Leading diversified mid-tier mining company
Bisha open pit mine, Eritrea
CORPORATE PROFILE
Nevsun Resources Ltd. [TSX-NSU, NYSE AMERICAN-NSU] is moving towards a Pre-Feasibility Study on the advanced-stage Timok copper-gold project in Serbia, Eastern Europe. The project has two styles of copper-gold mineralization – the Upper Zone and Lower Zone. The Upper Zone is a high-sulphidation epithermal deposit while the Lower Zone is a low grade porphyry style copper-gold deposit.
The company has a 100% interest in the high-grade Timok Upper Zone and 60.4% interest in the Timok Lower Zone. The Lower Zone is a partnership with Freeport-McMoRan, which owns 39.6% and, upon completion of a Feasibility Study, Nevsun will own 46% and Freeport 54%. For the Upper Zone, PEA highlights include: US $1.5 billion NPV (8%) and 50% IRR (after-tax); $630 million pre-production capital with under 1.5-year pay back; cumulative cash flow of $2.8 billion; expected 15-year mine life. A Prefeasibility study is planned for Q1/18 and Feasibility in H1/19.
Measured and Indicated resources are 28.7 million tonnes grading 3.7% copper and 2.4 g/t gold, for contained metal of 1.05 million tonnes of copper and 2.2 million ounces of gold. Inferred resources are 13.9 million tonnes grading 1.6% copper and 0.9 g/t gold, for contained metal of 0.23 million tonnes of copper and 0.4 million ounces of gold.
The PEA is based on the low cost, bulk tonnage sublevel caving mining method. Nevsun is working with the Serbian government on permitting with the objective of starting production in 2021. For the life-of-mine, Upper Zone production will be 3.3 million tpa with sustaining costs of $342 million. Exploration decline development is planned for Q1 2018. Exploration for more Upper Zone-style deposits is underway.
Recent drill results from targeting new high-grade Upper Zone-style mineralization included 2.93% copper and 2.54 g/t gold (4.71% copper Equiv.) over 27.0 metres and other encouraging assays. Follow-up exploration electromagnetic surveying and drilling is planned for 2018.
For the Timok Lower Zone, a joint venture with Freeport-McMoran (40%), a $20 million exploration program is underway to further define mineralization. The Timok Lower Zone is porphyry-style mineralization with the block caving mining method under consideration.
In addition, Nevsun is in a joint venture with Rio Tinto to explore the Bor region of Serbia. The Timok Project is 6km from the Bor mining and smelting complex and the historic mining town of Bor.
In addition to the Timok Project in Serbia, Nevsun is the 60% owner and operator of the Bisha open pit mine in Eritrea, East Africa, with state-owned ENAMCO owning a 40% interest. The Bisha Mine is 150km west of the capital of Asmara with a highway to the Port of Massawa that has enabled Nevsun to ship copper concentrates to Europe and Asia.
During 2017, the Bisha Mine produced 207.8 million lbs of zinc in zinc concentrate and 18.0 million lbs of copper in copper concentrate. Based on existing reserves, the current mine life is expected to extend into 2021.
Total Measured and Indicated resources are 35 million tonnes grading 1% copper, 4.2% zinc, 0.6 g/t gold and 33 g/t silver. Inferred resources are 33.8 million tonnes grading 1.0% copper, 4.7% zinc, 0.8 g/t gold and 25 g/t silver. There is potential to expand resources with exploration of a deeper Bisha open pit and potential for Harena and Bisha underground mining. There are many prospective district-scale exploration targets that could build resources, some of which are being drill-tested as well as brownfield targets. For 2018, exploration for the Bisha region includes investigating satellite deposits.
The company has strong support from the Eritrean government which has a stable taxation regime and fair mining regulations.
Nevsun Resources had $151 million in cash at end of Q3/17 and no debt. The company has about 302 million shares outstanding and 310 million fully diluted. Nevsun, headed by Peter Kukielski, President and CEO, has an experienced leadership team.
Serbia: Open for Business
Serbia is strategically located at the crossroads of central and southeastern Europe. The country is a parliamentary republic and has one of Europe’s first modern constitutions. Serbia, which has a population of about 7.2 million people, excluding Kosovo, has established relations with 188 United Nations member states and is working towards becoming a member of the European Union. It has now achieved candidate status and began accession talks in 2014.
Serbia has an emerging market economy in the middle-upper income range. According to the IMF, the Serbian nominal GDP in 2015 was US $36.56 billion. Belgrade is the capital, the largest city in Serbia, and is the location of its stock exchange.
Since 2000, Serbia has attracted over US $25 billion in foreign direct investment that has included major corporations such as Bosch, FIAT, Siemens, Michelin, Coca-Cola and Carlsberg. The country is an exporter of electricity.
Serbia’s mining industry is comparatively strong with the country being the world’s eighteenth largest producer of coal (seventh in the Europe) extracted from large deposits in Kolubara and Kostolac basins. It is also the world’s twenty-third largest (third in Europe) producer of copper which is extracted by RTB Bor, a large domestic copper mining company. Significant gold extraction is developed around Majdanpek.
The country has no restrictions on foreign ownership and a competitive corporate and personal tax regime. There is a 15% corporate tax rate and a 5% NSR royalty on copper and gold metals. In addition, there is a 10-year tax holiday available for large capital investments from the supportive government that features a favourable fiscal and regulatory environment. The Serbian government is committed to increasing GDP contribution from mining from 2% to 5% by 2020. In 2015, its mining code was updated.
Nevsun’s Timok Project located in the central zone (or Bor district) of the Timok Magmatic Complex (TMC) in the Serbian section of the East European Carpathian-Balkan Arc which has one of the highest concentrations of copper and gold enrichment in the world. This is a mature mining jurisdiction – the Bor Mine has been in operation since early 1900s. Serbia is also favoured by other mining companies such as Rio Tinto, Freeport-McMoRan, Dundee Precious Metals and Mundoro Capital.
There is European quality infrastructure in Serbia: power, roads, rail, water, smelters, ports, a highly skilled workforce and over 1,700 kilometres of navigable inland waterways. Serbia’s most renowned citizen is probably electrical engineer Nikola Tesla, inventor of the alternating current electrical system.
With a great geological potential and a welcoming government for foreign mining companies wishing to operate in the country, Serbia is a very attractive jurisdiction.
Contact: Heather Taylor, Investor Relations Manager (604) 623-4700