Nevsun Resources (NSU.TO, NYSEMKT:NSU) has announced their guidance for the gold and copper production in 2013 at their 60% owned Bisha Project in Eritrea, Africa.
The company plans to produce approximately 80,000 ounces of gold in H1 2013. As the trucking distances are higher than before and the average grade will be lower, Nevsun warned the market that cash costs will be much higher than before. This is absolutely not abnormal and we remember the additional gold output of 80,000 ounces (48,000oz attributable to Nevsun) as the positive note of this press release.
Nevsun also announces a preliminary guidance regarding the copper output for the second half of this year. The company puts an output between 60 and 80 million pounds of copper forward (between 36 and 48M lbs attributable to Nevsun).
The company hasn’t announced their expected cash costs, but we expect an all-in cash cost of $850/oz of gold and $1.45/lbs of copper, providing an operational cash flow of around $100M based on a gold price of $1650/oz and an average copper price of $3.25/oz.
Nevsun’s share price recently dipped to $4 on growing concerns over the political stability in Eritrea. For those who believe Eritrea will sort out their internal problems, Nevsun is an interestingly priced company at the moment.
Disclosure: The author holds no position. Please see our disclaimer for current positions.
