Nevsun focus ahead in Eritrea is high-grade, low-cost copper production

TORONTO– Following its successful transition in 2013 from producing gold to copper, Eritrea-focused miner Nevsun Resources on Wednesday announced that it was looking forward to its first full year of copper production at its flagship Bisha mine.

The Vancouver-based miner said its 60%-owned subsidiary Bisha Mining Share Company (BMSC) planned to produce between 180-million and 200-million pounds of copper in concentrate during the year, through processing about 2.1-million tonnes of ore from the Bisha main pit, averaging a grade of about 4.6% copper.

With such high-grade ore, the C1 cash costs (the costs of mining, milling and concentrating, onsite administration and general expenses) of producing a tonne of concentrate were estimated to be in the lowest quartile worldwide.

Based on the mine plan, the copper will be contained in about 280 000 t of concentrate, at about 30% copper grade. Continued plant optimisation and increased transport logistical efficiency would also remain top priorities.

Nevsun also said it had “considerable additional value” held in stockpiles to be monetised. This included 6 500 t of precious metals concentrate containing about 7 000 oz of gold, including a high silver content, that it intended to blend with its regular copper concentrate to heighten the value of the combined product.

The company has also mined and stockpiled more than 100 000 t of oxide ore at over 6 g/t gold, containing more than 20 000 oz of gold, and 200 000 t of pyrite sand ore that contained about 55 000 oz of gold, with significant silver content. The company said it was exploring alternative methods and timing to best monetise these stockpiles.

Nevsun earlier this month reported copper output in the second half of 2013 came in at the top end of its guidance, after the copper expansion project at its Bisha mine, in Eritrea, was completed on time and under budget.

The firm said copper-in-concentrate output totalled 48-million pounds during the second half of the year, compared with its forecast of 30-million to 50-million pounds. For the three months ended December 31, Nevsun produced 36-million pounds of copper.

The miner also said that gold output for the full year totalled 92 000 oz of gold in doré, including 20 000 equivalent ounces in precious metals concentrate.

“Following our successful transition to copper production in 2013, Nevsun looks forward to strong free cash flow and earnings from Bisha in 2014. For growth, we will continue to expand Bisha resources through generative exploration programmes in 2014 and to actively evaluate potential acquisition opportunities,” Nevsun CEO Cliff Davis commented.

Meanwhile, BMSC would advance its zinc expansion project through the year, with a target start-up in the fourth quarter of 2015.

Nevsun said it had already appointed an engineering, procurement and construction management contractor, and the initial commitments for long-lead item civil works had been made and detailed design had started. The capital cost for the zinc project would be more closely estimated during the first half of 2014, the company said.

Further, the TSX- and NYSE-listed company said that effective from March 31, Nevsun would start paying a quarterly dividend. The current $0.14 annualised dividend was expected to be paid at $0.035 a share each quarter.