Donner Metals says production is underway at Bracemac-McLeod Mine
The zinc and copper Bracemac-McLeod Mine (CVE:DON) commeneced production on May 15 with an anticipated average rate of 3,000 tonnes per day.
Donner's partner and operator, Glencore Xstrata plc, is processing the ore from Bracemac-McLeod following the depletion of ore from the Perseverance Mine. The Bracemac-McLeod Mine is a 65% Glencore Xstrata, 35% Donner joint venture.
In a research note Haywood Securities put a buy rating on Donner Metals with a target of 30 cents. The stock is currently trading at 11.5 cents. The 52-week range is 9 cents to 20 cents.
"With Bracemac-McLeod concentrate production now underway, Donner will begin to receive cash flow from the operation in mid-2013 given the 30- and 90-day settlement periods associated with zinc and copper concentrates respectively," writes Haywood analyst Stefan Ioannou.
"Hence, Donner has essentially completed the transition from explorer/developer to producer-in our view a major milestone."
The Bracemac-McLeod mine was discovered in 2007 and cost $159 million to develop. It employs 260 people.
Proven and probable mineral reserves of 3.7 million tonnes grading 9.60% zinc, 1.26% copper, 28.25 g/t silver and 0.43 g/t gold. Inferred mineral resources of 2.6 million tonnes grading 8.79% zinc, 1.31% copper, 38.84 g/t silver and 1.06 g/t gold are located in proximity to the mineral reserves.