TORONTO (miningweekly.com) – Apple was not the only company looking to give shareholders a bite of its growing cash pile in the way of stock repurchases on Monday morning – Vancouver-based Nevsun made a similar move, though obviously on a much smaller scale.
The TSX- and NYSE-listed company, which owns the Bisha gold mine in Eritrea, will buy back up to four-million shares – worth around C$14-million at current share prices – having received permission from the Toronto bourse to do so.
The stock under the normal course issuer bid represents around 2% of Nevsun’s issued and outstanding shares, and the repurchases will start after March 26, and last up to six months.
“Management of the company believe that the current share price is not reflective of the underlying value of the business,” the firm said in a statement.
Shares in Nevsun took a beating in February, after the company slashed its 2012 gold output guidance by half, saying it had overestimated parts of its Eritrean mine’s resources.
In one day, the stock lost 30% of its value to close at C$4.40 apiece on February 7, losing further ground since.
Monday’s news of the buyback perked the share up by over 5%, to trade at C$3.49 by 11:04. Apple’s announcement that it will pay its first dividend in 17 years and buy back up to $10-billion of its stock sent the share price about 1.3% higher.
Nevsun has been generating large amounts of cash flow at the Bisha mine, which also produces silver and zinc, and ended 2011 with C$347-million in the bank. The company in January paid shareholders a C$0.05 dividend, but has also said it is looking for acquisition opportunities to exploit some of its cash reserves, along with share repurchases.
Organic growth is also on the cards: Nevsun is spending $90-million to $100-million to build a copper plant that will start producing next year, as Bisha shifts its focus from gold to base metals.
The company is set to announce its 2011 financial results after markets close on Wednesday.
Edited by: Creamer Media Reporter
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