Nevsun Resources

Nevsun Resources ( NSU) and its subsidiaries are in the mineral property exploration and development business in Africa. The company is mainly focused on its Bisha Mine in Eritrea, East Africa. I don't have to tell you that doing business in Africa is risky, but Nevsun seems to be on the right track with its Bisha Mine. The development is expected to produce more than 1.14 million ounces of gold, 11.9 million ounces of silver, 821 pounds of copper and over 1 billion pounds of zinc during its estimated 13-year mine life. This stock is off by around 16% so far in 2011 and their current market cap is $1.23 billion.

What I like about the chart for Nevsum is that shares are starting make a key technical breakout as the stock begins to trade above a descending trend line. This descending trend line started back in January and now the stock is breaking out above this resistance area on decent volume.

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I would be a buyer of this stock once it takes out some near-term overhead resistance at around $6.30 to $6.50 a share. I would then add again above $7.25 and add even more aggressively above $7.75 a share. That said, I would only add to these moves if the volume is increasing dramatically above the three-month average trading activity of around 809,800 shares.

I would like to point out that a move above $7.75 will be huge for the bulls because it will mean that the stock is trading at all-time highs. If that happens, I would look for NSU to make a run at the psychologically important $10 level.

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