VANCOUVER, July 28, 2016 /PRNewswire/ - Nevsun
Resources Ltd. (TSX:NSU)(NYSE MKT:NSU) ("Nevsun" or the "Company")
is pleased to report its financial and operating results for the
three and six months ended June 30,
2016. Unless otherwise noted, with the exception of
earnings per share and realized price and cost per pound figures,
all financial results are in millions of US dollars.
Second quarter 2016 highlights
- Continued first quartile safety performance at Bisha
- Completed the acquisition of Reservoir Minerals Inc. at a
purchase price of $512.5 million
- Completed the acquisition of significant additional exploration
licenses in the Bisha District
- Delivered the Bisha Zinc Expansion Project on time and under
budget
- Produced 21.6 million pounds of copper at C1 cash
costs(1) of $0.92 per
payable pound sold
- Total 2016 supergene copper production of 55.8 million pounds
at a C1 cash cost(1) of $1.04 per payable pound sold significantly better
than guidance
- Sold 30,000 gold equivalent ounces from stockpiles for a YTD
sales total of 50,000 gold equivalent ounces
- Generated earnings per share attributable to Nevsun
shareholders of $0.04, and
$34.9 million in operating
income
- Ended period with working capital of $237.9 million, including $240.3 million of cash
- Paid quarterly dividend of $0.04
per share
"The Reservoir transaction is truly transformational and creates
immediate diversification to our valuation. We now have two
tremendous assets and a strong debt-free balance sheet.
Nevsun is positioned as a leading mid-tier base metal company
with production and growth. We have hit the ground
running in Serbia with drilling already underway and ambitious
plans to move the Timok Copper-Gold Project to pre-feasibility no
later than the end of 2017," commented Cliff Davis, CEO of Nevsun.
Financial Review
|
|
|
|
Three months ended June
30,
|
Six months ended June
30,
|
|
2016
|
2015
|
2016
|
2015
|
|
Revenue
|
$
|
79.2
|
$
|
104.2
|
$
|
171.6
|
$
|
221.4
|
|
Operating
income
|
|
34.9
|
|
38.6
|
|
67.8
|
|
81.2
|
|
Net
income
|
|
18.0
|
|
19.2
|
|
33.6
|
|
42.2
|
|
Net income attributable to Nevsun
shareholders
|
|
9.6
|
|
9.4
|
|
17.1
|
|
22.0
|
|
Basic earnings per share attributable to Nevsun
shareholders
|
|
0.04
|
|
0.05
|
|
0.08
|
|
0.11
|
|
Working
capital
|
|
237.9
|
|
498.6
|
|
237.9
|
|
498.6
|
|
|
|
|
|
|
|
|
|
|
Copper price realized, per payable pound
sold
|
|
2.11
|
|
2.59
|
|
2.16
|
|
2.53
|
|
C1 cash cost per payable pound
sold(1)
|
$
|
0.92
|
$
|
0.97
|
$
|
1.04
|
$
|
1.12
|
|
(1) C1 cash cost per pound is a non-GAAP
measure – see page 18 of the Q2 2016 MD&A for discussion of
non-GAAP measures
|
Operating review
|
|
Key operating information – Bisha
Mine:
|
|
Three months ended June
30,
|
Six months ended June
30,
|
|
2016
|
2015
|
2016
|
2015
|
|
Ore mined,
tonnes(1)
|
964,000
|
771,000
|
2,301,000
|
1,428,000
|
|
Waste mined,
tonnes
|
2,448,000
|
2,605,000
|
4,476,000
|
6,122,000
|
|
Strip ratio, (using
tonnes)
|
2.5
|
3.4
|
1.9
|
4.3
|
|
Ore milled,
tonnes(2)
|
471,000
|
429,000
|
1,055,000
|
870,000
|
|
Copper feed grade,
%
|
2.5
|
4.2
|
2.8
|
4.4
|
|
Recovery, % of
copper
|
82.9
|
82.5
|
85.2
|
83.2
|
|
Copper concentrate grade,
%
|
21.2
|
24.9
|
22.2
|
24.9
|
|
Copper in concentrate produced, millions of
pounds
|
21.6
|
32.4
|
55.8
|
70.4
|
|
Copper in concentrate produced,
tonnes
|
9,800
|
14,700
|
25,300
|
31,900
|
|
Payable copper in concentrate sold, millions of
pounds
|
22.9
|
33.6
|
57.8
|
81.0
|
|
Payable copper in concentrate sold,
tonnes
|
10,300
|
15,200
|
26,200
|
36,700
|
|
Payable gold in concentrate sold,
ounces
|
4,500
|
5,500
|
10,500
|
12,400
|
|
Payable silver in concentrate sold,
ounces
|
192,000
|
329,000
|
418,000
|
698,300
|
|
(1)
|
Ore tonnes mined for the three and six months ended
June 30, 2016 included no oxide ore (three and six months ended
June 30, 2015 –
43,000 and 54,000 tonnes, respectively), 133,000 and 865,000 tonnes
of supergene ore, respectively (three and six months ended June
30, 2015 – 462,000 and 980,000) and 831,000 and 1,436,000 tonnes of
primary ore, respectively (three months ended March 31, 2015 –
266,000 and 394,000).
