VANCOUVER, Oct. 25, 2018 /PRNewswire/ - Nevsun Resources
Ltd. (TSX:NSU) (NYSE AMERICAN:NSU) ("Nevsun" or "the Company") is
pleased to report its financial results for the three and nine
months ended September 30, 2018.
Unless otherwise noted all financial results are in millions of US
dollars.
Q3 2018 Highlights
- Strong quarterly production of 69.6 million pounds of zinc and
10.2 million pounds of copper.
- Revised full year 2018 zinc guidance upwards to 245 to 265
million pounds from 210 to 240 million pounds.
- Revised full year 2018 by-product copper guidance upwards to 33
to 38 million pounds from 25 to 30 million pounds.
- C1 cash costs(2) in middle of guidance at
$0.71 per payable pound of zinc sold
on a by-product basis.
- Revenue adversely impacted by lower zinc and copper
prices.
- Advanced both the Timok Upper Zone Project and the Bisha Mine
open pit extension.
- Announced friendly all-cash agreement for Nevsun to be acquired
by Zijin Mining for US$1.41
billion.
Timok Project Update
Site preparation activities continued at the Timok Upper Zone in
the third quarter to advance the construction of the portal and
exploration decline. Following preparatory work, excavation began
as scheduled in late August on the decline boxcut. The Company has
acquired 100% of the land required for development of the
exploration decline and 74% of the required private land for
construction of the Upper Zone project as at September 30, 2018. Drilling also continued as
part of a condemnation drill program aimed to ensure that no
significant mineralization is present near proposed
infrastructure.
The Timok Project feasibility study ("FS") is progressing on
schedule and is expected to be released in mid-2019. Permitting
activities also continued with the submission of an Elaborat, a
Serbian mineral reserve report, to the Serbian Ministry of Mining
and Energy in early September.
At the Lower Zone, a core relogging program continued to better
define the geological constraints on this resource to be used in
future economic studies. A NI 43-101 Technical Report incorporating
the initial resource statement for the Timok Lower Zone was filed
in August 2018.
The 2018 regional drilling program continued to target high
grade Upper Zone-style mineralization. A total of nine holes are
now complete with focus areas including the Eastern Target 2 area
immediately east of the Upper Zone; along the northeastern edge of
the Lower Zone footprint; the area to the west of the Upper Zone;
and two kilometres to the southeast of the Upper Zone. Strong Upper
Zone style alteration with associated pyrite, enargite,
chalcopyrite and minor covellite mineralization typical of the
outer edge of the Upper Zone is being encountered in all of the
holes immediately around Cukaru Peki.
Bisha Mine Update
The Bisha Mine maintained total quarterly material movement
above five million tonnes for the fourth consecutive quarter. This
sustained improvement in mine performance reflects the deployment
of new heavy mining equipment ("HME"), and the implementation of a
plan for in-pit waste dumping with favourable impacts on haulage
distance. Stripping also commenced in July for an open pit
extension with 690,000 tonnes moved in the quarter.
The third quarter coincides with the wet season in Eritrea and despite rainfall being almost
double the normal amount in 2018, high levels of production were
maintained. Ore supply remained tight throughout the quarter due to
lower productivity in constrained work areas at the bottom of the
pit, however zinc feed grade of 6.7% improved over the previous
quarter, while copper feed grade remained at 1.1%. Strong
recoveries of both zinc and copper continued through the third
quarter with 83.9% and 74.5% achieved respectively. Despite strong
zinc production in Q3, the volume of payable zinc in concentrate
sold decreased 17% from Q2 2018 as a result of processing
higher-grade material late in the quarter which remained in
concentrate inventory at September 30,
2018.
2018 Outlook Update
The Company's previously published 2018 production guidance is
210 to 240 million pounds of zinc and 20 to 30 million pounds of
copper. Zinc production in the first nine months of the year was
192.5 million pounds with strong production expected to continue
through the remainder of 2018. Accordingly, 2018 production
guidance has been revised upwards to 245 to 265 million pounds of
zinc. Copper by-product production in the first nine months of the
year was 27.8 million pounds and continues to benefit from the
implementation of the sodium meta bisulphate ("SMBS") reagent
scheme in mid-June. Due to sustained positive results, 2018
production guidance has been revised upwards to 33 to 38 million
pounds of copper.
