Nevsun completes switch to zinc

Image: Nevsun Resources

Nevsun Resources (TSX:NSU) (NYSE MKT:NSU) announced on Friday that it has sold and shipped the first zinc concentrate product from its Bisha mine in Eritrea.

The ten thousand tonne lot was loaded at the Port of Massawa and sailed on September 7, 2016. The concentrate was sold on the spot market, attracting multiple offers and highly competitive treatment charges, the company said in a statement.

Nevsun owns 60% (the Eritrean government owns the rest) of the $250 million Bisha mine which started operations as a gold-silver producer in 2010. Three years later Bisha underwent a $110 million expansion to switch to copper concentrate production from supergene ore.

This year the company pivoted again to expand flotation capacity to produce zinc concentrate. Zinc is the best-performing metal in 2016 rising more than 44% in price since the start of the year. Measured from its six-year low struck in mid-January, the price of the metal mainly used to galvanize steel is up 58% to trade around $2,230 a tonne or $1.05 per pound.

Cliff Davis, Nevsun CEO commented, “We are pleased to have a high quality zinc product coming to market in an environment of rising zinc prices. Bisha is the only significant new zinc concentrate coming to market in 2016 and we are being aggressively courted for offtake by various customers. We would like to congratulate our partner, the State of Eritrea, for adding another export product to the economy and thank them for their support.”

Nevsun is scheduled to load additional shipments in the coming weeks and is ramping up to commercial production which is forecast for the fourth quarter this year, the company said.

Life of mine payable metals at Bisha is put at 470m pounds of copper, 1.7 billion pounds of zinc, 240,000 ounces of gold and 8.2 million ounces of silver.

Nevsun completed a takeover of Reservoir Minerals in June in a $440 million cash and shares deal. The agreement provided the companies 100% ownership in the upper zone of the Timok Copper Project in Serbia, which had previously been owned by Reservoir and Freeport McMoRan. Nevsun shareholders own two-thirds of the combined company.