2012 Press Releases- Nevsun Reports Strong Second Quarter 2012 Results,
Further Raises 2012 Production Outlook
August 08, 2012
Read it in original:
http://www.nevsun.com/news/2012/august08/
<
http://www.nevsun.com/> Nevsun Resources Ltd.(TSX:NSU / NYSE MKT:NSU)
today reported strong financial and operating results for the second quarter
ended June 30, 2012.
This release should be read in conjunction with Nevsun Resources Ltd.'s
("Nevsun" or the "Company") 2012 second quarter Management Discussion and
Analysis ("MD&A"), which can be found at
<
http://www.nevsun.com/investors/financials>
www.nevsun.com/investors/financials. Unless otherwise noted, with the
exception of earnings per share and cash cost per ounce figures, all results
are in thousands of US dollars.
Second quarter 2012 highlights
* Mined 500,000 tonnes of ore at 6.04 g/t gold
* Produced 87,000 ounces of gold; 169,000 ounces for six months
* Net income attributable to Nevsun shareholders was $39.6 million,
representing earnings of $0.19 per share
* Cash costs of $253 per ounce of gold
Outlook
Nevsun has increased its total 2012 gold production forecast to 280,000 -
300,000 ounces from its previous target of 240,000 - 260,000 ounces, as
compared to its guidance of 190,000 to 210,000 ounces provided in February
2012.
The improved outlook is attributable to continuing unusually high
<
http://www.nevsun.com/projects/bisha-main/configuration/> gold grades
encountered in a portion of the oxide zone that is the interface between the
gold oxide and copper supergene zones, commonly termed the acid domain. The
variable high grades, which are expected to persist until September, when
mining of the acid zone will be complete, could not be fully included in the
<
http://www.nevsun.com/news/2012/july24/> July 2012 mineral reserves update
because drill hole core recovery from the acid domain was sporadic and the
core was difficult to assay.
Nevsun cautions that the competency of the material in this interface zone
is poor and requires sophisticated stockpile blending to facilitate
successful processing and recovery of the precious metals. In addition, the
combination of both a clay-like and sandy composition of the acid material
leads to challenging daily ore control sampling, making it difficult to
predict grades. The associated gold grade is highly variable and includes
both very high and low grades.
Mining of the <
http://www.nevsun.com/projects/bisha-main/configuration/>
Harena deposit will begin in August. Ore from Harena will be processed at
the Bisha plant. Once oxide gold production is completed, the
carbon-in-leach plant will be mothballed such that it can be restarted
should more oxide deposits be discovered in the Bisha vicinity.
The Company completed its 13,500 meter exploration drill program at the
<
http://www.nevsun.com/projects/nwzone/> North West Zone, which lies 3 km
from the Bisha deposit, and expects to release a resource estimate in the
first half of 2013.
Nevsun expects to close the
<
http://www.nevsun.com/projects/mogoraib-hambok/> Mogoraib exploration
license purchase in Q4 2012.
Financial review
Tonnes milled during the three month period ended June 30, 2012 totalled
465,000, up 5% from 444,000 tonnes for the same period in 2011. The milling
grade during the three month period ended June 30, 2012 averaged 6.93 grams
per tonne compared to 7.27 for the same three month period in 2011. Ore
tonnes mined during the second quarter of 2012 totalled 500,000, up 41% from
377,500 a year earlier. The mined grade during the second quarter of 2012
averaged 6.04 grams per tonne.
Revenues for the three month period ended June 30, 2012 were $147,713 (three
month period ended June 30, 2011 - $136,085). While the 87,500 gold ounces
sold in the three months ended June 30, 2012 decreased nominally compared to
the 88,700 ounces sold in the same period in 2011, Q2 2012 benefitted from
higher revenues as a result of a higher realized price per ounce of $1,599
(Q2 2011 - $1,510 per ounce) and an increase in silver by-product sales. The
Company had silver by-product sales of $7,818 and $1,053, respectively, for
the three month periods ended June 30, 2012 and 2011.
