2012 Press Releases- Nevsun Reports Strong Third Quarter 2012 Financial
Results
November 08, 2012
Please read in original for a clarity:
http://www.nevsun.com/news/2012/november08/
<
http://www.nevsun.com/> Nevsun Resources Ltd.(TSX:NSU / NYSE MKT:NSU)
today reported financial and operating results for the third quarter ended
September 30, 2012.
This release should be read in conjunction with Nevsun Resources Ltd.'s
("Nevsun" or the "Company") 2012 third 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.
Third quarter 2012 highlights
* Mined 316,000 tonnes of ore at 5.21 g/t gold
* Produced 98,000 ounces of gold; 267,000 ounces inthe nine months
ended September 30, 2012
* Net income attributable to Nevsun shareholders was $44.2 million,
representing earnings of $0.22 per share
* Cash costs of $307 per ounce of gold(1)
(1) Non-GAAP measure, refer to page 10 of the Q3 2012 MD&A
Outlook
* Expects to exceed previously announced 2012 gold production target
of 280,000 - 300,000 ounces
* Oxide gold production expected to continue into Q2 2013
* Copper plant expansion on budget and on schedule with commissioning
expected for mid-2013
* Mineral resource estimate for North West Zone deposit is expected to
be released by mid-2013
* Expects to release its exploration plans for Mogoraib region in Q1
2013
Financial review
The Bisha copper plant expansion continues on schedule and on budget. The
copper plant expansion is entirely funded by Bisha operating cash flows. As
a result, Nevsun has not had to access debt or equity markets to fund the
expansion and Nevsun's balance sheet remains clear of long-term debt
obligations.
Revenues for the three months ended September 30, 2012 were $169,992, a
decrease from the three months ended September 30, 2011 of $186,502,
resulting from fewer gold ounces sold, with 96,700 ounces sold in the three
months ended September 30, 2012 compared to 108,600 ounces sold in the same
period in 2011 and from a lower realized gold price per ounce with $1,681
realized in Q3 2012, compared to $1,715 in Q3 2011. The lower Q3 2012
production resulted from the previously mentioned lower milled grade and
from lower recoveries with 87% for Q3 2012 as compared with 89% for Q3 2011.
The comparatively lower milled grades and recoveries were expected, based on
the ore type for the section of the pit that was processed in Q3 2012. The
Company had silver by-product sales of $7,442 and $1,125, respectively, for
the three month periods ended September 30, 2012 and 2011.
Operating expenses for the three months ended September 30, 2012 of $29,196
(three months ended September 30, 2011 - $20,939) increased from the same
period in the prior year mostly due to increases in fuel, mill consumables
and labour costs and costs associated with an increased volume of waste
removal.Royalties for the three month periods ended September 30, 2012, and
2011 were $8,154, and$9,276, respectively.
Net income attributable to Nevsun shareholders for the three months ended
September 30, 2012 was $44,211, adecrease of $9,112 over the same period in
the prior year due to lower revenues and higher costs, as explained above.
Earnings per share attributable to Nevsun shareholders for the three months
ended September 30, 2012 was $0.22, a decrease of $0.05 per share over the
same period in 2011.
Gold cash costs per ounce sold for the three months ended September 30, 2012
were $307(2), which included $77 per ounce in silver by-product credits,
while gold cash costs per ounce sold for the same period in 2011 were $267,
which included $10 per ounce in silver by-product credits.
The Company's cash and cash equivalents at September 30, 2012, were
$378,925, up from $347,582 as at December 31, 2011. The Company generated
$79,632 and $102,911, respectively, from its operating activities for the
three month periods ended September 30, 2012 and 2011. There were $30,037 of
income taxes paid in Q3 2012 and $nil paid in the comparative period.
During the three months ended September 30, 2012, the Company used
$44,857(three months ended September 30, 2011 - used $44,722) in its
financing activities. During Q3 2012, the Company received $5,731, and $369
in related interest,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 Q3 2011.
(2) Non-GAAP measure, refer to page 10 of the Q3 2012 MD&A
Operations review
Milled grade increased from 6.58 grams per tonne ("g/t") in Q1 2012 to 7.40
g/t in Q3 2012 as a result of pockets of high grade acid domain ore that
were encountered in the pit. The ore in these extremely high grade pockets
has poor competency making it difficult to anticipate with exploration core
drilling while also requiring sophisticated stockpile blending to facilitate
successful processing and recovery of the precious metals. Average
metallurgical recoveries for the nine months ended September 30, 2012 of 86%
are lower than the 89% experienced in the comparative prior period as a
result of the changing nature of the ore and was expected.
The Company's gold production for Q1, Q2, and Q3 2012 was 82,000, 87,000 and
98,000 ounces respectively. The total for the nine months ended September
30, 2012, of 267,000 was 4% lower than the 278,000 produced in the
comparative prior period.
