Incl.          67.50   68.50        1.00     16.60   155.00    0.79    0.03

---------------------------------------------------------------------------

H-030         118.30  119.30        1.00      0.27    12.00    0.34    2.27

---------------------------------------------------------------------------

and           148.75  153.00        4.25      0.43    12.01    0.54    2.34

---------------------------------------------------------------------------

H-031          20.50   44.90       24.40      1.63     8.90    0.06    0.68

---------------------------------------------------------------------------

Incl.          30.00   35.75        5.75      3.31    10.56    0.03    0.47

---------------------------------------------------------------------------

Incl.          38.00   43.90        5.90      2.26    10.25    0.05    0.18

---------------------------------------------------------------------------

H-032          62.57  100.00       37.43      0.13     9.72    0.37    3.51

---------------------------------------------------------------------------

Incl.          68.00   75.00        7.00      0.11     6.43    0.13    4.21

---------------------------------------------------------------------------

Incl.          81.00   99.00       18.00      0.13     8.67    0.48    4.58

---------------------------------------------------------------------------

H-033         105.70  137.70       32.00      0.15    11.19    0.33    5.42

---------------------------------------------------------------------------

Incl.         106.70  114.70        8.00      0.12    18.88    0.16    7.91

---------------------------------------------------------------------------

Incl.         127.70  132.70        5.00      0.06     3.20    0.21    6.59

---------------------------------------------------------------------------

H-034         106.57  134.00       27.43      0.69    39.62    0.74    4.93

---------------------------------------------------------------------------

Incl.         110.50  121.40       10.90      0.23    19.38    0.52    6.38

---------------------------------------------------------------------------

Incl.         124.80  128.80        4.00      0.10     7.50    0.27    8.32

---------------------------------------------------------------------------

Incl.         128.80  134.00        5.20      2.62   134.42    1.95    1.35

---------------------------------------------------------------------------

H-035          36.00   38.00        2.00      1.24    30.50    0.10    0.96

---------------------------------------------------------------------------

and            42.00   73.00       31.00      2.41    12.71    0.05    0.06

---------------------------------------------------------------------------

Incl.          49.50   57.00        7.50      3.71     4.60    0.02    0.05

---------------------------------------------------------------------------

Incl.          58.50   64.00        5.50      4.93     4.73    0.01    0.04

---------------------------------------------------------------------------

Incl.          67.00   71.50        4.50      3.47    12.67    0.16    0.04

---------------------------------------------------------------------------

H-036          77.30  115.00       37.70      0.32    27.18    0.74    3.00

---------------------------------------------------------------------------

Incl.          93.95  102.00        8.05      0.58    38.39    1.59    7.57

---------------------------------------------------------------------------

Incl.         108.00  113.00        5.00      0.14     6.20    0.41    5.07

---------------------------------------------------------------------------

H-037         131.50  154.50       23.50      0.61    30.52    1.09    4.50

---------------------------------------------------------------------------

Incl.         131.50  142.90       11.40      0.33    33.64    1.08    8.51

---------------------------------------------------------------------------

H-038         150.30  162.60       12.30      0.50    30.91    1.13    3.85

---------------------------------------------------------------------------

Incl.         150.30  155.30        5.00      0.28    31.40    0.78    8.45

---------------------------------------------------------------------------

H-040          74.50   94.20       19.70      0.41    23.40    0.65    5.04

---------------------------------------------------------------------------

Incl.          75.30   83.50        8.20      0.57    34.21    0.97    8.58

---------------------------------------------------------------------------

Incl.          83.50   88.20        4.70      0.92    39.96    0.99    5.60

---------------------------------------------------------------------------

H-041         121.00  124.00        3.00      0.19    27.00    0.59    4.51

---------------------------------------------------------------------------

and           145.20  147.00        1.80      0.54    26.50    0.68    3.26

---------------------------------------------------------------------------

H-042         167.25  187.00       19.75      0.85    37.20    0.72    3.82

---------------------------------------------------------------------------

Incl.         167.25  172.00        4.75      0.35    57.40    1.11    5.81

---------------------------------------------------------------------------

Incl.         172.00  180.00        8.00      0.29    15.00    0.23    5.75

---------------------------------------------------------------------------

H-043         149.55  160.00       10.45      0.38    19.04    0.51    4.79

---------------------------------------------------------------------------

Holes 28, 39, and 44 showed no significant mineralization. Historic holes 1 through 27 were carried out and published in 2005. The drill hole locations were selected to infill drill the gossanous oxide cap and underlying sulphide structure on 50m spacings. All holes were done at 45 or 65 degrees. The results were positive, and have provided added confidence to the widths and grades of the third VMS near surface deposit on the Bisha concession.

