What happened

Shares of copper miner Nevsun Resources (NYSEMKT:NSU) are up 10% as of 12:30 p.m. EDT today after the company posted earnings. Even though it fell short of estimates, the company also announced the results of a preliminary economic assessment of a potential mine.

So what

Let's get the earnings stuff out of the way first. The company posted a net loss of $0.01 per share on $71 million in revenue. Wall Street was expecting flat results for the quarter.

Mining truck

Image source: Getty Images.

Now, for the real meat driving today's rally. The company announced the results of a preliminary economic study for its Timok Upper Zone project in Serbia. The mine, if fully developed, would produce 2.1 billion pounds of copper over a 15-year lifespan. Management estimates that the facility has a net present value of $1.5 billion and could generate a 50% internal return rate. Considering that the company's current production is only 4 million pounds per quarter, it would represent a sizable boost to the company.

Now what

Before getting carried away by today's announcement, let's keep this in perspective. Nevsun Resources is a company that only generates a few million dollars a year in operating income, and it wants to build a mine that will have initial capital costs in excess of $600 million.

Speculative mining stocks like this one can garner a lot of attention when news like this hits, but the news doesn't necessarily change the investment thesis for the company. I won't say that it is impossible for the company to carry out its plans, but there are a lot of hurdles in the way. Unless investors have a real hankering for speculative stocks, this looks like one they should sit out.