|
May 09, 2012
Nevsun Reports Strong First Quarter 2012 Financial Results, Raises 2012 Production Outlook
VANCOUVER, BC - Nevsun Resources Ltd. (TSX:NSU)(NYSE Amex:NSU) today reported strong financial and operating results for the first quarter ended March 31, 2012. Nevsun also increased its guidance for 2012 gold production by approximately 25% to a range of 240,000 ounces to 260,000 ounces.
This release should be read in conjunction with Nevsun Resources Ltd.'s ("Nevsun" or the "Company") 2012 first quarter Management Discussion and Analysis ("MD&A"), which can be found at www.nevsun.com/investors/financials. All results are in US dollars.
First quarter 2012 highlights
-
Revenue: $149.4 million
-
Net income attributable to Nevsun shareholders: $41.2 million, $0.21 per share
-
Ounces of gold produced: 82,000
-
Cash costs: $277 per ounce of gold
-
Average realized price: $1,712 per ounce
-
Paid $0.05 dividend per share on January 16, 2012
Outlook
Nevsun is increasing its production guidance for the full year 2012 as a result of unusually high gold grades encountered in April 2012. The high grades were in mining a portion of the oxide zone that is the interface between the gold oxide and copper supergene zones, commonly termed the acid domain. The high grades, which management now expects to persist until at least June 2012, could not be fully included in mineral reserves because drill hole core recovery from the acid domain was sporadic and the core was difficult to assay.
The new 2012 guidance compares favourably with a previous target of 190,000 - 210,000 ounces on February 7, 2012. Nevsun cautions that the competency of the ore 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.
Nevsun expects to disclose a revised mineral resource and reserve estimate for the entire Bisha and Harena deposits during early third quarter 2012.
Financial review
The Company benefited from higher gold sales and production, higher average realized prices and lower cash costs in the first quarter of 2012 compared with a year earlier. The 2012 first quarter results reflect a full 13 weeks of operation. The comparable 2011 first quarter results reflect just five weeks of operation because the mine was only commissioned on February 22, 2011.
Tonnes milled during the first quarter of 2012 totalled 430,000, down 7% from 461,000 a year earlier. The milling grade during the first quarter of 2012 averaged 6.6 grams per tonne, up 6% from 6.2 grams per tonne a year earlier. Tonnes mined during the first quarter of 2012 totalled 358,000, down 25% from 475,000 a year earlier. The mining grade during the first quarter of 2012 averaged 4.07 grams per tonne, down 28% from 5.65 grams per tonne a year earlier.
Gold cash costs per ounce for Q1 2012 were $277 on 83,100 ounces sold, which included $85 per ounce in silver by-product credits, while gold cash costs per ounce for Q1 2011 were $304 on 37,500 ounces sold during the five week operating period from February 15 - March 31, 2011, which included $15 per ounce in silver by-product credits.
The Company's cash and cash equivalents at March 31, 2012 were $279.4 million, down 20% from $347.6 million as at December 31, 2011. During Q1 2012 the Company used $39.2 million of cash in its operating activities, including paying $114.4 million during the quarter to settle its 2011 tax liability. During Q1 2011, the Company generated $27.0 million in cash from its operating activities. There were no income taxes paid in Q1 2011.
The Company used $16.7 million in investing activities in Q1 2012 and generated $30.0 million in the comparable prior period. In Q1 2011 the Company received $48.6 million in proceeds on pre-production gold sales; there were no such proceeds recorded in 2012 as the Company was in commercial production.
During Q1 2012 the Company used $12.3 million in its financing activities, up from $3.5 million in the same period in the prior year. During Q1 2012, the Company received $7.0 million 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 Q1 2011. In addition, in Q1 2012 the Company paid dividends of $10.0 million to Nevsun shareholders. No dividends were paid in Q1 2011.
Exploration and development
Harena:
Harena lies 9.5 km southwest of the Bisha Main deposit on an exploration license contiguous to the Bisha Mining license. In December 2011 the Company applied for a license to mine the deposit and during the past quarter has provided supplemental materials for further clarification for the relevant authorities. Receipt of the Mining license is expected mid-2012. The Company has a 1,200 metre drilling program planned for Harena during the second quarter 2012.
Bisha:
In Q1 2012 the Company drilled 5,716 metres at Bisha. The purpose of the drill program is to generate metallurgical and geotechnical data to be used for the previously mentioned revised reserve update due later in 2012.
North West Zone:
The Company drilled 1,850 metres in Q1 2012 at the North West Zone. A further 6,000 metres of drilling is planned for 2012 and a resource estimate planned in late 2012.
Copper phase development:
The Company continued work on copper phase development activities during Q1 2012, expending $11 million on terracing, other civils works and completing detailed design work. Total capital for the copper plant phase is expected to be approximately $100 million, of which $63 million has been spent, ordered or arranged. Ordering of major components is complete and the copper flotation plant is targeted to be operational in mid-2013. 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. The same firm, SENET of South Africa, is the engineering, procurement, and construction management contractor. Photos of the expansion can be found at www.nevsun.com/projects/photogallery/copperphase.
