Nevsun Resources Ltd. (TSX:NSU / NYSE MKT:NSU) is pleased to report its financial and operating results for the year ended December 31, 2012. Unless otherwise noted, with the exception of earnings per share and cash cost per ounce figures, all results are in thousands of US dollars.
This release should be read in conjunction with Nevsun Resources Ltd.’s (Nevsun or the Company) consolidated financial statements for the years ended December 31, 2012 and 2011 and associated Management Discussion and Analysis (MD&A), which are available on the Company’s website and on SEDAR and EDGAR .
FULL YEAR 2012 HIGHLIGHTS
- Operated safely and well below the industry average LTI rate with no fatalities
- Produced 313,000 ounces of gold in 2012, exceeding the top end of guidance
- Revenues of $566 million, with average realized gold price per ounce of $1,671
- Cash cost of $312 per ounce of gold sold, inclusive of royalties
- Generated $194 million in cash flow from operations
- Earnings of $0.73 per share attributable to Nevsun shareholders
- Increased mineral resource and reserve estimates from 2011/2012 drilling
“This past year represented the second year of gold production for the Company’s 60%-owned Bisha Mine” stated Cliff Davis, President and CEO of Nevsun.
“The Company surpassed the top end of its production guidance, which in turn, allowed the Company to achieve record revenues, remain among the lowest cost gold producers in the world, and generate strong operating cash flows. This excellent operating performance is not only due to the fact that Bisha is one of the highest grade open pit deposits in the world, but also due to the dedication of our site management and employees, and the strong support we receive from the State of Eritrea. We are also pleased to report that Bisha had zero lost time incidents during 2012 and that we strive to ensure that the Company’s presence has a positive social and economic impact and that mining operations are conducted in a responsible manner.
During the year, the Company invested $64 million in the copper phase expansion and a further $24 million between sustaining capital for the gold facilities and exploration and evaluation expenditures. The Company paid $20 million in dividends, completed a $6.3 million share repurchase program, and paid in excess of $200 million of income taxes relating to 2011 and installments for 2012. Despite these expenditures, we maintained an exceedingly strong balance sheet through 2012, ending the year with almost $400 million in cash and no debt.
As 2013 unfolds, the transition from gold production by mid-year to a low cost copper concentrate producer will be pivotal for Bisha. The copper expansion project remains on budget and on schedule. In excess of 80% of the forecasted project expenditures of $125 million has been spent or committed. The copper production ramp up will continue through the second half of 2013 after which we are expecting copper production in 2014 to be in the order of 200 million pounds.
Lastly, while we have this year launched an aggressive generative exploration program on the highly prospective Bisha property, we are continuing to actively evaluate potential acquisition opportunities.
For a more complete analysis, I encourage readers to review the Company’s Annual Information Form, the 2012 annual MD&A and the December 31, 2012, audited financial statements.”
Key operating information – Bisha Mine(1):
|Ore mined, tonnes||1,591,000||1,898,000|
|Waste mined, tonnes||8,677,000||7,716,000|
|Strip ratio, (using BCMs)||7.4||5.8|
|Copper phase prestrip, tonnes||1,220,000||–|
|Gold grade (g/t)||6.21||7.55|
|Recovery, % of gold||86%||88%|
|Gold in doré, ounces produced||313,000||379,000|
|Gold ounces sold||320,700||369,900|
|Gold price realized per ounce||$ 1,671||$ 1,620|
|Comperative gold price(3)||$ 1,669||$ 1,572|
|Cash cost per ounce sold(4)||$ 312||$ 295|
(1) For quarterly information, refer to the Annual MD&A, key operating information.
(2) The 2011 gold production and sales statistics include results from the pre-operating period, January 1 – February 21, 2011. For accounting purposes, sales from ounces produced prior to February 22, 2011 were considered pre-production and capitalized to property, plant and equipment.
(3) Average London PM Fix spot price.
(4) Cash cost per ounce sold includes royalties and is a non-GAAP measure; see cautionary note regarding non-GAAP measure.
Mined ore tonnage for 2012 of 1,591,000 was 307,000 tonnes fewer than 2011’s 1,898,000 tonnes. Waste mining tonnage of 8,677,000 in 2012 increased from 7,716,000 tonnes in 2011. The increase in waste mined and decrease in ore mined resulted in an increased strip ratio of 7.4 for 2012, as compared to 5.8 for 2011. The increase in strip ratio results from the increased pit depth and newly planned shallower pit walls due to updated geotechnical assessments.
The milled tonnage for 2012 of 1,807,000 was consistent to that in 2011 of 1,806,000 tonnes. The combined decrease in average grade in 2012 to 6.21 g/t from 7.55 g/t in 2011 and decrease in recovery in 2012 to 86% from 88% in 2011 resulted in fewer gold ounces produced in 2012 of 313,000 (2011 – 379,000 ounces) and gold ounces sold of 320,700 (2011 – 369,900). The decrease in grade results from the shift to mining Harena ore for the majority of Q4 2012. There was no mining of Harena ore in 2011.
Gold cash costs for 2012 were $312 per ounce on 320,700 ounces sold, net of $94 per ounce in silver by-product credits, while cash costs for 2011 were $295 per ounce on 334,500 gold ounces sold, net of $14 per ounce in silver by-product credits. The increase in full year 2012 cash operating costs compared to full year 2011 cash operating costs is attributed to: (i) fewer gold ounces sold as a result of lower grades and recoveries, which was expected; and (ii) higher fuel, mill consumables and labour costs. These increases were, however, partially offset by the increased silver by-product credits which were a result of significantly higher silver grades in the ore processed and higher recoveries, particularly in Q4 2012.
Summary of financial results:
|In US $000s (except per share data)||2012 (audited)||2011(1) (audited)|
|Revenues||$ 566,039||$ 547,770|
|Net income attributable to Nevsun shareholders||145,262||147,065|
|Earnings per share attributable to Nevsun shareholders||0.73||0.74|
|Total assets||$ 873,696||$ 775,226|
(1) 2011 figures reflect operating results from February 22, 2011, the date commercial production was achieved at the Bisha Mine, to December 30, 2011.
Revenues for 2012 of $566,039 (2011 – $547,770) comprise gold sales of $535,945 (2011 – $543,153) and by-product silver sales of $30,094 (2011 – $4,617). The gold ounces sold and price per ounce are included in key operating information. Silver revenues for 2012 included sales of 962,000 ounces of silver (2011 – 142,000 ounces). Increased 2012 silver by-product sales over 2011 are a result of higher silver grade ore and higher silver recoveries.
Operating income is very comparable for both 2012 and 2011. Details of certain operating expenses and depreciation and depletion are discussed in the annual MD&A.
Similarly the net income for both 2012 and 2011 are very comparable.
The Company’s cash and cash equivalents at December 31, 2012, were $396,404, up from $347,582 as at December 31, 2011. The Company generated $193,815 and $365,964, respectively, from operating activities for the years ended December 31, 2012 and 2011.