http://seekingalpha.com/article/3384245-nevsun-resources-nsu-ceo-clifford-davis-on-q2-2015-results-earnings-call-transcript
Nevsun Resources' (NSU) CEO Clifford Davis on Q2 2015 Results -
Earnings Call Transcript
Jul. 31, 2015 5:11 PM ET | 1 comment | About: Nevsun Resources Ltd. (NSU)
Operator
Good morning, ladies and gentlemen, and welcome to the Nevsun
Resources Q2 2015 Earnings Results Conference Call. I would now like
to turn the call over to Mr. Davis. Please go ahead.
Clifford Davis - President & CEO
Good morning from Vancouver. With me today is our Chief Financial
Officer, Tom Whelan; and our Chief Operating Officer, Frazer
Bourchier.
Before I begin a few cautionary comments. The following prepared
statements and discussion contains forward-looking statements
regarding production forecasts, past and future financial results, as
well as the potential arising from exploration programs and potential
M&A activity. Forward-looking statements are by their very nature
uncertain, identified by such words as expects, anticipates, believes
and similar expressions. We encourage all listeners to thoroughly read
yesterday's news release, as well as the quarterly financial
statements and the entire MD&A. All of the financial numbers are in
U.S. dollars.
I'm now going to provide my views of what we have accomplished over
the past quarter, where we're headed, and then we will open it up to
Q&A period.
We had another excellent quarter, particularly in light of the decline
in copper price and the unplanned plant stoppage. We mined over 4%
copper from the Bisha open pit, producing 32 million pounds of copper
in concentrate. We generated $58 million in operating cash flow and
created $0.05 earnings per share of which we paid out 80% to our
shareholders in a quarterly dividend. We continue to easily afford our
dividend. I strongly believe, as a shareholder myself, and based on
feedback from our Board and our major shareholders, that dividends are
wise allocation of capital which helps to reinforce our culture of
capital discipline. We ended up with a balance sheet that continues to
be as strong as ever.
We produced copper but what we really produce is cash. With the cash
generated in the first half of the year on dividends to shareholders
and growth in the form of exploration and growth on the zinc expansion
project. I think the most exciting part of the Nevsun story these days
is our exploration program that continues to deliver great results.
The new discovery of another massive sulphide deposit announced last
month is even more evident of success. I hope you all saw the drill
results on the newer Shelly deposit on our more grade exploration
lessons. 2.3% copper and 4.5% zinc over 23 meters with the deposit
open at depth along the straight length of four kilometers with
similar geology. This will pair very nicely with Harena announced
earlier in Q2 which had holes of over 5% copper equivalent over
significant widths.
As I said before, all of this is more confirmation that the Bisha
district will likely go on for decades just as important we believe we
have the milling capacity to bring the production and value forward
once we prove these deposits are economic.
At the end of the quarter we had $500 million in working capital
including $450 million in cash and we expect our cash flow from
operations over the next 12 months should continue to be healthy
despite the slide in copper price. Our cash balance is the equivalent
of about U.S. $2.25 per share compared to our share price of about
$3.25. This clearly suggests that the market is not yet paying for the
incredible asset quality of Bisha, the exploration potential of the
district or strong cash flow that is consistently generated from
Bisha. The share price adjust that only about $1 per share is
attributed to the operations, yet we continue to produce healthy cash
flow even in this low metals price environment.
Our dividend is U.S. $0.16 a share which is a yield of almost 5%. But
we pay a very high yield, the company is backed up by cash and
operations that generate cash, we dig dirt for a living but in reality
we're all about cash.
Received on Sat Aug 01 2015 - 11:09:03 EDT