Canadian copper miner Nevsun Resources released its third-quarter results last Thursday, and they show increased copper production as well as higher copper grades. That's given analysts plenty to mull over and praise.
The third quarter brought good news for Nevsun Resources (TSX:NSU,NYSEMKT:NSU) and its Bisha mine as higher-than-estimated copper grades and increased output brought praise from analysts. The company posted its third-quarter results last Thursday, highlighting a 19-percent quarter-on-quarter increase in copper production at its East African property, while keeping cash costs relatively flat. The mine produced 56.4 million pounds of the metal, with revenue somewhat slumping to $147.9 million from $169.2 million in the prior quarter. To date, the Canadian company's share price is up 7.37 percent, despite a copper market that has seen steep drops over the course of the past year. What's the silver lining? Since Nevsun's Q3 results release analysts have been lining up to praise the company, pointing out several highlights seen this past quarter. As mentioned, while revenue and net income saw slight slumps, higher grades and increased output helped provide a surge of optimism. Nevsun also had the lowest quarterly cash costs across the industry at $1.07 per pound of copper. Additionally, the company reported a safety milestone of over three years without a delay caused by injuries. Despite its underwhelming financial results, Nevsun's balance sheet remains strong. It has a cash position of US$380 million, and analysts with Haywood see it increasing to $435 million by the end of 2014. Meanwhile, Joseph Gallucci of Dundee Capital Markets said in a note to investors that increased copper production from quarter to quarter makes the company an attractive investment. "With excess capacity at the plant, we believe [Nevsun] is well on track to meet 2014 production guidance of 180-200M lbs of copper," he states. While the company had expected copper grades to go down with continued mining, the grades (at 6.3 percent) beat out the estimate of 5.5 percent Dundee had given.