By Carrie White
Shares rose nearly five percent on the back of the news, trading at $3.39 early Wednesday morning.
The gold and base metal explorer/developer is currently focused on advancing its high grade gold, copper and zinc Bisha Project in Eritrea.
As a result of unusually high gold grades encountered last month, Nevsun said it is increasing its gold production guidance for the full year 2012 by approximately 25 percent to a range of 240,000 ounces to 260,000 ounces.
This is up significantly from a previous target of 190,000 to 210,000 ounces announced in early February, when the company said it has overestimated the size of its gold resources at its Bisha mine.
Nevsun noted that the high grades were found in a portion of the oxide zone that is the interface between the gold oxide and copper supergene zones, “commonly termed the acid domain”.
The company expects the high grades to persist until at least June 2012, but said it could not include grades in its mineral reserves because drill hole core recovery from the acid domain was sporadic and the core was difficult to assay.
Nevsun stressed that the “competency of the ore in this interface zone is poor and requires sophisticated stockpile blending to facilitate successful processing and recovery of the precious metals.”
In addition, the company said the combination of both a clay-like and sandy composition of the acid material leads to challenging daily ore control sampling, making it difficult to predict grades.
“The associated gold grade is highly variable and includes both very high and low grades,” said Nevsun in a recent release.
The company said it expects to release a revised mineral resource and reserve estimate for the entire Bisha and Harena deposits during early third quarter of 2012.
The Harena deposit lies 9.5 kilometres southwest of the Bisha main deposit
In other news, Nevsun released its first quarter results, posting a net income of $41.2 million, or 20 cents per share, up from $11.8 million, or six cents per share, a year ago.
Nevsun said that revenue more than doubled to $149.4 million, from $54.3 million in the year-ago quarter, as it benefited from higher gold sales and production, higher average realized prices and lower cash costs compared with a year earlier.
The company noted that average realized price for gold in the first quarter was $1,712 per ounce.
Tonnes milled during the first quarter totalled 430,000, down seven percent from 461,000 a year earlier, said Nevsun. Milling grade during the first quarter averaged 6.6 grams per tonne (g/t), up six percent from 6.2 g/t a year earlier. The company said it mined 358,000 tonnes in the first quarter, down 25 percent from 475,000 a year earlier.
The mining grade averaged 4.07 g/t, down 28 percent from 5.65 g/t a year earlier.
Nevsun said that gold cash costs per ounce for the quarter were $277 on 83,100 ounces sold, which included $85 per ounce in silver by-product credits. Gold cash costs per ounce for were $304 on 37,500 ounces sold a year earlier, during the five week operating period, which included $15 per ounce in silver by-product credits.
Looking ahead, Nevsun said that it has a 1,200 metre drilling program planned for its Harena deposit, during the second quarter of 2012.
The company drilled 5,716 metres at Bisha in the first quarter and expects that metallurgical and geotechnical data will be used for the revised reserve update due later in 2012. In the North West zone of the mine, Nevsun said that 1,850 metres were drilled in the first quarter, with a further 6,000 metres planned for 2012 and a resource estimate planned in late 2012.
The company said it continues work on copper phase development activities and plans for its copper flotation plant to be operational in mid-2013.
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