Nevsun Announced Financial and Operating Results for 2011

Nevsun generates a net, after-tax income of $250 million in 2011 alone

By Nevsun,

Nevsun Resources Ltd.  (TSX:NSU / NYSE Amex:NSU) is pleased to report its financial and operating results for 2011.

In that year, the Company recorded $548 million in revenues for the year on sales of 369,900 ounces of gold for an average realized price $1,620 per ounce.  With 379,000 ounces produced, gold production averaged approximately 1,000 ounces per day with an average cash cost per ounce sold of $295

Since the Bisha Mine commenced operations in 2011, there are no comparative operating results for 2010.

The Company had after-tax income of $250 million for the year (2010 – loss $17 million), which translated to $0.74 earnings per share (2010 – $(0.07)).  The Company increased its cash and cash equivalents by $297 million to $347 million (2010 – $50 million).  Cash from operating activities for the year was $366 million (2010 – used $6 million).

NB: All figures are in United States dollars, unless otherwise indicated.

Financial results (for a 10 month   operating period in 2011):

In US $000s (except per share   data) Q4 2011 Q3 2011 Q2 2011 Q1 2011 2011
Revenues

170,868

186,502

136,085

54,315

547,770

Operating income  129,254  146,944  101,947  39,638  417,783
Net after-tax income  78,336  89,200  60,605  21,893  250,034
Owners’ earnings per share  0.23  0.27  0.18  0.06  0.74
Total assets

$775,226

$700,769

$480,830

$392,717

$775,226

The Bisha Mine achieved commercial production in late February 2011.  The annual operating income contains results only from February 22, 2011 to December 31, 2011.

Gold production and sales   statistics(1):
Q4 2011 Q3 2011 Q2 2011 Q1 2011 2011
Tonnes milled 455,000 446,000 444,000 461,000 1,806,000
Gold grade 8.33 8.45 7.27 6.22 7.55
Recovery % of gold 88% 89% 89% 88% 88%
Gold in doré, ounces produced 101,000 110,000 93,000 75,000 379,000
Gold ounces sold 99,800 108,600 88,700 72,800 369,900
Gold price realized per ounce

$

1,685

$

1,715

$

1,510

$

1,405

$

1,620
Cash cost per ounce sold(2)

$

314

$

267

$

305

$

304

$

295
(1) Q1 gold production and sales   statistics include results from the pre-operating period, January 1 –   February 21, 2011.  For accounting purposes, sales from ounces produced   prior to February 22, 2011 are considered pre-production and capitalized to   property, plant and equipment.
(2) Cash operating cost per ounce   sold includes royalties and is a non-GAAP measure.

Complete annual consolidated financial statements and management discussion and analysis can be found on the Company’s web site at www.nevsun.com as well as on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar/searchedgar/webusers.htm.

EXPLORATION AND OTHER HIGHLIGHTS IN 2011

The Company’s 2011 significant exploration and other highlights were as follows:

  • Applied for a mining license in December 2011 for the Harena deposit, situated 9.5 km from Bisha;
  • Finalized its arrangement with the State owned Eritrean National Mining Company (ENAMCO) for the purchase by ENAMCO of a 30% paid participating interest in the Bisha Mine, resulting in a gain of $242 million;
  • Completed a 16,000 metre drill program on the Bisha main deposit that includes a drill hole containing 88 meters of 11.8% zinc and 0.8% copper; and
  • Continued the copper phase plant expansion, expending $24 million on terracing, other civils works and completing detailed design work.

OUTLOOK IN 2012

The Company expects to achieve the following in 2012:

  • Gold production between 190,000 – 210,000 ounces;
  • Issue an updated resource and reserve statement in late Q2 / early Q3 that will include: Harena deposit, Bisha hanging wall copper zone, and Bisha zinc sub-pit mineralization;
  • Receive a mining license for and mine the oxide portion of the Harena deposit;
  • Complete a 5,000 metre drill program on the Northwest Zone deposit, which sits on the Bisha mining license, and prepare a resource estimate for the deposit in late 2012; and
  • Continue with the $100 million copper phase expansion with a target of mid-2013 production.

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