A number of dykes have cut the near surface mineralization at Harena making determinations of actual widths of the zone somewhat difficult but have been estimated to range between 5m to 35m over a 400m strike length. The deposit is hosted by a sequence of felsic to intermediate volcanics with a distinct footwall often containing kyanite and andalusite. The footwall rocks are often noticeably chloritized.

Nevsun views the Harena deposit as a very likely source of supplemental feed for the processing plant at Bisha which is currently under construction. Supplemental feed can provide valuable cash flow as an extension to mine life without having to absorb start up plant capital expenses. A map is attached to this release showing the locations of the holes.

Darin Wasylik, Senior Geologist for Nevsun, a qualified person under National Instrument 43-101, supervised and directed all work associated with the drilling program.

Sample preparation and analysis were conducted at ALS Chemex of Vancouver, Canada.

The Bisha Main zone is a significant gold/copper/zinc deposit that has been developed through feasibility, engineering and construction. It is approximately 50% complete to production, with operations planned to commence in late 2010. The Bisha Main deposit is open at depth and there exists at least two additional satellite deposits within the Company’s exploration and mining licensed areas.

The State of Eritrea is a strong supporter of a responsible mining industry and is a partner with the Company in the ownership and development of the Bisha mine.

Forward Looking Statements: The above contains statements regarding positive drill results, indications that the Bisha concession may host multiple deposits, the Harena deposit as a potential source of supplemental feed and valuable cash flow, the close relationship between the interpreted graphitic horizon and the Harena massive sulphide, and additional prospects at the Harena area. Although we believe the expectations reflected in our forward looking statements are reasonable, results may vary, and we cannot guarantee future results, levels of activity, performance or achievements. Forward-looking statements are statements about the future and are inherently uncertain, and 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, those described in the Management Discussion and Analysis of the Company. 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. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

NEVSUN RESOURCES LTD.

Cliff T. Davis, President & Chief Executive Officer

Find Map on following link: http://media3.marketwire.com/docs/NEV210MAP.pdf

Contacts:
Kin Communications
604 684 6730 or Toll Free: 1 866 684 6730
ir@kincommunications.com
www.nevsun.com

PRETORIA, Feb 8, NNN-BUANEWS report that South Africa and Australia have signed an agreement which will frame future bilateral co-operation on climate change issues.

The letter of intent was signed on Friday by Australian Trade Minister Simon Crean and Minister for Water and Environmental Affairs Buyelwa Sonjica.

The two nations have been co-operating on climate change matters under a Climate Change Partnership since 2006.

The Department of Water and Environmental Affairs said the signing of the letter formalised continued co-operation under this partnership.

Both countries agreed to identify as well develop and implement a further programme of joint activities such as addressing climate change and biodiversity; greenhouse gas emissions reporting and monitoring at national and entity levels.

The signing of the agreement in Pretoria came at the end of Crean’s visit to South Africa where he promoted Australia’s trade, economic and strategic interests with Africa.

Speaking in Cape Town at the Mining Indaba conference, Crean announced that Australia would provide AUD 500,000 to four West African universities to support capacity building of the mining sector in West Africa.

“The Australian Government is committed to strengthening the relationship with Africa that has been neglected for too long. We want to substantially enhance engagement with the countries and regional institutions of Africa which is home to almost one billion people” Crean said.

At the Mining Indaba conference, Crean held bilateral meetings with mining ministers from South Africa, Tanzania, Mozambique, Ghana, Senegal, Eritrea and Namibia.

gold rock

ASMARA (Reuters) – More than a dozen foreign mining firms are now working in Eritrea, but poor villagers in the Red Sea state’s remote lowlands are also increasingly using their bare hands to claim some of the riches.

The nation is on the brink of a mining surge that could boost its agriculture-based economy, which has suffered from irregular rains and the global downturn, while aid agencies say Eritrea’s poor suffer widespread hunger and malnutrition.

Experts say the country’s impending mining boom will challenge oil-rich neighbours to make it easier for foreign firms to prospect across a large geological structure in the region rich in base metals and gold.

Gold, copper and zinc are the main attraction for foreign explorers, and licenses are held by companies from Australia, Britain, Canada, China and Libya.

Asmara holds a significant stake in the projects, but the most advanced mine, run by Canada’s Nevsun Resources Ltd, will not begin production until late this year, and Asmara is unlikely to see a profit until 2012 at the earliest.

