Nevsun rises on share repurchase announcement
By: <
http://www.miningweekly.com/author.php?u_id=132> Matthew Hill
19th March 2012
Updated 4 hours ago
TORONTO (miningweekly.com) - Apple Inc. wasn't the only company looking to
give shareholders a bite of its growing cash pile in the way of stock
repurchases on Monday morning - Vancouver-based Nevsun made a similar move,
though obviously on a much smaller scale.
The TSX- and NYSE-listed company, which owns the Bisha gold mine in Eritrea,
will buy back up to four-million shares - worth around C$14-million at
current share prices - having received permission from the Toronto bourse to
do so.
The stock under the normal course issuer bid represents around 2% of
Nevsun's issued and outstanding shares, and the repurchases will start after
March 26, and lasting up to six months.
"Management of the company believe that the current share price is not
reflective of the underlying value of the business," the firm said in a
statement.
Shares in Nevsun took a beating in February, after the company slashed its
2012 gold output guidance by half, saying it had overestimated parts of its
Eritrean mine's resources.
In one day, the stock lost 30% of its value to close at C$4.40 apiece on
February 7, losing further ground since.
Monday's news of the buyback perked the share up by over 5%, to trade at
C$3.49 by 11:04. Apple's announcement that it will pay its first dividend in
17 years and buy back up to $10-billion of its stock sent the share price
about 1.3% higher.
Nevsun has been generating large amounts of cash flow at the Bisha mine,
which also produces silver and zinc, and ended 2011 with C$347-million in
the bank. The company in January paid shareholders a C$0.05 dividend, but
has also said it is looking for acquisition opportunities to exploit some of
its cash reserves, along with share repurchases.
Organic growth is also on the cards: Nevsun is spending $90-million to
$100-million to build a copper plant that will start producing next year, as
Bisha shifts its focus from gold to base metals.
The company is set to announce its 2011 financial results after markets
close on Wednesday.
----[Mailing List for Eritrea Related News ]----
Received on Mon Mar 19 2012 - 15:51:26 EDT