Ore mined was significantly higher in Q2 2012 at 500,000 tonnes, relative to
Q1 and Q3 2012 at 349,000 and 316,000 tonnes respectively, as a result of
stockpiling in Q2 to prepare for the rainy season that runs from mid-June to
mid-September. Waste mined in Q3 2012 of 2,590,000 tonnes increased when
compared to the 1,826,000 and 1,659,000 tonnes mined in Q1 and Q2,
respectively.
The increase in the Q3 2012 waste tonnes mined and corresponding increase in
strip ratio to 10.3 was in accordance with expectations. Copper phase
pre-stripping was completed in Q2 2012 so costs related to copper phase
waste tonnes are no longer deferred, adding to the strip ratio in Q3. In
addition, strip ratio increased as a result of increased pit depth and the
newly planned shallower pit walls due to updated geotechnical assessments,
as noted in the August 31, 2012 Technical Report. Strip ratio levels similar
to Q3 are expected to continue for the next 3 - 4 quarters, however a life
of mine strip ratio of 6.6:1 is predicted in the August 31, 2012 Technical
Report.
Reserves update
On September 7, 2012, the Company filed the Canadian National Instrument
43-101 Technical Report (the August 31, 2012 Technical Report) in support of
previously announced increased mineral resources and mineral reserves
estimates for Bisha. 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.
Exploration and development
Copper phase development:
The Company continued work on copper phase development activities during Q3
2012, expending $19,630 on the copper phase. Total capital for the copper
phase expansion is expected to be approximately $125,000, including the
copper plant, port facilities and concentrate shipping 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 September 30, 2012, $92,471 had been spent, ordered or
arranged, thereby fixing nearly three quarters of the expected project
costs. The copper flotation plant is targeted to be operational in mid-2013.
SENET of South Africa is the engineering, procurement, and construction
management contractor. Photos of the expansion can be found at
<
http://www.nevsun.com/projects/photogallery/copperphase>
www.nevsun.com/projects/photogallery/copperphase.
Harena:
In early July 2012, the State of Eritrea granted a mining license to Bisha
Mining Share Company for the Harena deposit, located 9 km south of the Bisha
plant. The Company started extracting Harena ore in October and processing
it at the Bisha plant in November.
North West Zone:
The Company has planned a metallurgical and geotechnical drilling campaign
for Q4 2012 with plans to prepare a resource estimate for the North West
Zone by mid-2013.
Mogoraib:
On October 10, 2012 the Company closed the acquisition of the Mogoraib
exploration license in Eritrea, which includes the Hambok copper and zinc
deposit. Consideration for the acquisition was $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. The Company expects to announce its
exploration plans for the region in Q1 2013.
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, November 8, 2012 at
8:30AM Vancouver / 11:30AM Toronto, New York / 4:30 PM London, to discuss
the quarterly results. Please call in at least five minutes prior to the
conference call start time to ensure prompt access to the conference. Dial
in details are as follows:
North America: 416-340-2219/ 1866-226-1798
UK: 00800-9559-6849 (toll free)
Other International: +1416-340-2219
The conference call will be available for replay until November 15, 2012 by
calling +1 905-694-9451 / 1 800-408-3053 and entering passcode 7510681.
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 future Mogoraib exploration programs. 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. Information
concerning the interpretation of drill results and mineral resource and
reserve estimates also may be deemed to be forward-looking statements, as
such information constitutes a prediction of what mineralization might be
found to be present if and when a project is actually developed.
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, the risks that (i) any of the
assumptions in the historical resource estimates turn out to be incorrect,
incomplete, or flawed in any respect; (ii) the methodologies and models used
to prepare the resource and reserve estimates either underestimate or
overestimate the resources or reserves due to hidden or unknown conditions,
(iii) the mine operations are disrupted or suspended due to acts of god,
internal conflicts in the country of Eritrea, or unforeseen government
actions; (iv) the Company experiences the loss of key personnel; (v) the
mine operations are adversely affected by other political or military, or
terrorist activities; (vi) the Company becomes involved in any material
disputes with any of its key business partners, lenders, suppliers or
customers; (vii) the Company is subjected to any hostile takeover or other
unsolicited attempts to acquire control of the Company; (viii) the Company
is subject to any adverse ruling in any of the pending litigation to which
it is a party; or (ix) the Company incurs unanticipated costs as a result of
the transition from the oxide phase of the Bisha mining operations to the
copper phase in 2013. Other risks are more fully described in the Company's
most recent Management Discussion and Analysis, which is incorporated herein
by reference. 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 obligation to update such
forward-looking statements in the future, except as required by law. For the
reasons set forth above, investors should not place undue reliance on
forward-looking statements.
Please see the Company's Annual Information Form, 2011 annual Management
Discussion and Analysis, and 2012 third quarter Management Discussion and
Analysis for a more complete discussion of the risk factors associated with
our business.