C1 cash costs per payable pound of zinc sold on a by-product
basis are expected to be $0.60 to
$0.80 in 2018. C1 cash costs on a
by-product basis were $0.66 in the
first nine months of the year as strong production results were
offset by higher operating costs. Accordingly, C1 cash costs on a
by-product basis are expected to remain within the expected range
in 2018.
Corporate Update
Zijin Mining Group Co. Ltd. ("Zijin") and Nevsun entered into a
definitive agreement dated September 4,
2018, to which Zijin made a friendly bid to Nevsun
Shareholders to acquire all of the issued and outstanding shares of
Nevsun for C$6.00 per share in cash
(the "Offer"). The Company has been advised by Zijin that Zijin has
received Canadian Competition Act clearance for the Offer as well
as approval from the People's Republic of
China's National Development and Reform Commission ("NDRC").
Nevsun would like to remind shareholders to follow the unanimous
Board recommendation for shareholders to accept the bid and tender
their Nevsun shares to the Zijin offer. For more details on the
Zijin offer, please refer to the Nevsun website.
Q3 2018 Financial Review
|
|
Q3 2018
|
|
Q2 2018
|
|
Q1 2018
|
|
Q3 2017
(Restated)(1)
|
Revenue
(millions)
|
$
|
71.6
|
$
|
76.4
|
$
|
106.7
|
$
|
71.0
|
Impairment reversals
(charges) (millions)
|
|
-
|
|
5.0
|
|
-
|
|
2.7
|
Earnings (loss) from
mine operations (millions)(1)
|
|
(2.7)
|
|
2.4
|
|
23.4
|
|
12.3
|
Exploration expenses
(millions)(1)
|
|
(4.2)
|
|
(1.6)
|
|
(8.2)
|
|
(12.2)
|
Net income (loss)
(millions)(1)
|
|
(19.9)
|
|
(9.3)
|
|
0.5
|
|
(8.4)
|
Net loss attributable
to Nevsun shareholders
(millions)(1)
|
|
(18.7)
|
|
(9.4)
|
|
(4.5)
|
|
(11.6)
|
Basic loss per share
attributable to Nevsun
shareholders(1)
|
$
|
(0.06)
|
$
|
(0.03)
|
$
|
(0.01)
|
$
|
(0.04)
|
|
|
|
|
|
|
|
|
|
Unrestricted cash
(millions)
|
$
|
88.7
|
$
|
125.1
|
$
|
149.6
|
$
|
151.2
|
Working capital
(millions)
|
|
135.5
|
|
170.4
|
|
187.6
|
|
179.1
|
|
|
|
|
|
|
|
|
|
Zinc price realized,
per payable pound sold(3)
|
$
|
1.02
|
$
|
1.14
|
$
|
1.51
|
$
|
1.44
|
C1 cash cost per
payable zinc pound sold, by-product
basis(2)
|
|
0.71
|
|
0.71
|
|
0.58
|
|
0.75
|
C1 cash cost per
payable zinc pound sold, co-product
basis(2)
|
|
0.94
|
|
0.84
|
|
0.79
|
|
0.84
|
|
|
|
|
|
|
|
|
|
Copper price
realized, per payable pound sold(3)
|
$
|
2.66
|
$
|
3.09
|
$
|
3.01
|
$
|
$2.99
|
C1 cash cost per
payable copper pound sold, co-
product
basis(2)
|
|
1.58
|
|
1.39
|
|
1.56
|
|
1.70
|
(1)
|
Effective December
31, 2017, the Company voluntarily elected to change its accounting
policy with respect to exploration and evaluation expenditures, and
as such, certain financial measures have been restated. Please
refer to the Company's 2017 annual consolidated financial
statements for the full accounting policy, and to the Company's Q3
2018 interim financial statements for disclosure surrounding the
effect of the change as at and for the three and nine months ended
September 30, 2017.
|
(2)
|
C1 cash cost per
pound is a non-GAAP measure. See page 16 of the Company's Q3 2018
MD&A for discussion of non-GAAP measures and page 6 of the
Company's Q3 2018 MD&A, Cash Costs, for explanation of per-unit
costs.
