EuroZinc fires up zinc plant at Neves-Corvo

Vancouver – The start-up of a new zinc plant has allowed EuroZinc Mining (EZM-T, EZM-X) to transform its Neves-Corvo copper mine into a polymetallic operation that will also produce zinc concentrates and a silver-lead concentrate. The 17-year-old mine is situated near Castro Verde, Portugal, and is the only zinc producer in the Iberian Peninsula at the present time.

The new zinc plant was retrofitted from an original tin plant at Neves-Corvo. The company began underground mining of a zinc zone earlier this year, and has since stockpiled ore as mill feed on surface and underground in anticipation of the plant commissioning.

EuroZinc expects to process zinc ore at an annual rate of 350,000 tonnes, containing an estimated 55 million lbs. of zinc metal in concentrate. Production this year will be about half that, at 27 million lbs. of zinc metal, and will be sold at spot prices.

A second-phase expansion is proposed to boost annual throughput to 650,000 tonnes, and thereby raise annual zinc metal production to about 110 million lbs. in the near future. This expansion, combined with achieving full production at the nearby Aljustrel zinc-silver-lead mine by mid-2008, is expected to boost the company’s overall production of contained zinc metal to abut 300 million lbs. in the years ahead.

On a consolidated basis, EuroZinc projects that it will be producing an estimated 500 million lbs. of contained copper and zinc, or about 650,000 tonnes of concentrates, by 2008 from two mines in the Iberian Pyrite belt of Portugal.

Neves-Corvo produced 197 million lbs. of copper from 2.2 million tonnes of ore with an average grade of 4.96% copper in 2005. Cash costs averaged US$0.77 per lb. Net profit for the mine was US$88.3 million on gross revenue of US$314.9 million, the largest in the mine’s 17-year operating history.

EuroZinc recently raised US$35 million toward the estimated capital costs of US$88 million required to resume production at the past-producing Aljustrel mine. The company also secured US$23 million of European Union incentives (interest-free loans and grants), leaving US$30 million to be financed from internal cash flow.

Aljustrel is expected to produce at an estimated annual rate of 170 million lbs. of contained zinc, 1.25 million oz. silver, and 40 million lbs. of contained lead. Average cash costs are estimated at US$0.46 per lb. zinc, net of by-product credits.