About Nevsun Resources Ltd.
Nevsun Resources Ltd. is a Vancouver-based mining company with an operating
mine in Eritrea. Nevsun's 60%-owned Bisha Mine commenced gold production in
February 2011 and is scheduled to transition to copper/gold production in
2013. Management expects the Bisha Mine will rank as one of the highest
grade open pit base metal deposits in the world.
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):
Nine months ended
September 30,
Q3 2012
Q2 2012
Q1 2012
2012
2011(1)
Revenues
$ 169,992
$ 147,713
$ 149,390
$ 467,095
$ 376,902
Operating income
125,482
109,671
110,628
345,781
288,529
Net income attributable to Nevsun shareholders
44,211
39,568
41,238
125,017
100,412
Earnings per share attributable to Nevsun shareholders
0.22
0.19
0.21
0.62
0.51
Total assets
$ 855,433
$ 813,352
$ 747,148
$ 855,433
$ 700,769
Gold production and sales statistics(2):
Nine months ended
September 30,
Q3 2012
Q2 2012
Q1 2012
2012
2011
Tonnes milled
465,000
465,000
430,000
1,360,000
1,351,000
Milled gold grade (g/t)
7.40
6.93
6.58
6.98
7.30
Recovery, % of gold
87%
85%
86%
86%
89%
Gold in doré, ounces produced
98,000
87,000
82,000
267,000
278,000
Gold ounces sold
96,700
87,500
83,100
267,300
270,100
Gold price realized per ounce
$ 1,681
$ 1,599
$ 1,712
$ 1,664
$ 1,605
Cash cost per ounce sold(3)
$ 307
$ 253
$ 277
$ 280
$ 287
Mining statistics:
Nine months ended
September 30,
Q3 2012
Q2 2012
Q1 2012
2012
2011
Ore mined, tonnes
316,000
500,000
349,000
1,165,000
1,230,000
Mined gold grade, g/t(5)
5.21
6.04
4.71
5.42
7.70
Waste mined, tonnes(4)
2,590,000
1,659,000
1,826,000
6,075,000
5,732,000
Strip ratio (using BCMs)(6)
10.3
4.0
6.2
6.3
6.6
Copper phase prestrip, tonnes
-
481,000
739,000
1,220,000
-
(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 September 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 were
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 10 of the MD&A for more information.
(4) All waste tonnes mined reflect updated rock density estimates.
(5) The milled grade is consistently higher than the mined grade. This
demonstrates the difficulty in estimating and testing mined grade as a
result of the very high grade pockets of oxide and supergene transitional
ore, as described on pg 5 and 6 of the MD&A.
(6) The increase in the Q3 2012 strip ratio to 10.3 was in accordance with
expectations. Copper phase pre-stripping was completed in Q2 2012 so copper
phase waste tonnes are no longer deferred, adding to the strip ratio in Q3.
In addition, strip ratio increased as a result of increased pit depth and
the newly planned shallower pit walls due to updated geotechnical
assessments, as noted in the August 31, 2012 Technical Report. Strip ratio
levels similar to Q3 are expected to continue for the next 3 - 4 quarters,
however a life of mine strip ratio of 6.6:1 is predicted in the August 31,
2012 Technical Report.
Condensed Consolidated Interim Statements of Comprehensive Income
Unaudited
(Expressed in thousands of United States dollars)
Three months ended
September 30,
Nine months ended
September 30,
2012
2011
2012
2011
Commercial operations commenced February 22, 2011:
Revenues
$ 169,992
$ 186,502
$ 467,095
$ 376,902
Cost of sales
Operating expenses
(29,196)
(20,939)
(75,202)
(51,965)
Royalties
(8,154)
(9,276)
(22,934)
(18,762)
Depreciation and depletion
(7,160)
(9,343)
(23,178)
(17,646)
Operating income(1)
125,482
146,944
345,781
288,529
Administrative
(3,220)
(3,730)
(5,116)
(11,046)
Finance income
899
2,445
3,104
2,481
Finance costs
(153)
(595)
(459)
(1,987)
Income before taxes
123,008
145,064
343,310
277,977
Income taxes
(47,372)
(55,864)
(132,046)
(106,279)
Net income
75,636
89,200
211,264
171,698
Other comprehensive income:
Unrealized gain on available-for-sale investment, net of tax
-
(40)
-
(166)
Comprehensive income
$ 75,636
$ 89,160
$ 211,264
$ 171,532
Income for the period attributable to:
Nevsun shareholders
44,211
53,323
125,017
100,412
Non-controlling interest
31,425
35,877
86,247
71,286
$ 75,636
$ 89,200
$ 211,264
$ 171,698
Comprehensive income for the period attributable to:
Nevsun shareholders
44,211
53,283
125,017
100,246
Non-controlling interest
31,425
35,877
86,247
71,286
$ 75,636
$ 89,160
$ 211,264
$ 171,532
Earnings per share attributable to Nevsun shareholders:
Basic
$ 0.22
$ 0.27
$ 0.62
$ 0.51
Diluted
$ 0.22
$ 0.27
$ 0.61
$ 0.50
(1) Operating income for the comparative periods is from July 1 to September
30, 2011 and February 22 to September 30, 2011..
