Nevsun Resources Ltd. (TSX:NSU / NYSE Amex:NSU) is pleased to report its financial and operating results for the second quarter ended June 30, 2011.
QUARTERLY HIGHLIGHTS
- First full quarter of operations at Bisha
- Gold production of 93,000 ounces
- Average realized price per ounce sold of $1,510
- Cash cost of $301 per ounce
- Cash increased $84 million over the quarter
- First dividend declared
Key quarterly financial and operating results
In Q2 2011 the Company recorded $135 million in revenues for the quarter on sales of 88,700 ounces of gold for an average realized price $1,510 per ounce. With 93,000 ounces produced, gold production averaged over 1,000 ounce per day with an average cash cost per ounce sold of $300. Since the Bisha Mine commenced operations in 2011, there are no comparative operating results for Q2 2010.
The Company had after tax income of $61 million for the quarter (Q2 2010 – loss $2 million), which translated to $0.18 earnings per share (Q2 2010 – $(0.01)). The Company increased its cash and cash equivalents by $84 million. Cash from operating activities for the quarter was $111 million (Q2 2010 – used $1 million).
| Financial results (for a 4 month operating period): | |||
| In US $000s (except per share data) |
Q1 2011 |
Q2 2011 |
YTD 2011 |
| Revenues |
$ 53,532 |
$ 134,655 |
$ 188,187 |
| Operating income |
39,604 |
101,881 |
141,485 |
| Net after tax income |
21,893 |
60,605 |
82,498 |
| Owners’ earnings per share |
0.06 |
0.18 |
0.24 |
| Total assets |
$ 392,717 |
$ 480,830 |
$ 480,830 |
The Bisha Mine achieved commercial production in late February 2011 and accordingly Q2 was the Company’s first full quarter of production. The year-to-date (YTD) operating income contains results only from February 22, 2011 to June 30, 2011.
During Q2 2011 the Company declared its first semi-annual dividend of $0.03 per share and paid it in July.
| Gold production and sales statistics(1): | |||
|
Q1 2011 |
Q2 2011 |
YTD 2011 |
|
| Tonnes milled |
461,000 |
444,000 |
905,000 |
| Gold grade |
6.22 |
7.27 |
6.72 |
| Recovery % of gold |
88% |
89% |
89% |
| Gold in doré, ounces produced |
75,000 |
93,000 |
168,000 |
| Gold ounces sold |
72,800 |
88,700 |
161,500 |
| Gold price realized per ounce |
$ 1,405 |
$ 1,510 |
$ 1,485 |
| Cash cost per ounce sold(2) |
$ 299 |
$ 301 |
$ 300 |
(1) Q1 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 are considered pre-production and capitalized to property, plant and equipment.
(2) Cash operating cost per ounce sold includes royalties and is a non-GAAP measure.
Liquidity and capital resources
The Company’s cash at June 30, 2011 was $187 million (December 31, 2010 – $50 million). The Company is confident this cash, along with ongoing cash flows, will be sufficient to meet its near term operating and development cash requirements.
In the quarter the Company generated $111 million in cash from operating activities (Q2 2010 – used $1 million), used $15 million in investing activities (Q2 2010 – used $30 million) and used $13 million in financing activities (Q2 2010 – generated $1 million).
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Nevsun Reports $60m Q2 Profit from Eritrean Mine
By Matthew Hill,
Nevsun Resources, the owner of the Bisha gold mine in Eritrea, on Wednesday posted second quarter after-tax net profit of $60.6 Million, compared with a $2-million loss for the same period in 2010.
Production came in at 93 000 oz at a cash cost of $301/oz, with an average realised sales price of $1 510/oz, the TSX-listed company said.
The Bisha mine reached commercial production in late February and the June quarter was the company’s first full quarter of production. Nevsun said it had $187-million in cash at the end of June, and did not need to raise money in the near term.
In 2007, the company signed an agreement with Eritrean State-owned Eritrean National Mining Corporation that government the government a 10% free ownership of the Bisha mine, and a 30% paid-for stake.
The companies have been negotiating on the price that Eritrea will pay for the 30% ownership, and Nevsun said it expects this to be finalised before the third quarter is through. Nevsun had previously said the price would be decided by June 30.
Although it has started off as a gold and silver producer, Nevsun will start producing copper from Bisha in 2013, followed by zinc output a few years later.
Shares in Nevsun closed 6% higher in Toronto at C$6.30, valuing the company at C$1.2-billion.
