By Nevsun & Henry Lazenby,
NEVSUN Resources, which is focused on extracting copper from its 60%-owned high-grade Bisha copper mine, in Eritrea, this week reported rising first-quarter profit as copper output ramped up.
The Vancouver-based miner late on Tuesday reported net income of $15.4-million, or $0.08 a share for the three months ended March 31, compared with a loss of $4.2-million, or $0.03 in the fourth quarter last year.
Revenue rose 39% to $99.1-million, as copper sales climbed 11% sequentially to 34-million pounds, offsetting a lower realised price of $3.01/lb, compared with $3.20/lb booked in the fourth quarter.
First quarter 2014 highlights:
• Continued copper ramp up with 39.7 million pounds produced in the quarter
• Achieved industry lowest quartile C1 cash costs of $0.98 per pound
• Delivered strong cash flows which increased working capital from $419 to $462 million
• Paid peer leading annualized dividend of $0.14 per share
• Increased indicated resource tonnes by 29% and contained copper by 22%
• Published 2013 Corporate Social Responsibility report in accordance with the Global Reporting Initiative’s fourth generation framework
Red-metal output during the quarter totalled 39.7-million pounds, a 10% increase over last quarter, when the mine produced 36-million pounds.
Mine-site operating, general and administrative costs, freight, treatment and refining charges totalled $0.98 pr payable pound of copper sold, which ranked among the lowest in the industry.
“Bisha had a great quarter” stated Cliff Davis, President and CEO of Nevsun. “We’re especially pleased to achieve a C1 cash cost per payable pound sold of $0.98, well within the first quartile of copper producers, while still ramping up production. We ended Q1 with an even stronger balance sheet, with quarter-end working capital increasing to $462 million, including cash of $338 million.
“We continue to optimize the copper plant and the copper concentrate logistics. We are poised to accelerate production during Q2 2014 and reiterate our 2014 production guidance of 180,000 to 200,000 pounds of copper in concentrate.”
“We have continued an aggressive generative exploration program on the highly prospective Bisha property and neighbouring Mogoraib River license and we are continuing to actively evaluate potential merger and acquisition opportunities.”
The mine produced low-cost gold/silver doré until mid-2013 when, through a $110-million copper expansion, throughput expanded to 2.4-million tonnes a year and the product switched to copper in concentrate. Later in the mine life, flotation capacity will be expanded again to also produce zinc concentrates.
As at the end of the period, the miner had $338-million cash in the bank and working capital of about $462-million, both figures improved over the previous quarter.
Nevsun said that it was poised to accelerate production during the current quarter and restated its 2014 production guidance of 180-million to 200-million of copper in concentrate.
As at the end of the period, the miner had $338-million cash in the bank and working capital of about $462-million, both figures improved over the previous quarter.
Nevsun said that it was poised to accelerate production during the current quarter and restated its 2014 production guidance of 180-million to 200-million of copper in concentrate.
Operations Review
| Key operating information – Bisha Mine(1) | For the three months ended, March 31, 2014 |
For the three months ended, December 31, 2013 |
| Mining – copper: | ||
| Ore mined, tonnes | 487,000 | 533,000 |
| Waste mined, tonnes | 3,471,000 | 2,664,000 |
| Strip ratio, (using tonnes) | 7.1 | 5.0 |
| Processing – copper: | ||
| Ore milled, tonnes | 353,000 | 401,000 |
| Copper feed grade, % | 6.1 | 5.1 |
| Recovery, % of copper | 83.5 | 79.7 |
| Copper concentrate grade, % | 28.8 | 26.0 |
| Copper in concentrate produced, millions of pounds(2) | 39.7 | 36.0 |
| Copper in concentrate produced, tonnes | 18,007 | 16,374 |
| Payable copper sold, millions of pounds | 34.0 | 30.6 |
| Payable copper sold, tonnes | 15,400 | 13,900 |
| Copper price realized, per payable pound sold | $ 3.01 | $ 3.20 |
| ——————————————————— | ||
(1) The Company achieved commercial production of the copper plant on December 1, 2013.
(2) Q1 2014 included 4.5 million pounds (Q4 2013 – 30.6 million pounds) of pre-commercial production. Receipts from pre-commercial production sales were credited against mineral property, plant and equipment, net of costs of sale.
Financial Review
| In US $000s (except per share data)(1) | For the three months ended March 31, 2014 |
For the three months ended March 31, 2013 |
| Revenues | $ 99,151 | $ 71,130 |
| Operating income | 51,983 | 37,779 |
| Net income for the period | 28,180 | 19,503 |
| Net income attributable to Nevsun shareholders | $ 15,440 | $ 10,625 |
| Earnings per share attributable to Nevsun shareholders – basic | 0.08 | 0.05 |
| Earnings per share attributable to Nevsun shareholders – fully diluted | 0.08 | 0.05 |
| —————————————————————————– |
(1) Copper commercial operations commenced December 1, 2013. The 2013 figures reflect only gold phase operating results and do not include copper sales.
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