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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (34777)	3/27/2009 3:01:03 PM
From: LoneClone	Read Replies (1) \| Respond to of 194043

Discovery weighs sale of nickel asset Ines Schumacher Posted: Wed, 25 Mar 2009 miningmx.com [miningmx.com] -- ASPIRING copper producer Discovery Metals is confident it can raise enough cash to develop its copper and silver project in Botswana, and is possibly willing to part with its nickel project to finance capital costs. Australia-based Discovery is aspiring to create Botswana’s largest copper mine and is set to complete its bankable feasibility study at its Boseto copper project at the end of 2009. Discovery will have to raise US$140m by the first quarter of 2010 to be able to finance construction. “We expect to raise US$75 in equity and the rest in debt,” managing director Brad Sampson told Miningmx. The company is listed on AIM, as well as the Australia and Botswana stock exchanges. As at 31 December 2008, Discovery had A$6.2m on its balance sheet and has subsequently raised a further A$2.3m. Edison Investment Research estimates the company to have a cash burn of about A$0.6m per month. Discovery secured the Boseto copper prospect in 2005, having previously focused on exploration in Australia and a nickel prospect in Botswana. The company has a proven resource of 45.6 million tonnes of copper and an inferred nickel resource of 4.1 million tonnes. The company expects to produce 23,500 tonnes of copper per annum and 780,000oz silver per annum from 2011. It has 14 prospecting licenses on the Kalahari copper belt. Boseto is located in the north-west of Botswana, a semi-arid region. Sampson said water supply is always a concern in Botswana, but Discovery has drilled holes around its project and found water supplies. “It’s all looking pretty good,” he said. Discovery’s other area of focus is its nickel asset in Botswana. “We have hardly spent any money on the Dikoloti nickel project in the past 12 months. Our focus is on financing and bringing our copper asset into production,” Sampson said. The company is currently re-evaluating Dikoloti and is considering selling it to raise the capital required for Boseto. “It’s a possibility, but nothing has been decided yet,” Sampson said. Copper outlook Discovery expects to start copper production in the middle of 2011. “We would anticipate that the Boseto copper project enters into production at a time when copper prices firm and demand picks up,” a recent Fairfax report said. The valuation of the Boseto project would become unfavourable should copper fall much below 170-180c/lb, however, Fairfax expects elevated copper prices during the initial years of production before they fall back. “The expected cash cost of around US$1.06/lb should ensure the mine remains profitable throughout the cycle,” Fairfax said. Sampson said the project would break even at 150c/lb. The copper price is currently trading at 177c/lb. Discovery is positive on its copper outlook. “We’ve always been bullish on commodity prices, but also not naïve. The demand is increasing. Economies are developing and middle classes emerging,” Sampson said. Expectations are Chinese demand for copper will grow by between 5 and 8% this year, Reuters reported on Wednesday. But that will be engulfed by slumping demand - between 10 and 20% - in other major economies such as the United States, Japan and Germany.