Operating costs for the three month period ended June 30, 2012 of $22,879
(three month period ended June 30, 2011 - $21,653) increased from the same
period in the prior year mostly due to increases in mining expenses
resulting from longer haul distances and more difficult ground conditions.
Royalties for the three month periods ended June 30, 2012 and 2011 were
$7,418, and $6,778, respectively. The increase in Q2 2012 royalties compared
to Q2 2011 resulted from the above noted higher realized price per ounce and
increase in silver sales.
Net income attributable to Nevsun shareholders for the three month period
ended June 30, 2012 was $39,568, an increase of $4,281 over the same period
in the prior year. Earnings per share attributable to Nevsun shareholders
for the three month period ended June 30, 2012 was $0.19, an increase of
$0.01 per share over the same period in 2011.
Gold cash costs per ounce sold for the three month period ended June 30,
2012 were $253, which included $89 per ounce in silver by-product credits,
while gold cash costs per ounce sold for the same period in 2011 were $305,
which included $13 per ounce in silver by-product credits.
The Company's cash and cash equivalents at June 30, 2012 were $369,350, up
6% from $347,582 as at December 31, 2011. The Company generated $106,325 and
$111,209, respectively, from its operating activities for the three month
periods ended June 30, 2012 and 2011.
During the three month period ended June 30, 2012, the Company generated
$3,765 in its financing activities, up from $12,687 used in the same period
in the prior year. During Q2 2012, the Company received $22,798 as partial
payment on the sale of 30% of the Bisha Mine to the State-owned Eritrean
National Mining Corporation. No such proceeds were received in Q2 2011.
Reserves update
On July 24, 2012 the Company announced increased base metal Canadian
National Instrument 43-101 (NI 43-101) compliant mineral resources and
reserves estimates. Expressed as contained metal, the copper reserves
estimate increased 6% and the zinc reserves estimate increased 38% as of May
31, 2012, compared with the previous reserves estimate effective date
January 1, 2011.
The total mineral reserves estimate consists of 26.5 million tonnes with the
oxide portions grading 5.79 g/t gold for a total of 167,000 troy ounces of
gold, the supergene portions grading 4.09% copper for a total of 579 million
pounds of copper, and the primary portions grading 1.09% copper and 6.33%
zinc for a total of 462 million pounds of copper and 2,680 million pounds of
zinc respectively.
Exploration and development
<
http://www.nevsun.com/projects/bisha-main/configuration/> Bisha:
The Company's 53 km2 exploration license officially expired in May 2012. The
Company and Eritrean Ministry of Energy and Mines officials are working
together to re-establish an exploration license or licenses that cover a
larger area so that the Company may carry out a more significant regional
exploration program. The Company has advised the State that it wishes to
expand its exploration efforts and the State has welcomed this approach.
Harena:
In July 2012 the Company was granted a mining license for Harena, which lies
9 km southwest of the Bisha Main deposit. The Company expects to commence
mining the deposit in August 2012.
<
http://www.nevsun.com/projects/bisha-main/copper-expansion/> Copper phase
development:
The Company continued work on copper phase development activities during Q2
2012, expending $15,705 on procurement, terracing, other civils works,
completing detailed design work and the beginnings of the structural steel
works. Total capital for the copper phase expansion is expected to be
approximately $125,000, including the copper plant, port facilities and
concentrate container equipment. The Company is taking the same approach to
eliminate price risk on construction that it was successfully able to
accomplish during the build of the gold plant. As at June 30, 2012, $67,126
had been spent, ordered or arranged, thereby fixing over half of the
expected project costs. The copper flotation plant is targeted to be
operational in mid-2013. The same firm, SENET of South Africa, is the
engineering, procurement, and construction management contractor. Photos of
the expansion can be found at <
http://www.nevsun.com/news/2012/august08/>
www.nevsun.com/projects/photogallery/copperphase.