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|
(2)
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The supergene phase of the
Bisha mine ceased on June 2, 2016. The processing figures presented
in this table consist of the processing
of supergene ore only.
|
Cliff Davis commented on Bisha,
"Bisha continues to produce cash for its shareholders. We exceeded
our guidance on supergene production and cash cost
expectations. Our cost-cutting efforts have been
sustained. Strong gold and silver prices from our Direct Ship
Ore stockpiled material also helped the bottom line. Pre-commercial
production is underway with our first sale of zinc concentrate
likely to occur in August. The zinc concentrate market remains very
tight and we are very pleased to see zinc prices in excess of
$1.00 per pound."
Cliff Davis went on to say, "Our
confidence operating in Eritrea,
supported by the positive exploration drill results, has lead us to
make an additional investment in Eritrea. This twenty-fold increase in our
exploration licensed areas, with more advantageous relinquishment
terms, was acquired in exchange for a portion of the amount
receivable from our partner, the Eritrean National Mining
Corporation."
Conference call details
The Company will hold a conference call on Friday, July 29, 2016, at 8AM Vancouver /
11AM Toronto, New
York / 4PM London, to discuss the Q2 2016 results. Please
call in at least five minutes prior to the conference call start
time to ensure prompt access to the conference. Dial in details are
as follows:
North America: 1 888-390-0546 /
+1 416-764-8688 / +1 778-383-7413
UK: 0800 652 2435 (toll free)
Other International: +1 416-764-8688 / +1 778-383-7413
The conference call will be available for replay until
August 5, 2016, by calling 1
888-390-0541 / +1 416-764-8677 and entering passcode 889772#.
About Nevsun Resources Ltd.
Nevsun Resources Ltd. is the 60% owner of the high grade Bisha
Mine in Eritrea. Bisha has 9 years of reserve life,
generating revenue from both copper and zinc concentrates
containing gold and silver by-products. Nevsun has a strong
balance sheet with over US$200
million cash, no debt and pays a peer leading quarterly
dividend. Nevsun is well positioned to grow shareholder value
through exploration at Bisha and the newly acquired Serbian assets
that include the high-grade copper-gold Timok Project.
Forward Looking Statements
The above contains forward-looking statements or
forward-looking information within the meaning of the United States
Private Securities Litigation Reform Act of 1995, and applicable
Canadian securities laws. Forward-looking statements are
frequently, but not always, identified by words such as "expects",
"anticipates", "believes", "hopes", "intends", "estimated",
"potential", "possible" and similar expressions, or statements that
events, conditions or results "wil", "may", "could" or "should"
occur or be achieved. Forward-looking statements are
statements concerning the Company's current beliefs, plans and
expectations about the future including but not limited to
statements and information made concerning: the Company's
acquisition of Reservoir, statements relating to the business,
prospects and future activities of, and developments related to the
Company, anticipated developments in operations, commercial
production, estimated future production, future costs of production
and capital expenditures, mine life of mineral projects, the timing
and amount of estimated capital expenditures, costs and timing of
exploration and development and capital expenditures related
thereto, operating expenditures, and related cash flows, success of
exploration activities, estimated exploration budgets, currency
fluctuations, requirements for additional capital, government
regulation of mining operations, environmental risks, unanticipated
reclamation expenses, title disputes or claims, limitations on
insurance coverage, the timing and possible outcome of pending
litigation, the timing and possible outcome of regulatory and
permitting matters, goals, strategies, future growth, planned
future acquisitions and explorations activities, the adequacy of
financial resources and other events or conditions that may occur
in the future, and are inherently uncertain. The actual
achievements of the Company or other future events or conditions
may differ materially from those reflected in the forward-looking
statements due to a variety of risks, uncertainties and other
factors, including, without limitation, the risks that: (i) any of
the assumptions in the historical resource estimates turn out to be
incorrect, incomplete, or flawed in any respect; (ii) the
methodologies and models used to prepare the resource and reserve
estimates either underestimate or overestimate the resources or
reserves due to hidden or unknown conditions, (iii) exploration
activities or the mine operations are disrupted or suspended due to
acts of god, internal conflicts in the country of Eritrea or Serbia, unforeseen government
actions or other events; (iv) the Company experiences the loss of
key personnel; (v) the Company's operations or exploration
activities are adversely affected by other political or military,
or terrorist activities; (vi) the Company becomes involved in any
material disputes with any of its key business partners, suppliers
or customers; (vii) the Company is subjected to any hostile
takeover or other unsolicited attempts to acquire control of the
Company; (viii) the Company is subject to any adverse ruling in any
of the pending litigation to which it is a party; (ix) Reservoir's
PEA is preliminary in nature and it includes inferred mineral
resources that are considered too speculative geologically to have
the economic considerations applied to them that would enable them
to be categorized as mineral reserves; and other risks are more
fully described in the Company's and Reservoir's Management
Information Circulars dated May 18,
2016 with respect to the proposed arrangement between
Reservoir and Nevsun and the Company's Annual Information Form for
the fiscal year ended December 31,
2015, which are incorporated herein by reference. The
Company's forward-looking statements are based on the beliefs,
expectations and opinions of management on the date the statements
are made and the Company assumes no obligation to update such
forward-looking statements in the future, except as required by
law. For the reasons set forth above, investors should not
place undue reliance on the Company's forward-looking
statements.
Further information concerning risks and uncertainties
associated with these forward-looking statements and our business
can be found in our Annual Information Form for the year ended
December 31, 2015, which is available
on the Company's website (www.nevsun.com), filed
under our profile on SEDAR (www.sedar.com) and on
EDGAR (www.sec.gov) under cover of Form 40-F.
NEVSUN RESOURCES LTD.
"Cliff T.
Davis"
Cliff T. Davis
President & Chief Executive Officer
SOURCE Nevsun Resources Ltd.