Nevsun Investors Will Have to Wait a Year Nevsun Investors Will Have to Wait a Year for Certainty
By Tim Wood
21 Apr 2005 at 03:44 PM EDT
ZURICH (ResourceInvestor.com) -- Nevsun President and CE, Dr John Clarke, is painfully aware that his investors crave some definitive evidence that the company’s rich Bisha project in Eritrea will not suffer another sudden “intervention”.
Whilst he is confident that there will be no further drama, Clarke admits that there is no instant salve that might dissolve the discount overhanging the company’s stock price. Nevsun investors took a bath when the government of Eritrea issued a halt work order which dragged on for four months without clarification.
Speaking to Resource Investor at the European Gold Forum on Thursday, Clarke said he was continuing to invest based on his interaction with government officials in the wake of the flap.
“I’ve known these guys since 1994. They’re doing great work and they’re very conscious of the development requirements,” he said.
Nevsun was allowed to resume work, but the continued lack of a plausible explanation from the government has spooked the market for the stock. Clarke says investors can be reassured as he was by his “eyeball-to-eyeball” contact with the actors in the decision. He says Eritrea wants Bisha to be developed, and hopes that it will attract more exploration and mining investment.
“The geology is wide open. We have enough drill ready properties, but it’s fantastic geology that I’m encouraging other companies to pursue,” Clarke said.
Clarke says he expects the eventual mining license to provide unambiguous project security. Unfortunately that is still a year away, and it leaves investors with timing and other dilemmas.
But for the sovereign risk, Bisha is a project of undeniable value and recent drill results confirm that. A single rich bore hole returned the equivalent of a million tonnes of resource.
Clarke says metallurgical testing is now underway on the zinc deposit, which has a complement of other metals. He expects to begin scouting for an offtake agreement once the metallurgy is confirmed. Refining is likely to be done in India or China; most likely India.
An interim economic study will shortly be released as a bridge for investors who are awaiting a full feasibility study in the first quarter of 2006.