<
http://www.nevsun.com/projects/mogoraib-hambok/> Mogoraib:
On August 1, 2012 the Company announced it had entered into an agreement to
acquire the Mogoraib exploration license in Eritrea, which includes the
Hambok copper and zinc deposit. The purchase of the Mogoraib exploration
license is expected to close in Q4 2012 and is pending approval by Eritrean
State officials. Consideration for the acquisition will be $5,000 plus an
additional possible $7,500 upon commencement of commercial production from
the licensed area.
While management does not believe Hambok is economic as a stand-alone
deposit the Company plans to undertake further exploration and, with the
Bisha plant a short distance away, believes Hambok may become an extension
for the Bisha base metal operations.
If additional exploration is successful and base metals reserves are
identified, then the Company may consider increasing the planned capacity of
the zinc and copper plant when the Bisha plant transitions from copper to
zinc in 2015 or 2016.
Conference call details
The Company will hold a conference call on Thursday, August 9 at 8AM
Vancouver / 11AM Toronto, New York / 4PM London, to discuss the quarterly
results. Dial in details are as follows:
North America: 416-340-8527 / 1-877-440-9795
UK: 00800-2787-2090 (toll free)
Other International: +1-416-340-8527
The conference call will be available for replay until August 23, 2012 by
calling +1 905-694-9451 / 1 800-408-3053 and entering passcode 3684053.
Forward Looking Statements: The above contains forward-looking statements
regarding future gold production, future gold recoveries, gold production
grades, future gold cash production costs, future copper phase expansion,
timing of copper production, and completion of the purchase of the Mogoraib
exploration license. Forward-looking statements are frequently, but not
always, identified by words such as "expects," "anticipates," "believes,"
"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
about the future and are inherently uncertain, and 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, metal price
volatility, share price volatility, operational risks, uncertainties in
estimating mineralization, future expenses and revenues, political and
country risk, regulatory risk, production forecast risk, the securities
class action recently filed against the Company and those other risks
described in the Company's most recent Annual Information Form and
Management Discussion and Analysis of the Company filed with Canadian
securities regulators and are available at www.sedar.com, which have also
been filed or submitted to the U.S. Securities and Exchange Commission on
Form 40-F or Form 6-K and are available at www.sec.gov. In addition, the
Company's actual results could differ materially from those anticipated in
these forward-looking statements as a result of regulatory decisions,
competitive factors in the industry in which the Company operates,
prevailing economic conditions, and other factors, many of which are beyond
the control of the Company. 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 intention or obligation
to update or revise such forward-looking statements whether as result of new
information, future events or otherwise, except as required under applicable
securities regulation. For the reasons set forth above, investors should not
place undue reliance on forward-looking statements.
NEVSUN RESOURCES LTD.
"Cliff T. Davis"
Cliff T. Davis
President & Chief Executive Officer
For further information, please contact:
Kin Communications
Tel: 604 684 6730
Toll free 1 866 684 6730
Email: <mailto:nsu_at_kincommunications.com> nsu_at_kincommunications.com
Website: <
http://www.nevsun.com/> www.nevsun.com
Summarized financial and operating results
Financial results:
In US $000s (except per share and per ounce data):
For the three months ended June 30,
For the six months ended June 30,
2012
2011
2012
2011(1)
Revenues
$ 147,713
$ 136,085
$ 297,103
$ 190,400
Operating income
109,671
101,947
220,299
141,586
Net income attributable to Nevsun shareholders
39,568
35,287
80,806
47,090
Earnings per share attributable to Nevsun shareholders
0.19
0.18
0.40
0.24
Total assets
$ 813,352
$ 480,830
$ 813,352
$ 480,830
Gold production and sales statistics(2):
For the three months ended June 30,
For the six months ended June 30,
2012
2011
2012
2011
Tonnes milled
465,000
444,000
895,000
905,000
Milled gold grade (g/t)
6.93
7.27
6.76
6.72
Recovery, % of gold
85%
89%
86%
89%
Gold in doré, ounces produced
87,000
93,000
169,000
168,000
Gold ounces sold
87,500
88,700
170,600
161,500
Gold price realized per ounce
$ 1,599
$ 1,510
$ 1,654
$ 1,509
Cash cost per ounce sold(3)
$ 253
$ 305
$ 265
$ 304
Mining statistics:
For the three months ended June 30,
For the six months ended June 30,
2012
2011
2012
2011
Ore mined, tonnes
500,000
377,500
849,000
852,300
Mined gold grade, g/t
6.04
8.83
5.49
7.06
Waste mined, tonnes4
1,658,500
1,918,100
3,484,700
3,521,300
Strip ratio
4.0
5.1
4.9
4.1
Copper phase prestrip, tonnes
480,600
-
1,219,600
-
(1) The 2011 revenues, operating income, net income attributable to Nevsun
shareholders and earnings per share attributable to Nevsun shareholders
contain results from February 22, 2011 to March 31, 2011 and February 22,
2011 to June 30, 2011 only.