|
(3)
|
Zinc and copper
prices realized per payable pound sold include provisional pricing
adjustments for shipments not yet settled, including shipments in
previous quarters. In Q3 2018, zinc and copper prices realized per
payable pound sold of $1.02 and $2.66 respectively are inclusive of
downward provisional pricing and other adjustments of $0.11 and
$0.16 per payable pound sold respectively – see page 19 of the
Company's Q3 2018 MD&A for a reconciliation of realized metal
prices.
|
Q3 2018 Operating Review
|
Q3 2018
|
Q2 2018
|
Q1 2018
|
Q3 2017
|
Mining
|
|
|
|
|
|
|
|
|
Ore mined,
tonnes(1)
|
|
464,000
|
|
582,000
|
|
640,000
|
|
383,000
|
Waste mined,
tonnes(2)
|
|
5,185,000
|
|
4,900,000
|
|
4,525,000
|
|
4,126,000
|
Strip ratio, using
tonnes(2)
|
|
9.7
|
|
8.4
|
|
7.1
|
|
10.8
|
Processing
|
|
|
|
|
|
|
|
|
Ore milled,
tonnes
|
|
559,000
|
|
491,000
|
|
563,000
|
|
524,000
|
Zinc feed grade,
%
|
|
6.7
|
|
6.1
|
|
7.1
|
|
6.8
|
Copper feed grade,
%
|
|
1.1
|
|
1.1
|
|
1.2
|
|
1.0
|
Recovery, % of
zinc
|
|
83.9
|
|
77.6
|
|
81.1
|
|
74.0
|
Recovery, % of
copper(3)
|
|
74.5
|
|
69.4
|
|
61.5
|
|
33.4
|
Zinc concentrate
grade, %
|
|
49.1
|
|
47.8
|
|
47.8
|
|
42.0
|
Copper concentrate
grade, %(3)
|
|
22.3
|
|
21.5
|
|
20.9
|
|
17.8
|
Zinc in concentrate
produced, millions of pounds
|
|
69.6
|
|
51.3
|
|
71.6
|
|
57.8
|
Zinc in concentrate
produced, tonnes
|
|
31,600
|
|
23,300
|
|
32,500
|
|
26,300
|
Copper in concentrate
produced, millions of pounds
|
|
10.2
|
|
8.6
|
|
8.9
|
|
4.0
|
Copper in concentrate
produced, tonnes
|
|
4,600
|
|
3,900
|
|
4,100
|
|
1,800
|
Payable zinc in
concentrate sold, millions of
pounds
|
|
44.4
|
|
53.8
|
|
53.4
|
|
43.4
|
Payable zinc in
concentrate sold, tonnes
|
|
20,200
|
|
24,400
|
|
24,200
|
|
19,800
|
Payable copper in
concentrate sold, millions of
pounds
|
|
9.3
|
|
4.3
|
|
7.8
|
|
3.1
|
Payable copper in
concentrate sold, tonnes
|
|
4,100
|
|
2,000
|
|
3,500
|
|
1,400
|
(1)
|
Ore tonnes mined for
the three and nine months ended September 30, 2018 consisted of
464,000 and 1,686,000 tonnes of primary ore (Q3 2017 – 381,000 and
1,618,000 tonnes of primary ore and 2,000 and 70,000 tonnes of
supergene ore).
|
(2)
|
Waste tonnes mined
for the three and nine months ended September 30, 2018 include
690,000 tonnes relating to stripping for an open pit extension
which commenced in July 2018. This material has been excluded from
the strip ratio.
|
(3)
|
This represents the
copper recovery to copper concentrate from the copper flotation
circuit only, and excludes copper recovered to zinc
concentrates.
|
The Company's Interim Financial Statements and Management's
Discussion and Analysis ("MD&A") are available on the
Company website at www.nevsun.com, on SEDAR
at www.sedar.com and on EDGAR at www.sec.gov.
Qualified Persons Statement
Mr. Peter Manojlovic, PGeo, and
Vice President Exploration of Nevsun Resources Ltd. is a Qualified
Person under the terms of NI 43-101 and has reviewed the
exploration and mineral resource and reserve statements of this
press release and approved its dissemination.
About Nevsun Resources Ltd.