However, some of Eritrea’s poorest people are already cashing in on the nation’s vast mineral potential, working in family groups to collect rocks and crush them by hand.

“The price of gold is so high at the moment that if these people, who are so poor, can find just one gram per month it is equivalent to the wage paid for national service,” Tucker Barrie, an economic geologist and regional expert, told Reuters.

“But you can find one gram in a day if you are lucky.”

Gold has been on a roll as investors buy the precious metal as a hedge against inflation although it slipped towards $1,100 an ounce on Thursday from $1,124.45 on Wednesday.

USING MERCURY

National service is mandatory for young Eritreans, and when someone will be granted “demobilization” is often unknown. Some Eritreans spend most of their adult lives in national service, whether in the military, building roads or working in cafes.

Mining company officials say the groups of impoverished Eritreans who search for gold on their licences use primitive and often unconventional methods.

“Every day on site I see local Eritreans working in groups, men and women,” Timothy Strong, Eritrea manager for British company London Africa, told Reuters. “They use one rock to crush, and the base of their sandals to pan for the gold.”

The dangers of rudimentary, artisanal mining are well known, where no safety standards are enforced and children carry piles of rocks between deep vertical pits.

“In the more advanced areas they also use mercury to extract the gold from the rock, which kills local wildlife, and in an agricultural area it gets into the food source. It also burns your skin and the fumes send you crazy,” Strong said.

Industry officials insist the artisanal mining is not in conflict with the big foreign companies, which use modern industrial methods alongside the basic, local extraction.

“Although artisan mining on sites licensed to companies is not technically legitimate, it is much wiser to build a good relationship with communities,” Strong said.

“If you totally disenfranchise local villagers — apart from being immoral — you leave your project open to sabotage. We help on our site. We give water and other provisions.”

Other than the small-scale artisanal mining and some minor extraction by Italians during the colonial era, Eritrea’s mining potential is largely unexploited.

ASMARA (Reuters) – An impending mining boom in Eritrea will challenge oil-rich neighbours to make it easier for foreign companies to prospect across a massive geological structure in the region rich in base metals and gold, analysts say.

Eritrea set the government’s stake in any mining project at 10 percent stake in 2008 with an option to buy a further 30 percent, a small claim compared to other countries in the area like Egypt which mandates a 50 percent stake or Sudan at 60 percent, according to industry experts.

The relatively liberal mining terms have led more than a dozen foreign companies to get licenses to explore in Eritrea which analysts expect to accelerate dramatically in the next five years and provide a lifeline for the impoverished economy.

Advanced projects are at Bisha, run by Canada’s Nevsun Resources Ltd, with gold production expected by the end of the year, and at Zara, run by Australia’s Chalice Gold Mines and expected to start producing a year later.

“In the next ten years other nations in the region will look at Eritrea’s mining boom and they will want in. They will relax their laws and it will become a regional boom,” Timothy Strong, Eritrea manager for British company London Africa, told Reuters.

“If you look at the geography, Eritrea is a relatively small nation compared to African giants Sudan and Egypt, but it has many more foreign mining companies than the others combined. Geologically speaking, they are just as prospective as Eritrea.”

The companies are attracted to Eritrea because it sits on a patch of the Arabian Nubian Shield, a geologic feature that stretches from Saudi Arabia and Yemen in the east to Sudan and Egypt in the west.

PRESSURE ON THE NEIGHBOURS

Tucker Barrie, an economic geologist and an expert on the Arabian Nubian Shield, says neighbouring countries have already taken note that foreign companies are now prospecting nearby.

“It is not going to wash with any foreign company if Khartoum keeps asking for 60 percent of gold mining projects. That’s why even though it’s 50 times the size of Eritrea, there is only one foreign company mining there,” he said.

“However Khartoum is well aware it needs to revise its mining law. In fact, they asked me to show them a copy of Eritrea’s mining law. The bottom line is, these are poor countries and they should take as much as they can of their own resource, but it’s a balancing act, they still need to invite foreign companies into their country.” Source: (Reuters)

Follow-up drilling during the quarter by South Boulder Mines (ASX: STB) at the newly discovered Terminator Gold Prospect defined further shallow mineralisation that is considered open in all directions with some compelling targets defined.

Significant results included;

- TBAC014 – 31m @ 1.07g/t Au from 1m including; 8m @ 2.68g/t from 1m;
- TBAC024 – 60m @ 1.30g/t Au from 2m including; 10m @ 4.25g/t from 3m;
- TBAC025 – 14m @ 5.13g/t from 70m including; 8m @ 8.38g/t from 72m.

