Unlike Nevsun Resources’ Bisha Mine project that has had to deal with being in Eritrea, a country with a dictatorship and a poor human rights record, Nevsun Resources’ Timok Project is located in Serbia. Serbia is a country with a strong support for foreign nations and strong mining infrastructure. Nevsun Resources’ Timok Project will provide the company with strong power, roads, rail, and water infrastructure along with other assets.
Nevsun Resources prospect is broken into both the Upper Zone and the Lower Zone, with the Upper Zone being where Nevsun Resources plans to start mining. The Upper Zone is an impressively large semi massive sulphide deposit holding resource grades incredibly rare in major projects. The Upper Zone is 100% owned by Nevsun Resources and mining is expected to start in a few years.
Nevsun Resources Upper Zone has 35 million tons of resources at a 2.9% copper grade and 1.7 grams per ton of gold. In these resources, are 1.7 million tons of indicated material at a 13.5% copper grade and 10.4 grams per ton gold grade. That means that these indicated mineral resources are currently valued at $1.85 billion.
And that value of the indicated mineral resources does not even take into account Nevsun Resources inferred mineral resources. And the value of Nevsun Resources Upper Zone indicated resources has increased by more than $0.2 billion from the recent spike in copper prices.
Since the cost of Nevsun Resources’ production will likely not increase, that means this $0.2 billion will go straight to the profits. And with a 12 year mine life, assuming Nevsun Resources manages to hold the same profit margin of its Bisha Mine (except with its 100% stake), that means the Upper Zone will likely earn Nevsun Resources $10s of millions in additional profits each year of its mine life.
The Lower Zone is an extensive porphyry style copper-gold mineralization with significant earnings potential from underground mining. The stake is so impressive that Freeport-McMoRan (NYSE: FCX) has signed on for the project and is a 54% JV.
As a result, the project is so impressive that Nevsun Resources is spending $20 million drilling in the Lower Zone before the end of 2017. That shows the potential of the Lower Zone project.
