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Nevsun narrows Q4 loss on impairment reversal

4th March 2018

By: Henry Lazenby

Creamer Media Deputy Editor: North America

     

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VANCOUVER (miningweekly.com) – Base metals producer Nevsun Resources has reported a narrower fourth-quarter loss of $3.8-million, or $0.01 a share, as the bottom line benefitted from the partial reversal of an impairment charge previously booked on zinc ore stockpiles.

The Vancouver-headquartered company advised that based on the sustained successful recovery of zinc from zinc-only stockpiles in the third and fourth quarters of 2017, the company has reversed the previous impairment taken on the high- and medium- grade portions of the zinc-only stockpiles.

This resulted in an impairment reversal of $13.1-million related to stockpiled ore, and a reversal of $6.5-million related to the zinc-only ore that was successfully processed during the two quarters. This resulted in a total reversal related to zinc-only stockpiles of $19.5-million recorded during 2017. The remaining $49-million impairment charge, as at December 31, comprised $32.2-million,which related to zinc-only stockpiles, $4.1-million related to pyrite sand stockpiles, $3-million related to oxide stockpiles, and $9.7-million related to obsolete equipment and related inventory.

Revenue in the period more than doubled to $80.6-million.

In 2017, Nevsun reported a net loss attributable to shareholders of $84.7-million, or $0.28 a share, compared with 2016 restated net loss of $2.7-million, or $0.01 a share.

Revenue for the 12-month period came to $289.9-million, up from $230.7-million a year earlier.

The miner produced 210.4-million pounds of zinc in zinc concentrate at its flagship Bisha mine, in Eritrea, which was at the top end of revised guidance of 190-million to 210-million pounds. Nevsun also produced 17.5-million pounds of copper in copper concentrate, which was below revised guidance of 20-million pounds to 30-million pounds.

The miner realised zinc C1 cash costs of $0.97/lb of payable metal sold on a co-product basis and $0.88/lb of payable metals sold on a by-product basis. Realised copper C1 cash costs came in at $1.72/lb on a co-product basis.

Nevsun expects to produce produce 210-million to 240-million pounds of zinc at C1 cash cost of $0.70/lb to $0.90/lb pf payable metal sold, with copper on a co-product basis; and C1 cash cost of $0.60/lb to $0.80/lb of payable metal sold, with copper on a by-product basis.

It expects to produce 20-million to 30-million pounds of copper at C1 cash cost of $1.55/lb to $1.75/lb of payable red metal sold, on a co-product basis.

TIMOK LICENCE
Critically, Nevsun announced that the Serbian Ministry of Mining and Energy had issued Nevsun with a decline exploration permit for the Timok Upper Zone project.

"Our team has been working closely with the Ministry of Mining and Energy and other government agencies in Serbia over the past several months to achieve this significant milestone for the Timok Upper Zone project. The prefeasibility study remains on track for release at the end of the first quarter of this year, after which we expect to immediately proceed with the full feasibility study work," CEO Peter Kukielski stated.

With this permit in place, the Timok project team will start preparing and contracting to build a decline. The exploration decline is expected to take about two years to reach the Timok Upper Zone orebody.

Edited by Creamer Media Reporter

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