STB said the Duketon Nickel JV continues to deliver excellent results from the Rosie Ni-Cu-PGE Prospect. Most recent highlights include:

- Hole TBRC070 – 7.00m @ 2.61% Ni, 0.42% Cu, 3.75g/t Pt+Pd from 190m;
- Hole TBDD080 – 3.59m @ 2.27% Ni, 0.24% Cu, 3.10g/t Pt+Pd from 205m including; 0.76m @ 4.98% Ni, 0.25% Cu, 6.98g/t Pt+Pd from 207.84m.

Subsequent to the end of the period, a 15-20 combination RC and diamond drilling program has commenced at the Rosie Prospect with results expected in February.

A drilling contract has beenfinalised and logistics for first confirmation drilling at the Colluli Potash Project, Eritrea, have been confirmed. Drill testing of the buried potash horizons are scheduled for February/March.

The company completed a non-renounceable 1 for 10 non renounceable rights issue and shortfall placement to raise ~ $1.1m from the issue of 5,570,794 new shares at 20cents.

STB held cash at end of period $2.6m + cash in trust ($0.68m) for a total of $3.28m; cash + listed equities ~ $1.6m.

South Africa’s State-owned Industrial Development Corporation (IDC) has reaffirmed its commitment to providing $89-million in project debt facilities for the Bisha gold project, in Eritrea, despite the imposition of a number of sanctions on the Eritrea government.

Head of the IDC’s mining and beneficiation strategic business unit Abel Malinga tells Mining Weekly that the corporation does not expect the sanctions to influence the project at all.

“As I understand it, the sanctions include an arms embargo, travel bans and asset freezes. They do not target the interests of mining companies operating in Eritrea or the develop- ment of mining projects in the country.”

Canada’s Nevsun Resources head of the Bisha project Stanley Rogers backs this statement, saying that there has been no slowdown whatsoever since the announcement and that the momentum of the project has continued. “I do not expect anything to change with respect to the Bisha project. Our production start date remains the same.

“For investors, the international price of gold is a more decisive factor than sanc-tions imposed on a single country,” he comments.

In July 2009, Nevsun signed extensive loan documentation with South Africa’s IDC and a group of European lenders for the funding of the Bisha project. Currently, the company is still waiting for European lenders to also reconfirm their commitment on the balance of the facilities agreed to at that time.

Malinga says that the IDC decided to sponsor the project owing to the fact that more than 60% of goods and services supplied to the project will be coming from South Africa.

“Before the IDC makes a commitment to funding a project outside South African borders, we ensure that at least 50% of the goods and services will be derived from South Africa.”

The IDC will provide funding in a one-off payment.

Bisha is Eritrea’s most advanced mining project. Its 27-million tons of ore is believed to contain one-million ounces of gold, 700-million pounds to 800-million pounds of copper and one-billion pounds of zinc. Pro-duction is expected by the end of the year.

Before sanctions were imposed in Dec-ember 2009, Nevsun spent a record $21,7-million on its Bisha project in the third quarter of 2009.

Meanwhile, Nevsun Resources has reached a significant milestone in the construction of its flagship Bisha project with the delivery of major equipment to the site in Eritrea.

By the end of December 2009, the company had received delivery of the semi- autogenous mill, the ball mill and the primary crusher. Installation of the mills and crusher has started.

Nevsun president and CEO Cliff Davis says that the installation of the mills forms the critical path activity and their timely arrival maintains the development time-line. The project continues to be on track for operation in late 2010.

The Bisha project is a high-grade gold/-copper/zinc volcanogenic massive sulphide deposit discovered in 2003, brought to feasibility in late 2006 and that began its official development stage at the start of 2009.

The project is positioned to become the first modern-day mine in this north-eastern African country, with yearly production projected to return payable metals of 1,06-million ounces of gold, 9,4-million ounces of silver, 734-million pounds of copper and 1 075-million pounds of zinc.

At current metal prices, the project is expected to generate enough cash in the first two-and-a-half years to repay all debt facilities, in addition to further mine expansion. The Bisha mine will be a low-cost gold producer for the first two years and a low-cost, high-grade copper and zinc producer for the remaining ten-year mine life. Further, resource potential exists at depth and from nearby discoveries within the company’s licence areas.

The project has the strong support of the government of Eritrea, which has a 40% ownership stake in the project company. “Nevsun looks forward to a very productive year in 2010,” concludes Davis. Source: (Mining Weekly)