* Looking for new copper project in Africa, S.America
* VP says company needs to diversify political risk
* Sees 350,000 ounces of gold in 2011
* Sees cash flow around $300 mln in first two years
By Julie Gordon
TORONTO, March 7 Nevsun Resources (NSU.TO)
plans to use the cash flow from its newly producing Bisha mine
in Eritrea to acquire a new copper project in another mining
jurisdiction, a company VP said on Monday.
"We're looking for acquisitions in the copper space ... and
we're looking to diversify political risk," Scott Trebilcock,
vice president of business development, said on the sidelines
of the PDAC prospectors and developers conference in Toronto.
"It would likely be out of Eritrea," he said. "We certainly
like Namibia, Botswana, the other established mining districts
He added the company will likely look for more projects in
Eritrea, on the Horn of Africa, after it has diversified.
For more stories on PDAC convention: [ID:nN02153893]
With the focus on copper, Trebilcock said that continuing
to develop in Africa makes sense, but that Nevsun is not
"We are also looking off the continent, in the Americas,"
he said. "But really we're looking for asset quality, as
opposed to geography."
Copper CMCU3 for three-month delivery on the London Metal
Exchange has risen by two-thirds since June, hitting an
all-time high of $10,190 a tonne in mid-February. The metal,
used in power lines, construction and industrial applications,
was trading at $9,614 on Monday.
Bisha, which is 60 percent owned by Nevsun and 40 percent
owned by the Eritrean government, is a mixed copper, gold and
zinc project. The Canadian junior poured its first gold in
December and will start copper production at the mine in 2013.
Gold production will last for just over two years, with
2011 production expected be around 350,000 ounces, said
"We fully expect to be mining on this site for 20-30 years,
based on the additional upside," said Trebilcock, adding that
the company will put out two resource updates in 2011.
With the spot gold price down slightly from a record high
of $1,444.40 an ounce, Nevsun expects cash flows of around $300
million for the first two years of production.
Trebilcock said the company is well-funded to develop the
copper and zinc stages of the Bisha project, as well as to fund
future exploration and merger activities.
He added that the board is considering ways to return cash
"Share buybacks and dividends are things we will consider,
although no decisions are made yet," he said.
(Editing by Frank McGurty)