Will this second time be the one for Nzuri?

7th December 2018
Resources Rising Stars

It’s not easy for a stock to rise by 30 per cent over two weeks without anybody seeming to notice (writes Tim Treadgold on Stockhead).

But that’s the case with Nzuri Copper which faded from view earlier this year after a false start, but which is returning for a second attempt to launch a stalled copper and cobalt project.

The proposed Kalongwe mine has some of the most attractive financial metrics of an asset owned by an Australian-listed miner, though Kalongwe’s greatest strength is also its greatest weakness, a location in the super-rich but often troubled copper belt of Africa.

If Kalongwe was located anywhere other than the Democratic Republic of Congo it would be a genuine rock star, spinning off fat profits from its shallow orebody which has an average grade of close to 3 per cent copper and 0.3 per cent cobalt, material which is expected to cost less than $US1 per pound to produce.

At the latest copper price of around $US2.83/lb, Kalongwe is expected to operate at a profit margin of close to 100 per cent, achieving payback on its estimated capital cost of $US53 million in just 17 months.

The problem, as other Australian miners working in Africa have discovered, is that local conditions, especially local politics, can be more difficult to master than anywhere else in the world.

Ready to go in January, Kalongwe hit a road block in the form of a new Congo mining code which stalled a number of proposed developments and confused all of the big players in the country, including industry leader, Glencore, and emerging leader, Ivanhoe Mines.

Sanity appears to have returned with the government keen to get mine investment moving again, though an essential first step is a national election scheduled for December 23.

Read more at https://stockhead.com.au/columnists/tim-treadgold-will-this-second-time-be-the-one-for-nzuri/



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