By Seeking Alpha,
Operator: Good morning, ladies and gentlemen and welcome to the Nevsun Resources Q3 2016 Earnings Results Conference Call.
And I would like to turn the conference over to Mr. Cliff Davis, President and CEO. Please go ahead, sir.
Cliff Davis: Good morning from Vancouver. With me today is our Chief Operating Officer, Frazer Bourchier and our Chief Financial Officer, Tom Whelan.
Before I begin a few cautionary comments. The following prepared statements and discussion contains forward-looking statements regarding production, past and future financial results, as well as the potential arising from exploration programs and the strategic direction to the company.
Forward-looking statements are by their nature uncertain, and frequently but not always identified by words, such as expects, anticipates, believes and similar expressions, or statements that, events, conditions or results, will, could or should occur or be achieved. Actual achievements or future events or conditions may differ materially from what is projected due to a variety of risks, uncertainties and other factors.
We encourage all listeners to thoroughly read yesterday’s news release, as well as the quarterly financial statements and the entire MD&A. all of the financial numbers referred to today are in United States dollars.
Now I am going to provide my views of what we’ve accomplished over the last quarter and where we’re headed. We will then open up the call to question-and-answer period. Nevsun had another quarter of significant advancements in our business. The Bisha mine shipped its first zinc concentrate in September and on October 1, Bisha declared commercial production on the zinc expansion plant.
In addition our direct sales to stockpiled gold material delivered another $23 million of revenue, which meant another quarter of positive earnings and operating cash flow from the Bisha mine even when it was in its pre-commercial production period.
A topic we don’t talk about very much, but it’s something our investors should take note of is our safety record at the Bisha mine, which continues to be an outstanding KPI to be proud of. There were zero lost time injuries during the zinc phase construction. We have had one LTI in the last five years. That is one lost time incident in over 30 million man-hours.
This is a remarkable safety record which can be attributed to the Bisha site leadership team, the mindset culture and continuous improvement programs at the mine. It is not something to ignore and it is something we intend to bring forward to the Serbian build and operations.
Through the acquisition of Reservoir minerals inc., which closed in late June, we have created the platform for significant (audio gap). During Q3 we hit the ground running, the team is focused on advancing to prefeasibility study with the delivery date of September 2017. We have drills turning in both the upper zone and lower zone. The upper zone has a budget of $35 million to $40 million and we will be spending another $20 million in the lower zone. I’ll talk more about this later.
Turning to Bisha operations, during the third quarter, Bisha mined 672,000 tons of primary ore at 5.8% zinc and mined a further 2.4 million tons of waste resulting in a 3.6 strip ration. We milled 510,000 tons of ore to produce 38.6 million pounds of zinc in concentrate.
We monetized 23,000 gold equivalent ounces from direct shipped ore during the quarter, which contributed about $23 million of revenue and $17.5 million to operating income. We expect to sell 80,000 to 100,000 gold equivalent ounces for the full-year which is the same guidance as provided at the beginning of the year.
Executives Present: Cliff Davis – President and CEO, Frazer Bourchier – COO, Tom Whelan – CFO
Analysts Present: Joseph Gallucci – Dundee, Alex Terentiew – Raymond James, Matt Murphy – Macquarie, Orest Wowkodaw – Scotia Bank, Brad Bloomer – Evergreen Capital, Craig Hutchison – TD securities, Stefan Ioannou – Haywood Securities