VANCOUVER,
Oct. 27, 2016 /CNW/ - 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 nine months ended September 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.
Third quarter 2016 highlights
- Continued first quartile safety performance at Bisha
- Shipped the first zinc concentrates produced by the zinc
expansion plant at Bisha
- Declared commercial production from the Bisha zinc expansion
plant effective October 1
- Advanced the Timok Project pre-feasibility study with
commencement of a major drilling program
- Produced 38.6 million pounds of zinc in concentrate
- Sold 23,000 gold equivalent ounces from stockpiles
- Generated earnings per share of $0.01, and $17.5
million in operating income
- Ended period with $217.6 million
of cash
- Paid quarterly dividend of $0.04
per share and implemented a dividend reinvestment plan
Financial Review
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2016
|
2015
|
2016
|
2015
|
Revenue
|
$
|
22.9
|
$
|
70.0
|
$
|
194.5
|
$
|
291.4
|
Operating
income
|
|
17.5
|
|
5.7
|
|
85.4
|
|
86.9
|
Net income
|
|
6.0
|
|
2.8
|
|
39.5
|
|
45.0
|
Net income
attributable to Nevsun shareholders
|
|
1.7
|
|
1.4
|
|
18.8
|
|
23.5
|
Basic earnings per
share attributable to Nevsun shareholders
|
|
0.01
|
|
0.01
|
|
0.08
|
|
0.12
|
Working
capital
|
|
206.9
|
|
489.0
|
|
206.9
|
|
489.0
|
|
|
|
|
|
|
|
|
|
Copper price
realized, per payable pound sold(1)
|
|
2.10
|
|
2.05
|
|
2.14
|
|
2.40
|
C1 cash cost per
payable pound sold(2)
|
$
|
0.72
|
$
|
1.56
|
$
|
1.03
|
$
|
1.24
|
(1) The realized copper
price per payable pound sold for Q3 2016 is presented before the
effect of mark to market adjustments. All other periods include the
effect of mark to market adjustments. Inter-period mark to
market adjustments from prior period sales reduce the calculated Q3
2016 realized price to a negative figure and it is therefore not
meaningful.
(2)
C1 cash cost per pound is a non-GAAP measure – see page 19 of the
Q3 2016 MD&A for discussion of non-GAAP measures.
|
|
|
|
|
|
"We are pleased to have completed the pre-commercial production
stage of the Zinc Phase expansion, while remaining profitable,"
commented Cliff Davis, President and
CEO of Nevsun. "The gold equivalent ounces that we are direct
selling to customers have provided an additional boost to our 2016
earnings and cash flow. This additional revenue stream in
addition to a zinc concentrate pricing environment that currently
favours miners instead of smelters is helping to offset the lower
copper production that we are experiencing in the short term."