Corporate Social Responsibility Report
During March 2012 the Company published its 2011 Corporate Social Responsibility Report which can be accessed on the Nevsun website at www.nevsun.com/pdf/2011-nevsun-csr-report.pdf.
Conference call details
The Company will hold a conference call on Thursday, May 10 at 8AM Vancouver / 11AM Toronto, New York / 4PM London, to discuss the quarterly results. Dial in details are as follows:
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North America: 416-340-2219 / 1-866-226-1793 |
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UK: 800-2787-2090 (toll free) |
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Other International: +1-416-340-2219 |
The conference call will be available for replay until May 24, 2012 by calling +1 905-694-9451 / 1 800-408-3053 and entering passcode 5429908.
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 timing of disclosure a revised reserve estimate for the Bisha and Harena deposits. 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, President & Chief Executive Officer
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Summarized financial and operating results |
|
|
Financial results:
In US $000s (except per share and per ounce data): |
|
For the three month periods ended March 31, |
|
2012 |
2011(1) |
|
Revenues |
$ |
149,390 |
$ |
54,315 |
|
Operating income |
|
110,628 |
|
39,638 |
|
Net income attributable to Nevsun shareholders |
|
41,238 |
|
11,803 |
|
Earnings per share attributable to Nevsun shareholders |
|
0.21 |
|
0.06 |
|
Total assets |
$ |
747,148 |
$ |
392,717 |
|
|
Gold production and sales statistics: |
|
For the three month periods ended March 31, |
|
2012 |
2011(1) |
|
Tonnes milled |
430,000 |
461,000 |
|
Milled gold grade (g/t) |
6.6 |
6.2 |
|
Recovery, % of gold |
86% |
88% |
|
Gold in dor�, ounces produced |
82,000 |
75,000 |
|
Gold ounces sold |
83,100 |
72,500 |
|
Gold price realized per ounce |
$ |
1,712 |
$ |
1,405 |
|
Cash cost per ounce sold(2) |
$ |
277 |
$ |
304 |
|
|
Mining statistics: |
|
For the three month periods ended March 31, |
|
2012 |
2011(1) |
|
Ore mined, tonnes |
358,000 |
475,000 |
|
Mined gold grade, g/t |
4.07 |
5.65 |
|
Waste mined, tonnes |
2,401,000 |
2,309,000 |
|
Strip ratio |
6.7 |
4.9 |
|
Copper phase prestrip, tonnes |
1,294,000 |
- |
(1) Q1 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.
(2) Cash operating cost per ounce sold includes royalties and is a non-GAAP measure; see pg 8 of the Company's 2012 Q1 MD&A for more information.
|
Three months ended March 31, |
|
|
|
|
2012 |
|
2011 |
|
Operations commenced February 22, 2011: |
|
|
|
|
|
|
Revenues |
|
$ |
149,390 |
$ |
54,315 |
|
Cost of sales |
|
|
|
|
|
|
Operating expenses |
|
|
(23,127) |
|
(9,373) |
|
Royalties |
|
|
(7,361) |
|
(2,709) |
|
Depreciation and depletion |
|
|
(8,274) |
|
(2,595) |
|
Operating income (January 1 to March 31, 2012 and |
|
|
110,628 |
|
39,638 |
|
February 22 to March 31, 2011) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative |
|
|
(421) |
|
(3,614) |
|
Finance income |
|
|
1,117 |
|
11 |
|
Finance costs |
|
|
(153) |
|
(467) |
|
Income before taxes |
|
|
111,171 |
|
35,568 |
|
|
|
|
|
|
|
|
Income taxes |
|
|
(42,408) |
|
(13,675) |
|
Net income |
|
|
68,763 |
|
21,893 |
|
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
Unrealized gain on available-for-sale investment, net of tax |
|
|
- |
|
107 |
|
Comprehensive income |
|
$ |
68,763 |
$ |
22,000 |
|
|
|
|
|
|
|
|
Income for the period attributable to: |
|
|
|
|
|
|
Nevsun shareholders |
|
|
41,238 |
|
11,803 |
|
Non-controlling interest |
|
|
27,525 |
|
10,090 |
|
|
|
$ |
68,763 |
$ |
21,893 |
|
|
|
|
|
|
|
|
Comprehensive income for the period attributable to: |
|
|
|
|
|
|
Nevsun shareholders |
|
|
41,238 |
|
11,910 |
|
Non-controlling interest |
|
|
27,525 |
|
10,090 |
|
|
|
$ |
68,763 |
$ |
22,000 |
|
|
|
|
|
|
|
|
Earnings per share attributable to Nevsun shareholders: |
|
|
|
|
|
|
Basic |
|
$ |
0.21 |
$ |
0.06 |
|
Diluted |
|
$ |
0.20 |
$ |
0.06 |
|
