RE: update analysisI went back to the press release of May 2004 which said that the design for Tabakoto was a milling capacity of 650 000 tons per year with a grade of 5.45 g/t of gold. The crushing capacity is oversized to allow for expansion. In terms of milling they are clearly running at capacity now. What is not up to snuff is the grade, which even in November was quite a bit below the life-of-mine expectations. I don't find that unusual for a mine during the early going, but it will obviously have an impact on financial results.
I suspect the 4th quarter will not be pretty and they will still have negative cash flow, but there are hopes that in 2007 cash flow will turn positive. However even with gold prices around the $630 mark they will not manage to generate the cash they need for Bisha unless they can crank the gold grade up to 5 grams/ton or so.
I have been negative on Nevsun for about a year now due to the endless delays and problems in Mali, but I do think there may finally be the basis for a turnaround. They must surely be one of the worst performing gold stocks since the peak in the spring, so if they work things out in Mali there is room for a rebound. They have to prove, however, that eventually they will get the grade to the levels expected in the feasibility study, because you can improve the plant, but there is nothing you can do to improve the quality of the ore at Tabakoto.