EuroZinc closer to Neves Corvo deal

Vancouver — EuroZinc Mining‘s (EZM-V) offer to buy the Neves Corvo copper mine in Portugal has been accepted as a conforming bid by the jury handling the tendering process.

Up to 30 days are expected to pass before the transaction can proceed, at which point a 10-million-euro deposit must be made and a definitive purchase agreement signed. A portion of the funds from EuroZinc’s previously announced $30-million financing has been allocated for this purpose.

EuroZinc was the only bidder for the sale of the Portuguese government’s 51% stake in the mining firm Somincor. Ownership of Somincor is shared by Empresa de Desenvolvimento Mineiro, the mining company held by the Portuguese government, with a 51% interest, and Rio Tinto (RTP-N), with 49%.

The lack of bidders is attributed to the recent sharp fall in the U.S. dollar. When Somincor’s stake in the mine was put up for sale, in November 2003, the base price was set at 115 million euros, equivalent to US$135 million; it is now about US$146 million.

The government is offloading its interest as part of a privatization program, whereas Rio Tinto’s stake has been for sale for more than four years now. In mid-2002, Rio Tinto was ready to hand over the Neves Corvo shares to Australian-based Murchison United, but the Portuguese government blocked the deal at the last minute.

Neves Corvo produced 330,000 tonnes copper concentrate in 2003. At the end of 2002, measured resources were pegged at 22.2 million tonnes averaging 5.65% copper. Indicated resources stood at 800,000 tonnes averaging 4.4% copper, and inferred resources, at 7.6 million tonnes grading 4.03% copper.

The mine has an additional indicated resource of 26 million tonnes averaging 6.4% zinc and an extra inferred resource of 24 million tonnes grading 5.55% zinc.

EuroZinc owns the dormant Aljustrel zinc mine, 40 km northwest of the Neves Corvo mine. It remains closed pending a sustained recovery in zinc prices.

The acquisition of Neves Corvo combined with a return to production at Aljustrel should elevate EuroZinc to mid-tier status among diversified base metal mining companies.

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