Condensed Consolidated Interim Statements of Cash Flows
Unaudited
(Expressed in thousands of United States dollars)
Three months ended
September 30,
Nine months ended
September 30,
2012
2011
2012
2011
Cash provided by (used in):
Operating:
Income for the period
$ 75,636
$ 89,200
$ 211,264
$ 171,698
Items not involving the use of cash:
Accretion on reclamation liability
153
153
459
356
Depreciation and depletion
7,165
9,343
23,182
17,646
Income taxes
47,372
55,864
132,046
106,279
Share-based paymentsand stock appreciation rights
1,219
2,493
751
7,730
Interest income on due from non-controlling interest
(816)
(2,414)
(2,929)
(2,414)
Interest expense on advances from non-controlling interest
-
406
-
1,495
Changes in non-cash operating capital:
Accounts receivable and prepaids
(16,308)
(44,440)
(33,796)
(45,456)
Inventories
(4,002)
(5,367)
(10,963)
(13,402)
Accounts payable and accrued liabilities
(750)
(2,327)
(3,625)
(1,756)
Income taxes paid
(30,037)
-
(169,586)
-
Net cash provided by (used in) operating activities
79,632
102,911
146,803
242,176
Investing:
Proceeds on sale of pre-production gold sales
-
-
-
48,613
Expenditures on property, plant and equipment - gold phase
(2,415)
(8,559)
(9,210)
(35,096)
Expenditures on property, plant and equipment - copper phase
(19,630)
(8,711)
(46,294)
(12,608)
Expenditures on exploration and evaluation
(2,600)
(1,680)
(4,850)
(4,565)
Changes in non-cash working capital related to investing activities
(555)
-
(1,696)
-
Net cash provided by(used in) investing activities
(25,200)
(18,950)
(62,050)
(3,656)
Financing:
Dividends paid to Nevsun shareholders
(9,976)
(5,935)
(19,989)
(5,935)
Dividends paid to non-controlling interest
(38,000)
-
(64,000)
-
Receipt of purchase price settlement from non-controlling interest
5,731
-
34,223
-
Interest received on due from non-controlling interest
369
-
1,773
-
Principal and interest paid on loan from non-controlling interest
-
-
-
(4,103)
Repayment of advances from non-controlling interest
-
(41,000)
-
(58,000)
Issuance of common shares, net of issue costs
160
2,213
855
6,035
Repurchase and cancellation of common shares
(3,141)
-
(6,272)
-
Net cash used in financing activities
(44,857)
(44,722)
(53,410)
(62,003)
Increase in cash and cash equivalents
9,575
39,239
31,343
176,517
Cash and cash equivalents, beginning of period
369,350
187,423
347,582
50,145
Cash and cash equivalents, end of period
$ 378,925
$ 226,662
$ 378,925
$ 226,662
Non-cash investing and financing transactions:
Reclassification of share-based payments reserve to share capital upon
exercise of options
49
880
280
2,255
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
Stock appreciation rights liability settled with common shares
-
8,451
-
8,451
Condensed Consolidated Interim Balance Sheets
Unaudited
(Expressed in thousands of United States dollars)
September 30, 2012
December 31, 2011
Assets
Current assets
Cash and cash equivalents
$ 378,925
$ 347,582
Accounts receivable and prepaids
54,285
20,490
Inventories
43,839
32,099
Due from non-controlling interest
-
11,137
477,049
411,308
Non-current assets
Due from non-controlling interest
62,382
84,312
Property, plant and equipment
297,935
279,606
316,002
363,918
Total assets
$ 855,433
$ 775,226
Liabilities and equity
Current liabilities
Accounts payable and accrued liabilities
$ 18,618
$ 24,651
Dividends payable
-
10,013
Income taxes payable
67,067
103,670
85,685
138,334
Non-current liabilities
Deferred income taxes
15,249
16,187
Provision for closure and reclamation
13,692
13,233
28,941
29,420
Total liabilities
114,626
167,754
Equity
Share capital
404,168
409,305
Share-based payments reserve
12,920
11,736
Retained earnings
191,424
76,383
Equity attributable to Nevsun shareholders
608,512
497,424
Non-controlling interest
132,295
110,048
Total equity
740,807
607,472
Total liabilities and equity
$ 855,433
$ 775,226
Received on Thu Nov 08 2012 - 21:33:20 EST
