|Will it be good or bad!!|
They also drilled a few holes in the core of the deposit, and as they also announced that they'll have an initial resource estimate by mid-2018, i decided to have a go, and so here is one of my wonderfully pathetic resource guesstimates (TM). You can get the Updated LF views from here (link)
This helps to smooth the data and prevents the final tonnages and grades being skewed.
In the last post (link) I used a 400m base range, and commented that this may be to large for resource calculation, so I've been conservative and reduced it to 300m, which I'm more comfortable with using as it is a reasonable value to define inferred resource.
Remember - using a very big search ranges is a good way to inflate resources in all deposits. In porphyries - anything above 300m is starting to look unrealistic, and is a good thing to check. In exploration, I like to use twice the average drill-hole spacing as a first pass.
Exploration upsideI also want to see if it can get bigger, from just a giant deposit to a massive one. With the CAPEX required to develop a large underground mine, Nevsun will want something that will support a 20+ year mine life. Again, if you see a project with a <10 year mine life, unless it has exceptional grades, it is best to avoid. It may pay back the CAPEX, but you want something that will generate enough revenues to develop the next project.
Here we have good news and bad news. Looking at a few sections through it
|Yellow = long section location|
cyan = cross section locations
Damn, my great idea was crap. The could of holes drilled to look for the SE (left) continuation hit virtually nothing, and to the NW, the grades are decent, but we are getting very very deep (almost 2km).
SE Cross section
We can see that to the NE mineralization is closed off, but maybe below the Upper zone, we could see more mineralization. It is relatively shallow (~900m depth). I've doodled on what I think is the high temperature core, where normally there isn't much mineralization, but potentially it could mean that they only half of the system has been drilled. It would be nice to see some section showing Moly and vein-type distributions (*cough* *cough*).
NW Cross section
We're much deeper, but the mineralization is open to the NE and SW.
So there appears to be some obvious areas to expand the mineralization. however, I would like to see Nevsun start to use directional drilling or drilling wedge holes (similar to SolGold at Alpala).
Just for the record here we are talking about Nevsun Resources Ltd. - NSU.t. Timok is in Serbia. Chief frommage says "This is a high-grade, high return, fully executable copper project in a supportive jurisdiction." We have, so far, 27 million tonnes at 3.3% copper and 2.1 grams per tonne gold using a price of $3.00 per pound copper and $1300 per ounce gold.ReplyDelete
it will be interesting what (financial) hit they get for the high As content of the Upper Timok ores, as according to the March 28th PR, the concentrate will be grading >1% As.Delete
They will maybe look at producing two concentrates...one high and one lower in As. Standard smelter terms usually have no penalty for less than 0.2%, then add $2.50/dmt of concentrate for every 0.1% increase. But few mines are in the 1% range, and even fewer that would produce several hundred thousand tonnes per year. I only know of a couple of smelters that take high As con. One is in Canada (Horne) and one owned by Dundee in Namibia. (Tsumeb) It was originally built to handle ore from the magnificant Tsumeb mine, but the mine has been closed for several decades and the smelter lives on custom feed, including high As material from somewhere in Europe. I believe the Tsumeb smelter makes arsenic trioxide for sale. I've visited the area but not the smelter.Delete
Exactly. Chelopech concentrates are similar to Timok. It's enargite.Delete
Those drill holes are becoming very long and expensive. I suspect they will wait until the get underground before spending a lot of money on it. From a mining perspective 2,000 meters is getting deep, particularly if insitu rock stress is high. Grades are "iffy" for most mining types. Block cave would work if the geometry was favourable, but again...stress levels become important at depth. I don't know of any block cave mines operating at that depth.ReplyDelete
Resolution - oh wait, it isn't producing, just 10 years away....Delete
I was surprised that a few angle holes weren't drilled, just to get an idea of any sub-vertical faults/structures that could potentially impact block caving. Maybe the reason they didn't is that they know they'll need a partner to develop it and for understandable reasons, are focusing on the upper zone.
Exactly! Why spend anything when the discounted value of this resource is very low, assuming no mining for at least 10 years? Also, it diffuses their focus at a time when they need to get the upper zone ready to go.Delete
I would guess that in a few years, some major will start sniffing around, as Lower Timok could potentially add annual production >100,000 Tonnes of Cu, and that would be very useful for those companies growth projections. Especially a mid-tier like Newcrest or even KGHM.Delete
Nevsun were actively seeking partners a few years ago. It amounted to a lot of tire kicking but that's about all. KGHM are going through another spasm right now...I hear they fired all their executive group. They have not done well with their acquisitions...except for Robinson, which has been a cash cow for the last dozen or so years. But it only has a couple of years left.Delete
Freeport is already the JV partner on the Lower Zone. It will own 54% after the DFS on Upper Zone is completed next year. I don't see Freeport leaving the JV, or Nevsun diluting its ultimate 46% interest any further (Upper Zone infrastructure should get dual use value when the Lower Zone is developed).Delete
In that case it may be that Freeport is funding the deep zone exploration in order to value their resource.Delete
I forgot that Freeport was involved.Delete
I'm a bit surprised at this resource wag, suggests ~1 billion tonnes @ 1% CuEq (that's the minimum hurdle rate for $3/lb copper in brownfield block cave according to Macquarie chart posted earlier).ReplyDelete
That was me being a big crude with the grade shells, I've changed from 0.25% CuEq steps to 0.2% CuEq steps (so 0.2, 0.4 0.6 etc) and using a 0.8%CuEq cut-off I get 583Mt @ 1.05%CuEq
...and we got 1.1 billion tonnes grading 1.11% CuEq. Would love to hear your comments, AG.ReplyDelete
Darn, slightly out! I'll have a lookDelete
I'll remodel my project using the SRK cutoffs and ranges to see how close I can get.Delete