Nevsun Resources (TSX: NSU; NYSE: NSU) continues to prove up the mineral potential of Eritrea.
The company wrapped up a sizeable drill program at the Northwest zone, roughly 2 km from its 60%-owned Bisha mine, and the results show that an upcoming maiden resource estimate on the zone could well impress investors.
Highlight intercepts from the polymetallic massive sulphide deposit include: 11.7 metres grading 21.6 grams gold; 12 metres grading 0.94% copper and 3.41 grams gold; 23.9 metres grading 0.74% copper and 1.15 grams gold; and 16 metres grading 0.92% copper, 3.23 grams gold and 141 grams silver.
Those results come out of four separate holes, and Nevsun estimates that true widths are between 70% and 90% of the reported drill length.
For the year the company completed 18,900 metres of resource-definition and expansion drilling at the zone, and it plans to include the results in a maiden resource estimate due out early this year.
Nevsun says the anomalous gold zone is associated with later felsic dykes close to copper-rich massive and stringer zones.
It says mineralization occurs in a series of massive sulphide lenses hosted within altered felsic volcanic rocks containing abundant copper and zinc-rich stringer sulphide mineralization. Some of the massive sulphides have weathered from surface, creating oxide zones that are locally enriched in gold.
It reports that beneath the gold areas, some supergene copper mineralization may also be present, as four down-dip step-out holes showed the mineralized system continues at depth. The Northwest zone remains opens to the north, south and at depth.
Scotia Capital markets analyst Mark Turner says the latest assay results demonstrate continuity of some of the gold zones and points out that the drill results indicate that a parallel zone of massive sulphide exists to the east, which has only seen limited drilling to-date.
Turner has Nevsun rated as "sector outperform" with a $5.30 share-price target.
Haywood Securities analyst Stefan Ioannou called the past year a “pivotal” one for Nevsun as it included a three-month break from any meaningful metal production at the plant as the company transitioned from gold to supergene copper.
Ioannou argues that the transition was likely responsible for the roughly 21% dip in Nevsun’s share price over the course of the year as investors moved into the stocks of miners with more near-term potential. The company also likely saw selling from gold-focused indices as it moves into copper production, he writes.
In Ioannou’s opinion is all adds up to a buying opportunity for investors.
“With commercial copper production underway we believe that Bisha is ripe for the picking in a marketplace characterized by ongoing consolidation,” he writes in his research note. “Nevsun is also well positioned to pursue its own organic and corporate growth initiatives given the company’s strong balance sheet, which included US$290 million in cash at Sept. 30, 2013, increasing to approximately US$455 million at year-end 2014 in our model.”
In Toronto on Jan. 6, Nevsun’s stock was up 2%, or 7¢, to $3.62 on 192,500 shares traded.
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