Nevsun Resources Ltd. is the 100% owner of the high-grade
copper-gold Timok Upper Zone and 60.4% owner of the Timok Lower
Zone in Serbia. The Timok Lower Zone is a partnership with
Freeport-McMoRan Exploration Corporation ("Freeport") which
currently owns 39.6% and upon completion of any feasibility study
(on the Upper or Lower Zone), Nevsun Resources Ltd. will own 46%
and Freeport will own 54%. Nevsun
generates cash flow from its 60% owned copper-zinc Bisha Mine in
Eritrea.
Forward Looking Statements
The above contains forward-looking statements or
forward-looking information within the meaning of the United States
Private Securities Litigation Reform Act of 1995, and applicable
Canadian securities laws. All statements, other than statements of
historical facts, are forward looking statements including
statements with respect to the Company's Bisha Mine in Eritrea, 2018 zinc and copper by-product
production guidance, its intentions for its Timok Upper Zone
Project in Serbia (the "Timok Project") including timing for
release of the Feasibility Study and the outcome of the Zijin offer
to Nevsun Shareholders to acquire all of the issued and outstanding
shares of Nevsun for C$6.00 per share
in cash. The Company also cautions the reader that the PEA
previously released in September 2017
and the PFS released in March 2018 on
the Timok Project that support the technical feasibility or
economic viability of the Timok Project, including the
marketability of the concentrate, mining method, costs, processing,
metal recoveries and any other technical aspects related to the
Timok Project, are preliminary in nature and there is no certainty
that the PEA or the PFS will be realized.
Forward-looking statements are frequently, but not always,
identified by words such as "expects", "anticipates", "believes",
"hopes", "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 concerning the Company's
current beliefs, plans, objectives and expectations about the
future, including but not limited to statements and information
made concerning: statements relating to the business, prospects and
future activities of, and development plans related to the Company,
exploration activities, the adequacy of financial resources,
anticipated production, processing and recoveries of zinc and
copper, mineral reserve and resource estimates, mining efficiencies
and access to mineral reserves, goals, strategies, future growth,
planned future acquisitions, anticipated C1 cash costs to produce
zinc or copper, resolution of metallurgical challenges from
variable ore materials to produce concentrate and the ability to
increase processing and recovery rates of zinc and copper,
achievement of and timing for achievement of any key milestones
including, planned mineral movement at the Bisha Mine and other
events or conditions that may occur in the future regarding the
Company or its projects.
The 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. These risks, uncertainties and factors include
general business, legal, economic, competitive, political,
regulatory and social uncertainties; actual results of exploration
activities and economic evaluations; fluctuations in currency
exchange rates; changes in project parameters; changes in costs,
including labour, infrastructure, operating and production costs;
future prices of copper, gold, zinc, silver and other minerals;
resource estimates and variations of mineral grade or recovery
rates; metallurgical challenges on the variable ore materials being
processed and if the significant improvements in recovery rates of
zinc and copper will be maintained or that recoveries to initial
design levels will be achieved; the ability to extend mine life
beyond the current mine plans; operating or technical difficulties
in connection with exploration; land acquisition; mining method,
production profile and mine plan; other development or mining
activities, including the failure of plant, equipment or processes
to operate as anticipated; performance on ore production and waste
movement and improvement in mining capability; delays in
exploration, development and construction activities including
commencement of the decline construction as planned; changes in
government legislation and regulation; the ability to maintain and
renew existing licenses and permits and the ability to obtain other
required licences and permits in a timely manner or at all; the
ability to obtain financing on acceptable terms and in a timely
manner or at all; contests over title to properties; employee
relations and shortages of skilled personnel and contractors; the
speculative nature of, and the risks involved in, the exploration,
development and mining business including, without limitation,
other risks that are more fully described in the Company's Annual
Information Form for the fiscal year ended December 31, 2017 (the "AIF") and the Company's
management discussion and analysis for the fiscal year ended
December 31, 2017 (the "MD&A"),
which are 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 the Company's forward-looking
statements.
Further information concerning risks and uncertainties
associated with these forward-looking statements and our business
can be found in our AIF and MD&A, which is available on the
Company's website (www.nevsun.com), filed under our profile on
SEDAR (www.sedar.com) and on EDGAR (www.sec.gov) under cover of
Form 40-F.
NEVSUN RESOURCES LTD.
"Peter G.J. Kukielski"
Peter G.J. Kukielski
President & Chief Executive Officer
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SOURCE Nevsun Resources Ltd.