Shares of junior miner Nevsun Resources Ltd. fell nearly a third in trading Tuesday after the Vancouver company said its output from a key African gold mine this year will be half of what it originally expected.
Nevsun dropped $1.90 or 30 per cent to $4.44 in trading of nearly 3.5 million shares on the TSX.
Before markets opened Tuesday, Nevsun said it expects to produce between 190,000 to 210,000 ounces of gold this year from its Bisha mine in Eritrea – about half of what the company was originally expecting.
At the high end of 2012 estimates, that's 45 per cent less than the 379,000 ounces of gold Nevsun produced from the mine in 2011.
The Vancouver company said original resource estimates used in planning the mine “overestimated gold in portions of the Bisha Main oxide mineralization.”
“Accordingly, the ounces to be produced in 2012 are about half of what Nevsun was previously expecting,” the company said.
Nevsun has called Bisha one of the highest grade open pit deposits in the world, a mine with a life of at least 12 years and which is being developed to produce copper starting next year.
“Bisha had an excellent 2011 operating year, achieving its gold and cost per ounce production objectives,” Nevsun chief executive officer Cliff Davis said in a release Tuesday before stock markets opened.
“For 2012, Bisha has the team and contractors in place to successfully execute the copper phase expansion project so that copper production can start in mid 2013.”
The miner said it hopes to have updated figures on Bisha’s gold and copper resources later this year.
The Canadian Press