Nevoro buys some Moonlight

Nevoro (NVR-T) has finalized the acquisition of Sheffield Resources after Sheffield shareholders voted to approve the takeover. Nevoro is paying 0.8 of a Nevoro share for each of the approximately 37.4 million Sheffield shares outstanding, for a total of 29.9 million Nevoro shares.

Sheffield’s principal asset is the wholly-owned Moonlight copper project in northern California’s Plumas Cty., 19 km southwest of Susanville, Calif., and 140 km northwest of Reno, Nev.

The Moonlight property entails 6,900 acres and hosts porphyry copper and copper-oxide mineralization. National Instrument 43-101- compliant indicated resources are about 162 million short tons (147 million tonnes) at a cutoff grade of 0.2% copper, grading about 0.32% copper, 0.003 oz. gold per ton and 0.1 oz. silver per short ton. Inferred resources are about 88 million tons (80 million tonnes) at a cutoff grade of 0.2% copper, grading about 0.28% copper, 0.003 oz. gold and 0.09 oz. silver per short ton.

The Moonlight project hosts two historic mines — named Engels and Superior –and four advanced targets. There has been historic drilling of 43,000 metres on the property.

Nevoro is particularly interested in five targets: Moonlight Valley (the most advanced), Engels Mine, Superior Mine, Copper Mountain and Moonlight South. Other targets include Sulphide Ridge, Gossan Ridge and Blue Copper.

Nevoro’s objective is to expand the resource, tally a NI 43-101 estimate for the expanded resource, and complete a prefeasibility study.

Meanwhile at its Stillwater project in Montana, Nevoro has finalized a lease on the past-producing Benbow chromite mine in the Stillwater district, which, according to Nevoro, contains the largest chromite resource in the western hemisphere, as well as significant nickel, copper, cobalt and platinum group metals (PGM) targets.

The 25-year lease agreement for Benbow calls for a signing bonus of US$50,000, annual payments of US$50,000 for the first five years, US$75,000 for years 6 to 10, and US$100,000 thereafter. The mine is subject to a 5% production royalty, calculated on net sales proceeds, and the annual payments form a part of the royalty. Nevoro has the option of buying the mine for US$5 million during the first five years, or US$10 million during the following five years.

The Stillwater property near Nye, in south-central Montana, a driving distance of about 131 km southwest of Billings, is a polymetallic project, with chromium, nickel, copper, cobalt and platinum group metals (PGM) mineralization. The 4,600- acre property is adjacent to Stillwater Mining’s (SWC-N)producing Stillwater PGM mine, and its producing East Boulder PGM mine. Targets in the Stillwater project include Crescent Creek, Mountain View, Mouat, Nye Basin, Benbow East, and Benbow mine. Mineralization is not uniform throughout the six targets; rather, each target is prospective for different minerals.

Historically, nickel-copper-cobalt mineralization at Nevoro’s Stillwater project area has been explored on three sites: Mouat, Nye Basin and Benbow. Historic resources are between 103 and 133 million short tons of 0.6% nickel, 0.5% copper, and 0.06% cobalt, or about 3.2% copper equivalent, while PGM resources are not known.

These resources are based on more than 33,000 metres of drilling in 150 holes by Anaconda in the 1970’s.

Nevoro intends to bring these historic resources to NI 43-101 standards, expand them, better define PGM mineralization, and carry out a prefeasibility study.

Examples of high PGM values from historic holes drilled by Anaconda at Crescent Creek include 1.5 metres of 4.4 grams PGM per tonne, and 1.8 metres of 4.7 grams PGM per tonne. Some historic holes also returned rhodium mineralization.

Crescent Creek is a target with a 3.7-km strike, while Mouat, which is also a PGM target, has a 2.5-km strike.

The Stillwater project has four chromite-related targets (Mountain View, Benbow East, Benbow Mine and Nye Basin) with historic resources of 50 million short tons grading an average of 22% Cr2O3, equivalent to 22 billion lb. Cr2O3. According to Nevoro, this is the largest chromite resource in the western hemisphere, and the seventh largest in the world.

Chromite was mined in the Stillwater area during the Second World War, when 364,000 tonnes of ore were mined from the Benbow and Mountain View mines. Nevoro is interested in the chromium resources at Stillwater due to the fivefold increase in ferrochrome prices over the last five years, coupled with supply problems from South Africa. U. S. ferrochrome prices are about US$2.05 per lb. for ferrochrome with 50-55% chromium.

A historic feasibility study which was conducted in 1988, taking into account only 30% of Nevoro’s chromite resource, indicated a net present value of US$77 million at a discount rate of 12%. Nevoro’s plan is to update that feasibility study, advance the resource to NI 43-101 standards, and conduct a prefeasibility study with the new resource figures.

The chief use of chromium is as an alloying agent, particularly in stainless steel. Most chromite is converted to ferrochrome, which is used as a raw material for alloys. The U. S. Geological Survey estimates that world resources of chromite are in excess of 11 billion tonnes, sufficient to meet world demand for many centuries. By far, South Africa has the largest chromite reserves and is the largest producer. World production was 19 million tonnes chromite in 2006.

Overall, Nevoro’s focus is on defining and expanding the resources it controls on its two flagship projects at Stillwater and Moonlight.

Speaking at a recent presentation at the Albany Club in Toronto, CEO Bill Schara desacribed Nevoro as more of a developer than an explorer. Moreover, the board and executive management have been assembled with a view that they will support both organic growth through advancing existing projects, and growth through acquisitions

“Our philosophy as a junior is to acquire assets of such a calibre that a lot of value can be created at the prefeasibility and feasibility stages,” Schara said.

Nevoro also has a dozen earlystage projects in Nevada, which are mostly gold prospects. Currently, results from first-round drilling on two of these are awaited, and exploration is planned for three.

In addition, Sheffield Resources had an option to acquire the early-stage Golden Loon polymetallic property in B. C., which now joins Nevoro’s stable of earlystage projects.

Nevoro has about 181 million shares fully diluted. After completing a $7-million first tranche of a private placement, there were $9 million in the treasury. In August, a second tranche of $2.3 million closed, which should increase treasury cash position to about $11 million, and the number of fully diluted shares to about 191 million. Quarterly financial statements with updated figures are due in mid-August.