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Nevsun's Bisha beats guidance


By: Matthew Hill
6th October 2011
Updated 6 hours ago



TORONTO (miningweekly.com) – Gold production for Nevsun Resources continued ahead of plan at its Eritrean Bisha mine in the third quarter, reaching a record 110 000 oz, the company said on Thursday.

Though the news pushed the company’s share price up 3% on a day when the TSX was up by around the same percentage, Nevsun was still trading at levels similar to this time last year, when gold was $200/oz lower than today’s price.

Nevsun CEO Cliff Davis hailed Bisha’s “smooth start-up” and said the mine’s strong cash generation “will eventually be recognized in the market”. With $226-million in the bank at the end of September, the operation is pumping cash for the TSX-listed firm.

Nevsun is busy building the second phase at Bisha, which will exploit an area of its deposit called the “supergene” zone that will yield around 500-million pounds of copper, as well as gold and silver.

So far, the mine has produced 278 000 oz of gold, since commercial operation began in February.

In August, Nevsun announced it had reached an agreement with Eritrea that the government mining company Enamco would pay $253-million for its 30% stake in Bisha, after it received a 10% free-carry interest.

The money will come out of Bisha’s cash flows.

The operation produced 93 000 oz of gold in the second quarter this year, generating an after-tax net profit of $60.6-million for Nevsun.

Australia-based Chalice Gold also hopes to build a gold mine in the East African country.

Nevsun closed at C$5.60 a share on the TSX, valuing the company at C$1.1-billion.