By Anne Marriot,
Traders are bullish on Nevsun Resources Ltd (NSU) as it has outperformed the S&P 500 by a wide margin of 6.36% in the past 4 weeks. The bullishness in the stock continues even in the near-term as the stock has returned an impressive 13.39%, relative to the S&P 500.
The stock has continued its bullish performance both in the near-term and the medium-term, as the stock is up 15% in the last 1 week, and is up 9.93% in the past 4 weeks. Buying continues as the stock moves higher, suggesting a strong appetite for the stock.
The stock has recorded a 20-day Moving Average of 11.24% and the 50-Day Moving Average is 6.47%. Nevsun Resources Ltd. has dropped 10.16% during the last 3-month period . Year-to-Date the stock performance stands at 25.48%.
Nevsun Resources Ltd (NYSEMKT:NSU): stock turned positive on Friday. Though the stock opened at $3.16, the bulls momentum made the stock top out at $3.4 level for the day. The stock recorded a low of $3.16 and closed the trading day at $3.32, in the green by 8.50%. The total traded volume for the day was 3,862,747. The stock had closed at $3.06 in the previous days trading.
Nevsun Resources Ltd. (Nevsun) is engaged in the acquisition, exploration, development and operation of mineral property interests. The Companys principal mining operation is the Bisha Mine and the Companys principal mineral property is the Bisha property, which is owned by Bisha Mining Share Company (BMSC).
The Companys wholly owned subsidiaries include Nevsun (Barbados) Holdings Ltd., Nevsun Africa (Barbados) Ltd. and Nevsun Resources (Eritrea) Ltd. The Company has 60% interest in BMSC. Bisha is a volcanogenic massive sulphide (VMS) deposit located 150 kilometers west of Asmara, Eritrea, East Africa.
The Bisha mine hosts a gold, copper and zinc deposit and the overall Bisha district includes satellite VMS deposits known as Harena, Northwest and Hambok.
The Bisha Main deposit is located within the Bisha Mining License and the Harena satellite deposit lies in a separate mining license 6 kilometers south.
Bisha Main and Harena form 100% of the mineral reserves for Bisha.
Nevsun CEO on Q2 2016 Earning Results – Transcript
By Seeking Alpha,
Good morning, from Vancouver. With me [CEO, Cliff Davis] today is our Chief Operating Officer, Frazer Bourchier and our Chief Financial Officer, Tom Whelan.
Now, I am going to provide my views on what we have accomplished over the last quarter and where we are headed. Then, we will open up the call to question-and-answer period. Nevsun had a transformational quarter. It was the most significant quarter for the Company in the past five years since we reached commercial production at Bisha in early 2011. We continued to deliver returns for our shareholders from our operation in Bisha and we expect to deliver future returns through the acquisition of Reservoir Minerals, which we announced and closed during the second quarter of 2016.
We have created the platform for significant production and earnings growth for the Company. We also significantly expanded our land position in Eritrea to take advantage of our success and acceleration in and around Bisha where we see likely additional mineral deposits near our existing Bisha mine. We are profitable. We are rebuilding cash from operations and we have accomplished one of our key objectives through the acquisition of the Serbian assets to diversify the Company and put our hard earned cash to work. We are delivering on our objectives and believe the downturn in the copper commodity sector was the right time to complete the acquisition.
Nevsun remains strongly positioned in the base metal sector with production growth and resource growth. We’ve a great producing asset in Bisha and we have added very perspective additional exploration ground in Eritrea. The high grade copper-gold Timok development asset in Serbia, as well as other perspective Serbian exploration assets gives us the diversification and leads us with one of the strongest balance sheets in our peer group with no debt.
We focus on financial results and we have an aligned part in the State of Eritrea and we’re pleased to have added two strong partners in Freeport‑McMoRan and Rio Tinto on the two significant Serbian assets. We take a very disciplined approach to running our business. Q2 was no exception in delivering results.
The zinc flotation plant expansion was finished on time and well under budget. The budget was $100 million and actual cost to build the plant was $77 million. This is the third capital project brought in on time and under budget. After completing the supergene copper phase we began pre-commercial operating phase of the primary ore on June 2nd and turned on the newly configured flotation plant for the primary phase.
We will be producing both copper and zinc concentrates from the primary ore. Also referred to as hot commissioning, the process has gone very well from a mechanical and electrical perspective with the plant operating capacity approaching our intended daily throughput rate. The new flotation plant has already been successfully producing a high quality zinc concentrate with concentrate grades approaching 50%. Our first zinc concentrate tender will be happening very soon.
As with all startups there’re many challenges which are leading to lower levels of copper concentrate grades and zinc recoveries. The updated copper flotation plant with the new IsaMill has recently restarted as is in the commissioning phase as well. At this early stage of commissioning, the plant has not yet produced a copper only salable concentrate with expected recoveries. The key challenges are driven by the new ore type. There is a lot of work to be done including additional calibration analysis to stabilize and optimize the flotation characteristics to consistently make two good quality concentrates.
Quite frankly, it’s too early to predict with certainty when we will expect to be in commercial production. Nevertheless, we remain optimistic as it is a work in progress. However, due to the extended supergene processing into early June and to be conservative in our forecast, we now expect commercial production to be declared some time in Q4 2016. In the two months of operations, we delivered, during the quarter Bisha mined 133,000 tons of supergene ore at 2.5% copper and another 831,000 tons of primary ore at 5.9% zinc as we prepare to startup our new plant in June.
In the first two months of the quarter, we milled 471,000 tons of ore to produce 22 million pounds of copper. Bisha completed the supergene processing, exceeding our production guidance with our focus on cost containment and lower fuel prices we achieved C1 cash cost of $0.92 per pound, well ahead of budget, well ahead of guidance and in the lowest cortile of the industry.
We also monetized 30,000 gold equivalent ounces from direct shipped ore during the quarter, which contributed a further $28 million of revenue and $22 million to the bottom line. With higher gold prices now than at the start of the year, we expect these continuing gold sales will continue to make a healthy contribution to our bottom line for 2016. We still expect to see 80,000 to 100,000 gold equivalent ounces for the full year.
In the quarter, we generated 44 million of net cash from operations from the mine. We had net income before taxes of 31 million. So, we continue to generate strong operating cash flow. We continue to pay our shareholders a leading quarterly dividend. We continue to invest in growth through exploration. The balance sheet is very strong with $240 million in cash, $238 million in working capital. Our dividend is $0.04 per share per quarter, or $0.16 which is a yield of over 5%.
A common question I received for the past few months is about our dividend, and whether we plan on continuing to pay dividends. I believe the question arises really because we have issued 100 million additional shares on the acquisition of Reservoir because many people believe we have significant capital program going forward to develop Timok.
At the last quarterly call, I made is very clear that we believe return on investment by way of dividends is an important part of our culture. This differentiates us in the second, both on how we have always paid returns to our shareholders and how we incorporate dividends to shareholders as part of our approach to business. I do not expect any change to our dividend policy this year. As we look forward to evaluating our capital needs to Timok, we will need to consider our dividend rate. Our timeline and more deep tailed development plan will become apparent as we move Timok from PEA status to prefeasibility. And similarly our overall capital requirements will be better defined.
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