Discovery bullish on Maun Copper Mine

| Tuesday March 2, 2010 00:00

The company's primary asset is Botswana's Boseto copper project, which has a total resource of 60,4-million tons of copper, with a grading at 1,4 percent and 19,5 g/t silver. Canadian miner Hana Mining, which operates the Ghanzi copper/silver project in the district, is also exploring this area.The company also has a nickel project south-east of Boseto. The Dikoloti nickel mine has a current resource of 4,1-million tons inferred at 0,7 percent nickel, 0,5 percent copper and 1,2 g/t platinum group elements. Australian brokerage house RBS Morgans reports that Discovery Metals is a 'strong fundamental story, going unrecognised in a buoyant copper price environment'.

In a mining research report, corporate broking house West-house Securities, of London, says: 'Discovery has plenty of exploration upside with only 5 percent of the 1 300 km of its Kalahari copper belt licence having been explored.' Discovery Metals is yet to complete the bankable feasibility study (BFS) for its Boseto copper project.

Discovery says that it expects the BFS to be completed by March 2010. Westhouse adds that the company has raised A$13,1-million through a placement, which was completed in October 2009.

This was followed by A$2,7-milion through a share purchase plan, with about 20 percent of the company's shareholders taking the offer, says Westhouse. There is also a potential A$9-mil- lion available from the exercise of options which are priced at A$0,30, due to expire in May 2010. This will provide Discovery Metals with the monetary support to complete the BFS. In 2011, production at the mine is expected to deliver resources of two-million tons a year for 25 600 t of copper and 690 000 oz/y of silver, with a probability of high-grade initial production to increase revenues in the early years. Discovery Metals says that there is also a possibility of pursuing underground mining, which will increase production and the mine's life beyond the currently planned ten years.

Westhouse says: 'Owing to the large high-grade zones and the continuity of the orebody, Discovery Metals believes that it will be possible to switch to underground mining below the currently planned openpits.' Westhouse also reports that Discovery Metals is highly geared to the copper price and that a 25 percent increase in this price results in a 76 percent increase in earnings for each share.-(Miningweekly)