Three months ended March 31, |
|
|
|
|
2012 |
|
2011 |
|
Cash provided by (used in): |
|
|
|
|
|
|
Operating: |
|
|
|
|
|
|
Income for the period |
|
$ |
68,763 |
$ |
21,893 |
|
Items not involving the use of cash: |
|
|
|
|
|
|
Accretion on reclamation liability |
|
|
153 |
|
- |
|
Depreciation and depletion |
|
|
8,274 |
|
2,595 |
|
Income tax expense |
|
|
42,408 |
|
13,675 |
|
Share-based payments and stock appreciation rights |
|
|
(703) |
|
2,561 |
|
Interest income on due from non-controlling interest |
|
|
(1,091) |
|
- |
|
Changes in non-cash operating capital: |
|
|
|
|
|
|
Accounts receivable and prepaids |
|
|
(34,760) |
|
(10,951) |
|
Inventories |
|
|
(3,937) |
|
(2,422) |
|
Accounts payable and accrued liabilities |
|
|
(3,829) |
|
(384) |
|
Income taxes paid |
|
|
(114,432) |
|
- |
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
(39,154) |
|
26,967 |
|
Investing: |
|
|
|
|
|
|
Proceeds on sale of pre-production gold sales |
|
|
- |
|
48,613 |
|
Expenditures on property, plant and equipment - gold phase |
|
|
(3,977) |
|
(17,319) |
|
Expenditures on property, plant and equipment - copper phase |
|
|
(10,959) |
|
- |
|
Expenditures on exploration and evaluation |
|
|
(659) |
|
(1,288) |
|
Changes in non-cash working capital related to investing activities |
|
|
(1,122) |
|
- |
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
(16,717) |
|
30,006 |
|
Financing: |
|
|
|
|
|
|
Dividends paid to Nevsun shareholders |
|
|
(10,013) |
|
- |
|
Dividends paid to non-controlling interest |
|
|
(10,000) |
|
- |
|
Receipt of purchase price settlement from non-controlling interest |
|
|
6,770 |
|
- |
|
Interest received on due from non-controlling interest |
|
|
230 |
|
- |
|
Principal and interest paid on loan from non-controlling interest |
|
|
- |
|
(4,103) |
|
Interest paid on advances from non-controlling interest |
|
|
- |
|
326 |
|
Issuance of common shares, net of issue costs |
|
|
695 |
|
272 |
|
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(12,318) |
|
(3,505) |
|
Increase (decrease) in cash and cash equivalents |
|
|
(68,189) |
|
53,468 |
|
Cash and cash equivalents, beginning of period |
|
|
347,582 |
|
50,145 |
|
Cash and cash equivalents, end of period |
|
$ |
279,393 |
$ |
103,613 |
|
Non-cash investing and financing transactions: |
|
|
|
|
|
|
Reclassification of share-based payments reserve to share capital upon exercise of options |
|
|
231 |
|
122 |
|
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 |
|
|
- |
|
1,124 |
|
Interest capitalized to property, plant and equipment |
|
|
- |
|
831 |
|
|
|
March 31,
2012 |
December 31,
2011 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
279,393 |
$ |
347,582 |
|
Accounts receivable and prepaids |
|
|
55,250 |
|
20,490 |
|
Inventories |
|
|
37,265 |
|
32,099 |
|
Due from non-controlling interest |
|
|
22,896 |
|
11,137 |
|
|
|
|
|
394,804 |
|
411,308 |
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Due from non-controlling interest |
|
|
66,644 |
|
84,312 |
|
Property, plant and equipment |
|
|
285,700 |
|
279,606 |
|
|
|
|
|
352,344 |
|
363,918 |
|
Total assets |
|
$ |
747,148 |
$ |
775,226 |
|
|
|
|
|
|
|
|
Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
18,340 |
$ |
24,651 |
|
Dividends payable |
|
|
- |
|
10,013 |
|
Income taxes payable |
|
|
38,792 |
|
103,670 |
|
|
|
|
|
57,132 |
|
138,334 |
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Deferred income taxes |
|
|
9,040 |
|
16,187 |
|
Provision for closure and reclamation |
|
|
13,386 |
|
13,233 |
|
|
|
|
22,426 |
|
29,420 |
|
Total liabilities |
|
|
79,558 |
|
167,754 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Share capital |
|
|
410,231 |
|
409,305 |
|
Share-based payments reserve |
|
|
12,165 |
|
11,736 |
|
Retained earnings |
|
|
117,621 |
|
76,383 |
|
|
Equity attributable to Nevsun shareholders |
|
|
540,017 |
|
497,424 |
|
|
|
|
|
|
|
|
Non-controlling interest |
|
|
127,573 |
|
110,048 |
|
Total equity |
|
|
667,590 |
|
607,472 |
|
Total liabilities and equity |
|
$ |
747,148 |
$ |
775,226 | |