http://www.mineweb.com/mineweb/content/en/mineweb-gold-news?oid=165755&sn=Detail
Nevsun's Bisha gold recovery - now moving to v. high grade copper
In a presentation in London this week, Nevsun gave an update on its
performance, now virtually totally recovered from its early year gold
target setback and is shortly to transition to very high grade copper
Author: Lawrence Williams
Posted: Friday , 07 Dec 2012
LONDON (MINEWEB) -
When Canadian junior (or perhaps it should be reclassified as
mid-tier) miner, Nevsun Resources, had to report a big hole in its
predicted Eritrean gold resource back in February and was forced to
virtually halve its gold production guidance for the year, its stock
price, unsurprisingly, took a knock – but a far bigger one than any
sensible examination of the company’s future plans would have
suggested and, as a result the big fall in price was heavily overdone
by the market. The market was totally fixated on Nevsun’s gold, yet
the company’s future announced path was in reality as a potentially
highly profitable base metals miner, with the short life gold rich cap
giving it substantial early stage cashflow (even with the output fall)
thus helping it finance its transition towards mining a hugely rich
copper zone which will start dominating the mine’s output from mid
2013.
In an excellent presentation at the well-attended MineAfrica one-day
conference in London early this week, Nevsun’s VP of Business
Development and Investor Relations Scott Trebilcock, set out the
company’s future path very succinctly and it has to remain one of the
most successful junior – or mid-tier - miners around despite its
early year setback. The group halved 2012 guidance in February to
between 190,000 and 210,000 gold ounces the company but has done far
better than this already, comfortably producing 267,000 ounces by the
end of Q3 alone on its way, said Trebilcock, to 300,000 ounces plus
this year. And, he says, the transition to mining the supergene
enriched copper ore below the gold bearing oxide cap (from which the
copper content has been leached out enriching the ore below) is
proceeding on plan.
When one considers that many major miners are currently mining their
copper from deposits running at close to 0.5%. perhaps with some
byproduct credits, Nevsun’s 6.4 million tonne supergene enriched
copper resource, which it will be mining for the next three years
runs at 4.09% copper, with 0.67 g/tonne gold and 28 g/tonne silver.
It then transitions again into its 19 million tonnes of primary
sulphides grading 1.09% copper, 6.33% zinc with byproduct 0.72 g/tonne
gold and 47 g/tonne silver – all from open pit mining. The economics
of the project are thus very impressive indeed even though it will no
longer be a primary gold miner.
The primary sulphide deposit is open at depth, thus giving it the
possibility of moving underground when the pit limits have been
reached, while there is great potential for additional resources close
by the existing property. Eritrea, which has proved to be a mining
friendly environment with virtually no corruption (almost unique for
Africa) is only sparsely explored and has huge precious and base
metals potential - largely in a string of VMS.deposits of which
Nevsun's Bisha is the first to be exploited.
Returning to the supergene copper zone output, when Nevsun moves into
this zone, planned for Q2 next year, it will be one of the highest
grade open pit copper mines in the world and its margins will be
exceptional. Trebilcock suggested that it will be able to produce
copper at around 50 cents US per lb – compared with the current global
price of around $3.60/lb (which itself is well off the red metal’s
highs). The company has already been able to finance the cost of its
base metals concentrator out of profits from the gold cap, and has
around $400 million in cash which puts it in a great position for
acquisitions given the parlous cash-strapped state of many exploration
juniors at the moment – and Trebilcock did comment that Nevsun does
plan to use this money without going into any detail.
Nevsun’s stock price is currently around $4/share – well up from the
$2.80 it fell to after its February announcement, but still well
below the $7 peak of December 2010 – and it is now paying dividends
currently of 10 cents/share on an annual basis so yields 2.5%.
As the first to develop a modern mine in Eritrea, Trebilcock did
comment that the company was taking a serious risk in working in what
was a new mining environment for both itself and for the country, but
given the supportive nature of the government, which has a 10% free
carried interest as part of the agreement, but has also purchased a
further 30%, it is now reaping the rewards which are looking to be
substantial for both company and state.
Received on Sun Dec 09 2012 - 20:58:54 EST
