Canada-based Nevsun Resources said its updated Preliminary Economic Assessment shows the after-tax net asset value of the high-grade Timok Upper Zone copper-gold project in Serbia stands at $1.5 billion (1.3 billion euro).
The Timok Upper Zone project in Serbia is expected to have a 15-year mine life producing over 960,000 tonnes of payable copper after a $630 million investment in pre-production capital with 50% internal rate of return and under a year and a half payback, Nevsun said in a statement on Thursday.
“The PEA demonstrates the extremely compelling economics of the Timok Upper Zone project. Nevsun is in a unique position in the industry with a 100% ownership of a high grade, high return copper project in a well-established mining jurisdiction,” the CEO of Nevsun, Peter Kukielski, said in the statement.
For the time being Nevsun remains focused on further defining the project capital cost and execution plan through robust front-end engineering.
“Additional detailed design and metallurgical test work are ongoing ahead of the pre-feasibility study and we now plan to break ground on the exploration decline in Q1 2018. We are working with the Serbian government on permitting with the objective to start production in 2021,” Kukielski said.
Nevsun has a balance sheet with $151 million in cash without any debt and strong front-end cash flow from Timok Upper Zone, which puts the company in a strong position to finance the project build, CFO Ryan MacWilliam noted.
The PEA includes an additional 36,639 metres of infill drilling, an updated mineral resource estimate, a mining method based upon numerous tradeoff studies, additional metallurgical test work, process plant and infrastructure engineering and a new marketing study. Further work during the pre-feasibility study due in the first quarter of 2018 and the feasibility study expected in the first half of 2019 will further define the project and optimise costs for the construction and operation phases of the project, Nevsun said.
The Timok project consists of the Cukaru Peki Upper Zone and Lower Zone. Nevsun Resources owns 100% of the Cukaru Peki Upper Zone. The Lower Zone is owned by a joint venture with Freeport – McMoRan Exploration Corporation.
The project is located within the central zone of the Timok Magmatic Complex, in the Serbian section of the East European Carpathian-Balkan Arc. The Timok Magmatic Complex has one of the highest concentrations of copper enrichment in the Tethyan Belt.