The company has received approval from the TSX Exchange to purchase up to 4.0 million common shares, representing around two percent of the 200,470,415 common shares issued and outstanding as of last Friday.

The purchases can begin no earlier than March 26 and continue over the next six months, depending on market conditions, until September 26.

The TSX approved the plan as the company has indicated that it intends to make a normal course issuer bid for certain of its outstanding common shares.

The company, which said it believes its share price is not reflective of the underlying value of the business, is trying to boost investor confidence after a recent setback at its flagship mine in Eritrea took out around half of its market value.

In February, the company said it overestimated the size of its gold resources at its Bisha mine, with output from the mine expected to nearly halve this year. Nevsun is now conducting a study to recalculate the size of the resource.

At the beginning of February, the company's stock was trading at around $6.67, down to around $3.49 on Monday, up 5.5 percent.

The gold producer said it expects to produce between 190,000 to 210,000 ounces from its Bisha mine in Eritrea. This is about half of what the company was previously expecting, and falls short of the 379,000 ounces of gold produced a year ago.

Nevsun's outlook includes production from the Bisha Main oxide reserve, stockpiles and the Harena oxide. It does not include any production from "the much larger and more valuable" supergene and primary zones, the company said, which sit beneath the oxide zone cap and are scheduled to be brought into production in 2013.

Based on actual production data from 2011, the company reconciled its 2011 ore control model with the March 2011 resource model at Bisha, and concluded that the resource estimate used for mine planning over-estimated gold in portions of the Bisha Main oxide mineralization.

The new production forecast includes around 1.3 million tonnes at 5.1 grams per tonne gold of the remaining 1.6 million tonnes of Bisha Main oxide, compared with 2.5 million tonnes that was previously expected.

As per the March 2011 technical report, Nevsun said the change represents a reduction of approximately four percent in Bisha's total reserve tonnage.

The Bisha mine is one of the highest grade open pit base metal deposits in the world and has a mine life in excess of 12 years. It is a large precious and base metal-rich volcanogenic massive sulphide deposit situated 150 kilometres west of Asmara, Eritrea in East Africa.

Deposit mineralization comprises of gold and silver oxides, as well as copper and zinc massive sulphides.

Nevsun also announced Tuesday that it expects to release a revised reserve estimate for the entire Bisha and Harena deposits in late second-quarter or early third-quarter this year.

"The time delay from previous guidance is due to the rigorous review process that has commenced using new independent engineers, incorporating actual mine data and data from the extensive 2011 drilling program," the company said in a statement.

Nevsun CEO, Cliff Davis, commented: "Bisha had an excellent 2011 operating year, achieving its gold and cost per ounce production objectives.

"For 2012, Bisha has the team and contractors in place to successfully execute the copper phase expansion project so that copper production can start in mid 2013."

Indeed, the miner said it is on track to complete the copper phase expansion project at Bisha and will start copper commercial production next year.

While production for 2012 is lower than previously expected, Nevsun believes that the cash flow generated this year from the oxide deposit will be more than sufficient to fund the copper plant to completion.

Shares closed Monday at $6.34 each.

On the 4th February, Nevsun said it had opted to fully fund the Bisha gold project after the lenders failed to provide the required debt-based financing in a timeframe that suited the company. The development of Nevsun’s flagship Bisha Mine in Eritrea began in 2009, funded by a mixture of capital raised from shareholders and the anticipated debt-facility.

Nevsun’s development partner the Eritrean National Mining Corporation (ENAMCO), which retains a 33% interest in the project, continued to meet its own contributing share of the financing, and that the state government had also remained supportive of the mining industry.

The company previously said that whilst it would have preferred to have continued with leveraged project financing, the overriding priority is to get the mine built and for it to begin cash generation. According to Nevsun, the equity-fundraising ensures this will remain on schedule.

The Bisha project is now nearly 50% complete. “Due to the very robust nature of the project and assuming recent metals prices, the payback to the Company is now expected to be under one year”, Nevsun stated.

“...the Company and ENAMCO have concluded that the debt facilities are sufficiently unreliable and inconclusive for our project.” The project is expected to cost $260 million in total, approximately 4% ahead of the original estimate of $250 million.

Under the terms of the placing, the shares are subject to a hold period which lasts until June 17th 2010.

In July 2009, Nevsun received all required credit approvals from the project finance lenders for debt facilities totalling US$235 million to be utilised for the development of the Bisha project.  The debt package is a mix of senior and subordinated loans from a lending group comprised of seven institutions from Europe and South Africa. The arrangements include an available cost over-run facility of US$30 million that will be in addition to a contingency allowance of US$32 million in the budget.

Bisha is expected to generate enough cash in the first two and a half years to both repay all debt facilities, as well as fund the copper phase mine expansion. Bisha is a high grade deposit and as such its projected operating cash costs including royalties are estimated to be less than US$230/oz Au.

In September, Nevsun announced it has secured metal sales contracts for its future gold and copper production at the Bisha mine.  Pricing for all metals will be fixed at spot rates at the time of delivery. Bisha’s gold will be refined in Switzerland and Canada by two major international companies while the copper concentrate will be shipped to major smelters in Europe and India.

Metal production within the first two years is estimated at approximately 900,000 ounces of payable gold, followed by over 500,000,000 pounds of payable copper in years 3-5, plus in years 5-10 an additional 1 billion pounds of payable zinc and 200,000,000 pounds of copper.