From Calandra...Nevsun negotiates geologic and country risk
On metals-exploration risk, Nevsun Resources (CA:NSU: news, chart, profile), whose shares I own, could be doing handstands next year. The Canadian mining company on Wednesday updated its latest round of drill-hole results at the Bisha discovery it is nurturing in Eritrea, Africa.
Nevsun Resources is balancing geologic and political risk in Africa (it is also active in Mali), yet the company is on track to become one of the fastest-growing copper-gold exploration companies based in North America. (Ivanhoe Mines is also on the short list of copper-gold miners whose prospects in politically sensitive parts of the globe will pay off handsomely for investors in coming months.)
As forecast in The Calandra Report, the Nevsun results just in are off the charts on gold, copper, silver and zinc. Nevsun's Don Halliday got me on the horn this morning to explain the scope of the results, which surveyed the Bisha discovery's southern extension.
"The results confirm a very high grade of mineralization in the south, where we had not had confirmation until now. We saw in one hole some 30 meters of 5 gram (per metric ton) gold, another with 23 meters of 13-gram gold and 19 meters of 13 percent copper, and so on," said Halliday, who serves as business development director and reports directly to CEO John Clarke, the Nevsun veteran who spent many years of his life working for Ashanti Goldfields (ASL: news, chart, profile) in Ghana.
Asset managers who already own Nevsun shares liked what they saw Wednesday. "High dollar rock per ton," said Richard H. Sacks at Chicago-based Phoenix Advisory Management, which was buying Nevsun shares more than a year ago at much lower prices. "This is a very high grade system in my view."
Nevsun is in the process of raising as much as $68 million Canadian through the placement of stock and warrants with risk-embracing investors. A syndicate of brokers took almost $50 million of the placement in a so-called "bought deal," so certain was it the financing would be successful.
If Wednesday's Bisha results from 38 drill holes are any indication, Nevsun investors should be overjoyed. Nevsun's data indicate the potential for a massive sulfide of mineralization beneath the southern extension of Bisha, which is shaping up as one of the few large-scale discoveries in a world of dwindling poly-metallic deposits of copper, gold silver and zinc. (Also with great potential: Bema Gold's (BGO: news, chart, profile) Kupol discovery in eastern Russia and Ivanhoe Mines' (HUGO: news, chart, profile) Oyu Tolgoi project in Mongolia.)
"In one spot, we are seeing 120 grams (per metric ton) of silver," says Halliday, speaking to me from Nevsun headquarters in the hot-metal capital of the western world, Vancouver in Canada. "We are also seeing the potential for the massive sulfide underneath ... like 32 meters of 9 percent zinc, with 1 percent copper, 60 grams silver and 0.6 grams gold, so that's $120 (a ton) rock. This is economic rock at 112 to 145 meters deep."
Stay tuned for several other risk-in-extremis candidates in the areas of metals, diamonds and biomedical equipment. Plus, see The Calandra Report, which this week features a natural gas and oil company embracing political risk in Central America.