Navan Resources embarks on Spanish mine construction

The first stage of construction is under way at the Aguas Tenidas zinc project in Spain’s Pyrite belt.

The operator, London-listed Navan Resources, has contracted Spanish firm Ingemisa Servicios to drive 4,000 metres of decline and underground workings. That work will provide underground drill stations for final delineation of the Aguas Tenidas mineralization.

Indicated resources stand at 17.6 million tonnes grading 4.39% zinc, 1.26% lead and 1.67% copper. The mineralized zone is an elongated massive sulphide deposit, open down-plunge to the northwest with strongly developed zonation parallel to stratigraphy. According to the company, two copper ore lenses with chalcopyrite and some sphalerite form an inner core, surrounded by massive pyritic sulphide zones that are interbedded with “complex ore,” a laminated sphalerite-galena type with minor amounts of chalcopyrite.

The first hole of a new program to investigate the down-plunge extension intersected 16 metres grading 11.72% zinc, 2.84% lead and 0.96% copper. A lower-grade resource of 48 million tonnes of pyritic material grading 3.3% zinc, 0.8% lead and 1.3% copper surrounds the complex and copper ore types.

Aguas Tenidas will supply Navan’s existing Almagrera mill and smelter complex, about 21 km away in the town of Sotiel Coronada. Annual milling capacity at Almagrera is being expanded to 1.4 million from 750,000 tonnes.

On an annual basis, the smelter will produce 35,000 tonnes of zinc, 7,000 tonnes of lead, and 10,000 tonnes of copper, as well as 300,000 tonnes of sulphuric acid.

The current development phase at Aguas Tenidas is expected to cost US$10 million, and Navan’s net capital requirement for the entire expansion program is projected at US$20-30 million. Navan will raise funds through debt and equity financing, as well as through operating cash flow from its producing Sotiel and Migollas mines, and grants from the Spanish government.

Navan has also closed a deal with U.S. gold miner Homestake Mining (hm-n) whereby that company will acquire up to a 51% interest in the Chelopech gold-copper mine in west-central Bulgaria. Under terms of the agreement, Homestake will inject US$30 million into the operation, as well as provide an additional loan of US$10 million. Navan shareholders have yet to approve the proposal. Navan has also lined up a US$40-million loan from the European Bank for Reconstruction and Development.

The funds will be used to double output at Chelopech to 160,000 oz. gold and 18,000 tonnes copper per year through mill expansion and increased hauling and hoisting. In addition, a proposed roaster for arsenopyritic gold ores has been approved by the Bulgarian government, which holds the mineral title to the ground and retains a 32% interest in Chelopech’s operating company.

The government has announced, however, that it will transfer the mineral title to the operating company and sell its share to Navan at a price to be determined later.

Once that deal is complete, Navan’s interest will be diluted to 49% from 100% as a result of Homestake’s investment. That company will then hold a 51% interest.

The agreement also allows Homestake to earn up to a 50% interest in Navan’s other Bulgarian exploration properties. Homestake can purchase a 32% interest for US$4 million, and spending a similar amount on exploration will earn it an additional 18%.