(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 are
considered pre-production and capitalized to property, plant and equipment.
(3) Cash operating cost per ounce sold includes royalties and is a non-GAAP
measure; see pg 9 of the MD&A for more information.
(4) All waste tonnes mined reflect updated rock density estimates.
Condensed Consolidated Interim Statements of Comprehensive Income
Unaudited
(Expressed in thousands of United States dollars)
Three months ended June 30,
Six months ended June 30,
2012
2011
2012
2011
Commercial operations commenced February 22, 2011:
Revenues
$ 147,713
$ 136,085
$ 297,103
$ 190,400
Cost of sales
Operating expenses
(22,879)
(21,653)
(46,006)
(31,026)
Royalties
(7,418)
(6,778)
(14,780)
(9,486)
Depreciation and depletion
(7,745)
(5,707)
(16,018)
(8,302)
Operating income(1)
109,671
101,947
220,299
141,586
Administrative
(1,475)
(3,703)
(1,896)
(7,317)
Finance income
1,088
25
2,205
36
Finance costs
(153)
(925)
(306)
(1,393)
Income before taxes
109,131
97,344
220,302
132,912
Income taxes
(42,266)
(36,739)
(84,674)
(50,414)
Net income
66,865
60,605
135,628
82,498
Other comprehensive income:
Unrealized gain on available-for-sale investment, net of tax
-
(233)
-
(125)
Comprehensive income
$ 66,865
$ 60,372
$ 135,628
$ 82,373
Income for the period attributable to:
Nevsun shareholders
39,568
35,287
80,806
47,090
Non-controlling interest
27,297
25,318
54,822
35,408
$ 66,865
$ 60,605
$ 135,628
$ 82,498
Comprehensive income for the period attributable to:
Nevsun shareholders
39,568
35,054
80,806
46,965
Non-controlling interest
27,297
25,318
54,822
35,408
$ 66,865
$ 60,372
$ 135,628
$ 82,373
Earnings per share attributable to Nevsun shareholders:
Basic
$ 0.19
$ 0.18
$ 0.40
$ 0.24
Diluted
$ 0.19
$ 0.17
$ 0.39
$ 0.23
(1) Operating income for the comparative periods is from April 1 to June 30,
2011 and February 22 to June 30, 2011.
