2009-01-07 16:21 ET - News Release ]\

Mr. Cliff Davis reports

2009 OUTLOOK FOR NEVSUN

Nevsun Resources Ltd. has provided its outlook for the company for 2009. The company holds the world-class Bisha project in Eritrea, maintains a strong cash position, benefits from the continued support of the local Eritrea government and, despite the "credit crunch," has assembled a reputable lending group to provide all necessary additional finance for the Bisha development. The project is on schedule and on budget.

Nevsun's consolidated cash position at Dec. 31, 2008, was approximately $40-million (U.S.).

Bisha Mining Share Company (BMSC), the project company, had, as of Dec. 31, spent approximately $40-million of the $250-million project cost and has placed orders for a significant portion of the remaining supply requirements. Financing to date has been provided by Nevsun and Enamco; the Eritrean National Mining Corp. Enamco is a 40-per-cent owner, contributing one-third of the equity.

2009 outlook -- another year of success expected:

Nevsun expects to finish Bisha financing by Q1

1. Completion of debt finance. The lending group for the project debt was further consolidated in December and the group is actively dealing with the normal legal and due diligence arrangements. The planned debt package is a mix of senior and subordinated debt coming from a number of development agencies and commercial banks from Europe and South Africa. The completion of debt facilities is targeted for the end of the first quarter and is expected to total over $200-million. The robust nature of the Bisha project allows for a relatively high debt equity ratio as payback, with anticipated cash sweeps, is very short. The project timetable remains unchanged with production expected in mid-2010. Endeavour Financial is the project finance adviser;
2. Build of plant and all facilities. The camp facilities and excavation for the plant are on schedule. Pictures of the progress can be found on the company website. The fabrication of the mills, by Polysius in Europe, continues in accordance with the plan and both mills are scheduled for delivery to site in the fourth quarter of 2009. Accordingly, other preparatory work, equipment orders and delivery are planned for earlier in 2009. The project detailed design work is virtually complete as at the end of December, 2008, and a very substantial portion of orders have already been placed with terms secured. The early order strategy was followed so as to ensure capex costs were controlled. As a result of exchange rates favourable to the project, as well as the early order strategy, the company remains confident that the project can be completed within the previously issued capex estimate of $250-million;
3. Review for additional ore in phase 1. The feasibility study used a cut-off grade of 2.0 grams per tonne gold for the initial high-grade oxide phase of production. All material below two g/t has previously been treated as waste in financial models. Naturally, since the company will be mining all of the material in any case, it is prudent to re-evaluate the material to see how much may be economically processed. A preliminary review suggests a possible significant reduction of waste and hence reclassification of waste material to ore. The additional lower grade ore would be processed either through the CIL plant or stockpiled for heap-leach treatment.

2008 year in review -- milestones achieved

January, 2008: Mining licence granted

February, 2008: $25-million received from Enamco as a downpayment on purchase price

February, 2008: Orders placed for critical equipment (long lead items, ball and SAG mills)

May, 2008: $20-million received on sale of other Nevsun assets

August, 2008: Senet mobilized to site; site clearing and heavy earthmoving started

September, 2008: Construction camp for 400 people advanced

October, 2008: $89-million debt finance commitment received from the lead lender, Industrial Development Corp. of South Africa

Project economics (low metals price assumptions)

High returns and quick capital payback highlight the economic strength of the project. Low site operating costs throughout the projected mine life result in Bisha being particularly robust and the strengthening of the U.S. dollar will also improve the economics further regarding both capital and operating costs. Due to the volatility in metals prices over recent weeks, management presents below a low metals prices projection (1.).

Internal rate of return: 42 per cent

Payback: 1.6 years

Life of mine net after-tax cash flow: $440-million

1. Assumptions: low metals price scenario -- Au: $600, Cu: $1.50, Zn: 50 cents, Ag: $8. Preproduction capex -- $250-million (June, 2008, including contingency).

The company looks forward to progressing Bisha through to production with the continued full support of the Eritrean government.

We seek Safe Harbor.