Nevsun Sinks on Production-Drop Forecast: Vancouver Mover
February 07, 2012, 4:32 PM EST
Feb. 7 (Bloomberg) -- Nevsun Resources Ltd., which mines gold in the
African country of Eritrea, plunged the most since September 2004
today after saying production may fall 50 percent this year.
Nevsun, which operates the Bisha mine, tumbled 31 percent in Toronto
after the Vancouver-based company forecast production of 190,000 to
210,000 ounces, compared with the 379,000 ounces mined in 2011. The
shares dropped C$1.94 to C$4.40, the lowest close since August 2010.
The company said it found its March 2011 estimate of its resources to
be too optimistic. It has delayed its revision of the estimates for
the entire project, originally scheduled for late this quarter, to
the second or third quarter.
"Gold production guidance for 2012 is basically half of what was
expected," Steven Green, an analyst at Toronto- Dominion Bank, wrote
in a note to clients. "The reason for the lowered guidance is an
apparent overstatement in the reserve estimate of both tonnage and
grade -- which is a major negative."
Nevsun surged 22 percent from Oct. 27, when it reported a copper
discovery next to the mine, to yesterday. The Bisha deposit consists
of a layer of gold oxide above layers of zinc and copper. The company
says it expects to begin mining base metals next year.
----[Mailing List for Eritrea Related News ]----
Received on Tue Feb 07 2012 - 22:44:45 EST