Condensed Consolidated Interim Statements of Cash Flows
Unaudited
(Expressed in thousands of United States dollars)
Three months ended June 30,
Six months ended June 30,
2012
2011
2012
2011
Cash provided by (used in):
Operating:
Income for the period
$ 66,865
$ 60,605
$ 135,628
$ 82,498
Items not involving the use of cash:
Accretion on reclamation liability
153
203
306
203
Depreciation and depletion
7,745
5,707
16,018
8,302
Income taxes
42,266
36,739
84,674
50,414
Share-based paymentsand stock appreciation rights
235
2,677
(468)
5,238
Interest income on due from non-controlling interest
(1,022)
-
(2,113)
-
Changes in non-cash operating capital:
Accounts receivable and prepaids
17,272
9,935
(17,488)
(1,016)
Inventories
(4,182)
(5,613)
(8,118)
(8,035)
Accounts payable and accrued liabilities
2,111
956
(1,718)
572
Income taxes paid
(25,117)
-
(139,549)
-
Net cash provided by (used in) operating activities
106,325
111,209
67,171
138,176
Investing:
Proceeds on sale of pre-production gold sales
-
-
-
48,613
Expenditures on property, plant and equipment - gold phase
(2,818)
(9,218)
(6,795)
(26,537)
Expenditures on property, plant and equipment - copper phase
(15,705)
(3,897)
(26,664)
(3,897)
Expenditures on exploration and evaluation
(1,591)
(1,597)
(2,250)
(2,885)
Changes in non-cash working capital related to investing activities
(19)
-
(1,141)
-
Net cash provided by(used in) investing activities
(20,133)
(14,712)
(36,850)
15,294
Financing:
Dividends paid to Nevsun shareholders
-
-
(10,013)
-
Dividends paid to non-controlling interest
(16,000)
-
(26,000)
-
Receipt of purchase price settlement from non-controlling interest
22,798
-
29,568
-
Interest received on due from non-controlling interest
98
-
328
-
Accrued interest not paid on advances from non-controlling interest
-
763
-
1,089
Principal and interest paid on loan from non-controlling interest
-
-
-
(4,103)
Repayment of advances from non-controlling interest
-
(17,000)
-
(17,000)
Issuance of common shares, net of issue costs
-
3,550
695
3,822
Repurchase and cancellation of common shares
(3,131)
-
(3,131)
-
Net cash used in financing activities
3,765
(12,687)
(8,553)
(16,192)
Increase in cash and cash equivalents
89,957
83,810
21,768
137,278
Cash and cash equivalents, beginning of period
279,393
103,613
347,582
50,145
Cash and cash equivalents, end of period
$ 369,350
$ 187,423
$ 369,350
$ 187,423
Non-cash investing and financing transactions:
Dividends declared
9,976
5,935
9,976
5,935
Reclassification of share-based payments reserve to share capital upon
exercise of options
-
1,253
231
1,375
Depreciation capitalized to property, plant and equipment
-
-
-
397
Share-based payments capitalized to property, plant and equipment
-
-
-
276
Closure and reclamation increase in property, plant and equipment
-
-
-
1,074
Interest capitalized to property, plant and equipment
-
-
-
693
Condensed Consolidated Interim Balance Sheets
Unaudited
(Expressed in thousands of United States dollars)
June 30,
2012
December 31,
2011
Assets
Current assets
Cash and cash equivalents
$ 369,350
$ 347,582
Accounts receivable and prepaids
37,978
20,490
Inventories
40,423
32,099
Due from non-controlling interest
6,100
11,137
453,851
411,308
Non-current assets
Due from non-controlling interest
61,566
84,312
Property, plant and equipment
297,935
279,606
359,501
363,918
Total assets
$ 813,352
$ 775,226
Liabilities and equity
Current liabilities
Accounts payable and accrued liabilities
$ 19,029
$ 24,651
Dividends payable
9,976
10,013
Income taxes payable
52,343
103,670
81,348
138,334
Non-current liabilities
Deferred income taxes
12,638
16,187
Provision for closure and reclamation
13,539
13,233
26,177
29,420
Total liabilities
107,525
167,754
Equity
Share capital
407,100
409,305
Share-based payments reserve
12,644
11,736
Retained earnings
147,213
76,383
Equity attributable to Nevsun shareholders
566,957
497,424
Non-controlling interest
138,870
110,048
Total equity
705,827
607,472
Total liabilities and equity
$ 813,352
$ 775,226
Received on Wed Aug 08 2012 - 09:37:56 EDT