Operating
review
|
Key operating
information – Bisha Mine(4):
|
Three months ended
September
30,
|
Nine months
ended
September
30,
|
|
2016
|
2015
|
2016
|
2015
|
Mining
|
|
|
|
|
Ore mined,
tonnes(1)
|
672,000
|
881,000
|
2,973,000
|
2,309,000
|
Waste mined,
tonnes
|
2,446,000
|
2,580,000
|
6,922,000
|
8,702,000
|
Strip ratio, (using
tonnes)
|
3.6
|
2.9
|
2.3
|
3.8
|
Processing -
Supergene Ore
|
|
|
|
|
Ore milled,
tonnes(2)
|
-
|
485,000
|
1,055,000
|
1,355,000
|
Copper feed grade,
%
|
-
|
3.8
|
2.8
|
4.2
|
Recovery, % of
copper
|
-
|
79.6
|
85.2
|
81.9
|
Copper concentrate
grade, %
|
-
|
22.5
|
22.2
|
24.1
|
Copper in concentrate
produced, millions of pounds
|
-
|
32.5
|
55.8
|
102.9
|
Copper in concentrate
produced, tonnes
|
-
|
14,800
|
25,300
|
46,700
|
Payable copper in
concentrate sold, millions of pounds
|
0.8
|
30.8
|
58.6
|
111.8
|
Payable copper in
concentrate sold, tonnes
|
300
|
14,000
|
26,500
|
50,700
|
Payable gold in
concentrate sold, ounces
|
200
|
6,300
|
10,700
|
18,700
|
Payable silver in
concentrate sold, ounces
|
7,000
|
365,000
|
425,000
|
1,063,000
|
Processing - Primary
Ore
|
|
|
|
|
Ore milled,
tonnes
|
510,000
|
-
|
644,000
|
-
|
Zinc feed grade,
%
|
5.8
|
-
|
5.6
|
-
|
Copper feed grade,
%
|
1.0
|
-
|
1.0
|
-
|
Recovery, % of zinc
(3)
|
59.1
|
-
|
54.5
|
-
|
Zinc concentrate
grade, %
|
41.3
|
-
|
41.3
|
-
|
Zinc in concentrate
produced, millions of pounds
|
38.6
|
-
|
43.7
|
-
|
Zinc in concentrate
produced, tonnes
|
17,500
|
-
|
19,800
|
-
|
Payable zinc in
concentrate sold, millions of pounds(5)
|
21.2
|
-
|
21.2
|
-
|
Payable zinc in
concentrate sold, tonnes(5)
|
9,600
|
-
|
9,600
|
-
|
(1)
Ore tonnes mined for the three and nine months ended September 30,
2016 included no oxide ore (three and nine months ended September
30, 2015 – 134,000 and 188,000 tonnes, respectively), 29,000 and
894,000 tonnes of supergene ore, respectively (three and nine
months ended September 30, 2015 – 349,000 and 1,329,000) and
643,000 and 2,079,000 tonnes of primary ore, respectively (three
and nine months ended September 30, 2015 – 398,000 and
792,000).
(2)
The supergene phase of the Bisha mine ceased on June 2,
2016.
(3)
This represents the overall combined zinc recovery from both the
copper and zinc flotation circuits. Copper recovery for both
circuits averaged 41.2% during Q3 2016.
(4)
DSO material is not included in this table as the ore was mined in
prior years and there is no processing of the ore.
(5)
Sales of zinc in concentrate recorded during Q3 2016 consisted
entirely of pre-commercial production. Receipts from the sales of
pre-commercial production were credited against mineral property,
plant and equipment, net of costs of sale.
|
Cliff Davis continued, "With the
achievement of commercial production for the zinc phase, we are
expecting continued increases in our zinc recovery and concentrate
grade throughout the fourth quarter of 2016. The clear
priority is to resolve the challenges related to the copper
flotation circuit and begin to produce meaningful quantities of
commercially saleable copper concentrate."
"Equally important is to ensure the high-grade Timok Project
remains on track to deliver a pre-feasibility on the Upper Zone by
September 2017 and start decline
development later in 2017." Mr. Davis emphasized, "We are focused
on delivering value to our shareholders through rapidly advancing
the high-grade Timok project to production."
Conference call details
The Company will hold a conference call on Friday, October 28, 2016, at 8AM Vancouver /
11AM Toronto, New
York / 4PM London, to discuss the Q3 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
November 4, 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 nine 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 "will", "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: statements relating to
the business, prospects and future activities of, and developments
related to the Company, anticipated dividends, 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) the timing and success of improving the quality of the
copper circuit product by resolving the metallurgical challenges
from the variable ore materials being processed to produce
concentrate from the copper circuit; * the effect on resource or
reserve estimates due to the possible inability to resolve the
metallurgical challenges on the variable ore materials being
processed on a timely basis or at all; and other risks are more
fully described in the Company's Management Information Circulars
dated May 18, 2016 with respect to
the proposed arrangement between Reservoir Minerals Inc. 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.