VANCOUVER — Drills probing the Northwest zone, a satellite zone 1.2 km from Nevsun Resources’ (NSU-T, NSU-N) operating Bisha gold mine in Eritrea, are finding high-grade gold, copper and zinc — just not all in the same place.
Nevsun discovered the Northwest zone in 2003 based on an electromagnetic anomaly. A few holes drilled over the next few years defined a 600-metre zone of massive and stringer sulphide mineralization, but building and commissioning the Bisha mine dominated Nevsun’s attention, and the Northwest zone sat largely untouched for several years.
Last year, with Bisha running smoothly and the copper expansion plant almost built, Nevsun returned to the satellite zone. Nevsun CEO Cliff Davis is glad they did.
“The mineralization is complex, but we’re cautiously optimistic that this is going to provide some good additional feed for the Bisha plant,” Davis says in an interview.
Early indications suggest that Northwest is a promising, if complicated, zone. Results from the first holes of the 2013 program include a high-grade copper intercept, a high-grade gold hit and a healthy zinc zone, all in different places.
Hole 72 provided the golden goods, returning 15 metres grading 28.6 grams gold per tonne from 38 metres downhole. Hole 108 illustrated the zone’s copper potential, cutting 4.1 metres of 19.17% copper from 65 metres depth. And hole 31 offered zinc in a 37.5-metre intercept averaging 4.13% zinc and 0.89% copper, starting 96 metres below surface.
Other interesting intercepts include 75.9 metres grading 1.28% copper and 0.18% zinc from 131 metres down hole 50, 32 metres averaging 1.01% copper and 1.41% zinc from 105 metres down hole 57, and 40.6 metres of 1.16% copper, 0.98% zinc and 0.2 gram gold from 109 metres down hole 124.
Mineralization at Northwest is clearly complicated. The zone is made up of a series of massive sulphide lenses hosted in altered felsic volcanic rocks. Both the footwall and hangingwall contain stringer sulphide mineralization, while faulting and slumping have added more complexity. The sulphides are also weathered at surface, creating oxide zones locally enriched in gold and underlying supergene layers with enhanced copper.
Davis says they are still awaiting results from another 70 Northwest zone holes.
The system at Northwest remains open to the north, south and at depth, though Nevsun’s drill teams have moved on to the Mogoraib exploration licence to fulfill work commitments there. The company plans to return to Northwest with drills in the second half of the year, expand the limits of known mineralization and probe a parallel zone of massive sulphide that has seen limited drilling.
The 2013 drill program at Northwest comprised almost 16,000 metres of drilling. That added to 4,325 metres completed in 2011 and 13,520 drilled in 2012. Davis says the company now has enough data to complete a resource estimate for the zone, something it will release as part of its overall project resource and reserve updated in early 2014.
Nevsun certainly has the cash to continue exploring. The company finished the first quarter with US$335 million in cash and no debt, a pile of money that has prompted many analysts to wonder whether an acquisition in the works. With the US$64-million Bisha copper expansion almost complete, the company has no large spending plans in its immediate future.
The expansion project saw Nevsun add a flotation plant and copper concentrate load-out facility to the existing miner, crusher and grinding circuits at Bisha. The flotation plant is needed because the mine has worked through most of the gold-dominant upper oxide layer, which was processed through a carbon-in-leach (CIL) circuit.
Underneath the gold layer is a copper-rich supergene layer. Nevsun expected to transition directly from gold-oxide leaching to copper supergene flotation, but the layered deposit at Bisha had another geologic offering at the interface: large pockets of pyrite sands.
Don’t be fooled by the name: these are valuable sands, carrying 3 to 10 grams gold and more than 100 grams silver per tonne. The company estimates it has 250,000 tonnes of these pyrite sands, which the CIL circuit cannot handle because of the pyrite content. Nevsun is still doing the test work, but says it could send the sands through the new copper flotation plant.
Processing the pyrite sands would take six to seven weeks, which means delaying the start of supergene copper processing until almost the fourth quarter of the year. The gold and silver grades in the sands, however, should make the delay more than worthwhile.
“The fact that it is so high grade means it is something we have to be careful about processing,” Davis says. “We don’t want to lose anything.”
Nevsun’s share price lost 6¢ following news of the drill results from the Northwest zone to close at $3.58. The company has a 52-week share price range of $2.75 to $4.96, and has 199 million shares outstanding.
The company recently increased its semi-annual dividend by US2¢ to US7¢ a share, or US14¢ per share annually. The next payout will occur on July 15 to shareholders of record as of June 28. It will be the fifth dividend payment Nevsun has made.