Nevsun Resources (NSU.TO, NYSEMKT:NSU) has announced an updated production guidance for this year. The company now expects to produce 110,000 ounces of gold and between 30 and 50 million pounds of copper this year. Nevsun reiterates their guidance of 200 million pounds of copper for next year.
At a current share price of US$2.81/share, we think Nevsun offers tremendous value down here. The company will produce approximately 120M lbs copper next year at a cash cost ‘under one dollar per pound’. If we use an operating margin of $1.5/lbs, Nevsun will have a cash flow of in excess of $175M.
As the company had over $2/share in working capital and has a 5% dividend yield, we still feel comfortable holding Nevsun Resources and increasing our position.
> Click here to read the press release
Disclosure: The author holds a long position in Nevsun Resources and will increase his position in the near future. Please see our disclaimer for current positions.
