THE TIMOK PROJECT
Nevsun successfully met one of its primary business objectives in 2016: to diversify its core asset base and increase the Company’s overall sustainability by securing an additional world-class mineral production project. In June of 2016, Reservoir Minerals Inc. was acquired by Nevsun for its flagship Cukaru Peki Deposit (Timok geological region) and prospective exploration portfolio.
The Timok Project is focused on the Cukaru Peki deposit, which includes the high grade Upper Zone (characterized by massive and semi-massive sulphide mineralization) and the Lower Zone (characterized by porphyry-style mineralization). The Upper Zone has an extremely high copper and gold content consisting of 1.7 million tonnes of indicated resource grading 13.5% copper and 10.4 g/t gold and 35.0 million tonnes of inferred resource grading 2.9% copper and 1.7 g/t gold. The Timok Project is a joint venture between the Company and Freeport McMoRan Exploration Corp. and is held by Rakita Exploration Ltd. (Rakita), an indirect wholly owned Serbian subsidiary of Timok JVSA (BVI) Ltd. a joint venture company. The Company owns 100% of the upper zone of the Timok Project and 60.4% of the lower zone. The Company’s ownership interest in the lower zone will decline to 46% once a feasibility study has been prepared for either the upper zone or the lower zone of the Timok Project.
The Timok Project is located in the mineral rich mining district of Bor, eastern Serbia, some 245 km southeast of the capital city of Belgrade via paved highway.
Originally discovered in 2012, this copper-gold deposit is situated approximately 6 km south of the city of Bor, the existing mining operations of RTB Bor, and the modern infrastructure of a refurbished flash smelting complex.
The Timok Project is owned by Rakita Exploration Ltd. (Rakita), the Serbian company conducting the advanced exploration activities and development on both the Upper Zone and the Lower Zone.
A Preliminary Economic Assessment (authored by SRK Consulting (UK) Limited) was released early in 2016 by Reservoir Minerals, and since that time Nevsun has been successful at both confirming and increasing the confidence of existing potential tonnage and grade on the basis of infill and exploration drilling. A Pre-Feasibility Study on the Upper Zone is currently underway and is expected to be released in September 2017.
Ongoing exploration is being conducted on the underlying Lower Zone porphyry. Nevsun, with its joint venture partner, Freeport McMoRan, has commenced a USD 20 Million dollar drilling program on the Lower Zone deposit to further define the deep porphyry potential. Continued exploration drilling success and results are encouraging and contribute to the ongoing realization of the Company’s geological plans and goals.
In addition to the Timok Project, Nevsun has significant additional exploration opportunities in Serbia: (1) Rakita, which has four exploration permits in a joint venture agreement with Freeport-McMoran, (2) Tilva, which includes four permits in close proximity to the Timok Project subject to a joint venture agreement with Rio Tinto, and (3) Seven 100%-owned permits for zinc, lead, copper, gold, and silver targets.
SERBIAN LAW AND INTERNATIONAL STANDARDS
The Cukaru Peki Deposit – its baseline studies, scoping requirements, modelling, and preliminary impact assessments – will be developed in adherence with Serbian laws, (including regulatory environmental requirements) International Finance Corporation (IFC) Performance Standards for Environmental and Social Responsibility, the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises, the Voluntary Principles on Security and Human Rights, and (for certain metrics), the European Union (EU) Standard.
The Nevsun Human Rights Policy makes a series of commitments to respect human rights in the workplace, in the communities in which we operate, and to ongoing human rights due diligence in accordance with the UN Guiding Principles. One of the Policy requirements is for every subsidiary to respect, promote, and support human rights in its operations. The Cukaru Peki Deposit has, in this regard, commissioned a human rights impact assessment (HRIA) which will be coordinated with other environmental and social impact assessment processes in 2017.
The HRIA process is part of the proactive human rights due diligence being conducted for the Project with the aim to identify, prevent, and mitigate potential human rights impacts. The HRIA will provide important input into the Pre-Feasibility Study alongside the Environmental and Social Impact Assessment (ESIA) and Land Acquisition and Resettlement Action Plan (LARAP) that are concurrently being prepared. The Cukaru Peki Human Rights Impact Assessment will be published upon completion.
The Cukaru Peki Deposit design requires slightly over 800 hectares of land for the development of the Upper Zone deposit, consisting of approximately 1,339 land parcels and approximately 300 owners, a small number of whom reside on the properties within the footprint and could be resettled. Some land parcels have homes or other structures (such as barns or workshops), and many are used for agricultural purposes; however, overall the area is sparsely and/or seasonally populated. The mine layout has been developed to minimize the potential for displacement, and through negotiation with landowners, land acquisition and resettlement planning has commenced.
One of our highest priorities is ensuring the land acquisition and resettlement process is conducted with a great deal of sensitivity, consistency and fairness, meets Serbian legal requirements and is aligned with IFC Performance Standards. A preliminary cultural heritage assessment was undertaken in 2016 and socio-economic and asset surveys will be undertaken for resettlement and a Livelihood Restoration Plan (LRP) in 2017.
We believe that Nevsun’s comprehensive policies and procedures, alongside our commitment to align our practices with IFC Performance Standards and other international best-practice guidance, have already impacted and are improving the Cukaru Peki Deposit in areas such as: workplace health & safety, stakeholder engagement, grievance mechanisms, community investments in 2016, and the CSR plans for 2017 and beyond.