Banner year at EuroZinc’s Neves Corvo

Vancouver — Positive year-end results appear to justify EuroZinc Mining‘s (EZM-T) acquisition of the Neves Corvo copper mine in southern Portugal.

In 2004, Neves Corvo produced 95,687 tonnes of copper in concentrate, or about 211 million lbs. of the metal. The total profit of US$80.5 million was the second-highest in 16 years of operation.

Almost 2 million tonnes of ore were mined and processed from underground. The average head grade was 5.7% copper; the recovery rate, 88.4%; and the concentrate averaged 23.9% copper.

Neves Corvo incurred a cash cost of US60 per lb. copper during a year when the red metal traded at an average price of US$1.30 per lb., based on figures from the London Metal Exchange.

EuroZinc acquired Neves Corvo from Empresa de Desenvolvimento Mineiro (EDM) and Rio Tinto (RTP-N) in return for about US$155 million. More recently, EuroZinc acquired the price participation rights held by those two companies. The rights were put into effect following the sale of the mine, allowing the vendors to receive a royalty based on copper sales and the average world spot price for the metal. The company’s purchase price for the rights totalled US$48 million, but the recapture of a scheduled US$12.5-million payment offset some of the cost.

Neves Corvo accounts for about 90% of Portugal’s mineral production, by value, and is the largest copper producer in the European Union. Reserves of 19.3 million tonnes grading 5% copper will support at least 10 years of operation. The deposit also has reserves of tin, which have largely been exhausted, and zinc, on which metallurgical tests are ongoing.

EuroZinc also owns the dormant Aljustrel zinc mine, about 40 km north of Neves Corvo. The company estimates it can advance the mine to production by incurring a capital expenditure of US$86 million. Significant increases in zinc, lead and silver prices all augur well for the project.

Both Neves Corvo and Aljustrel are in the western section of the Iberian pyrite belt, which runs about 250 km through southern Spain and into Portugal. The 25-to-75-km wide belt hosts some of the larger volcanogenic massive sulphide deposits in the world.

With 508.7 million shares outstanding, EuroZinc has a market capitalization of $458 million. It recently traded at 90.